Economic Impact Analysis of Exchange Rate, RFS2, and Farm Program Support Changes on the U.S. Crop Sector
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This dissertation aims at analyzing the expected consequences resulting from an exchange rate change, the Renewable Fuel Standard 2 (RFS2), and removing farm price and income supports in the 2014 Farm Bill. This study establishes a dynamic, recursive, partial equilibrium crop model containing 14 commodities to analyze economic impacts of external shocks on the U.S. crop sector. The concept of expected net returns (ENRs) based on economic theory is introduced to account for producers’ decision makings in response to external shocks and the supply-demand structure embedded in the entire sector. Model validation results support that the proposed model reasonably replicates the historical data. The baseline forecast results indicate that the price, planted acres, production, demand, and ENRs for most commodities will be stabilized around 2014-2016. Compared to the baseline, incorporating the exchange rate changes and the RFS2 is expected to influence the demand side, whereas the forthcoming Farm Bill is likely to largely affect the supply side via changing the ENRs. Impacts of the exchange rate changes are forecasted to be substantial, but vary by crop. The 2014 Farm Bill is forecasted to contribute to the goal of budget reductions, at the expense of lower ENRs. The impact analysis can be applied to most major crops at the national and regional level. This nested information is expected to help policy makers with their decision makings. A successful incorporation of important and relevant sectors such as the U.S. livestock sector, international trade, and climate change will improve the proposed model’s performance and forecasting results. This further development remains as future work.
Rhew, Chanhee (2014). Economic Impact Analysis of Exchange Rate, RFS2, and Farm Program Support Changes on the U.S. Crop Sector. Doctoral dissertation, Texas A & M University. Available electronically from