Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana   
January 30,  1970
THE 1970 FEED GRAIN PROGRAM
Paul R. Robbins,
Agricultural Economics
J.rIE 1970 FEED GRAIN PROGRAM is very similar TO THE ONE FOR 1969. PRICE SUPPORT LOAN RATES
ARE unchanged;   HOWEVER,   CORN   IS   NOW   QUOTED   ON
"no. 2" basis. Price support payment rates are unchanged. Diversion payments will be slightly reduced.
Signup  will be  conducted February 2  through
March 20.
Budgeting Your Farm Situation
Should you participate in the 1970 Feed Grain Pro-
ram and if so, at what level? What payments could
you receive? What costs can be saved if you participate? Some of your costs are already fixed for 1970.
Taxes and interest on land as well as depreciation, interest, taxes and insurance on machinery and equipment will likely be influenced very little if at all, by
your decision regarding the feed grain program. However, if because of a larger acreage of corn (non-participation) , it is necessary to buy added equipment,
then fixed machinery and equipment costs would be
increased and become an important factor in your decision regarding participation in 1970. Costs for items
such as seed, fertilizer, chemicals, tractor fuel and
equipment repairs are variable and would be reduced
by participation. Labor can be either a fixed or variable
cost depending upon the particular situation. In the
budgets that follow, labor is considered a variable cost
since it is often in short supply particularly during the
corn planting and harvest periods, and many Indiana
farmers have alternative uses for any labor that might
be saved through participation.
EXAMPLE: Bill Smith farms 400 tillable acres, all
suitable for continuous row crop production. He has a
feed grain base of 250 acres. His farm has no conserving acreage base, no wheat base and no wheat planted.
The farm's established yield on which payments are
based is 100 bushels per acre. If Smith does not par-
cipate in the 1970 feed grain program he plans to raise
* Assistance in interpretation of details of the program
Provided by program specialists of the State ASC Office
300 acres of corn and 100 acres of soybeans. With these
acreages of corn and soybeans his expected yields are
100 bushels for corn and 33 bushels for soybeans. If
Smith participates at the 20 per cent level, he would
divert 50 acres and, due to more timely operations, he
expects the corn yield on the remaining acreage to
average 102 bushels. If he participates at the 50 per
cent level, his average corn yield is expected to increase to 105 bushels. If Smith participates he will
grow 150 acres of soybeans.
Smith thinks that the price of No. 2 corn at harvest
will be about $1.00 and soybeans about $2.25 per
bushel.
Smith computed his feed grain program payments at
the minimum and maximum levels of participation:
(See Table 1.)
Table 1. Bill Smith's 1970 Feed Grain Program Payments at Minimum and Maximum Levels
of  Participation
1.     Participation at minimum 20 per cent level:
(a) Price support payment = 100
(farm's projected yield) x $.30 x
acres  ( Vz of base)
bu.
125
(b) Total payment (same as 1-a price
support payment only)
Participation    at    50    per    cent    level     (may    be
any level of participation from 20-50 per cent) :
(a) Price support payment (same as computed in 1-a above
(b) Diversion payment = 40% x $1.38
(national average loan and support
payment for No. 2 corn) x 100 bu.
(farm's projected yield) x 75 acres
(additional acres diverted above minimum 20%)
(c) Total program payment at 50% level
of   participation    (2-a   -f-   2-b)
= $3750
= $3750
= 3750
:   4140
$7890
was
Next Smith turned to Table 3 to determine the income above variable costs per acre for the crops he
would be growing  (corn and soybeans)  and at yield