Eliminating planting restrictions on fruits and vegetables could result in farmers shifting acreage from program crops to fruit and vegetables in some regions, USDA's Economic Research Service says in a recent report.
The ERS report looks into the potential effects of eliminating fruit and vegetable planting restrictions. The WTO found in March 2005 that direct payments in the U.S. for program commodities do not qualify as decoupled payments because they restrict fruit and vegetable production.
Decoupled payments are made per acre, based on historical plantings of program crops and yields, as opposed to basing payments on market prices or crop production levels. The 1996 and 2002 farm bills converted some farm support to decoupled payments, but these programs do not cover fruit or vegetable acres.
The report finds that farmers in regions favorable to fruits and vegetables would be likely to move some acres to those crops and away from program crops, as they would often still be able to collect payments on base acres.
High production costs may prevent producers from switching to certain crops, such as fresh fruit. Startup costs could also turn producers not currently growing fruit and vegetable crops from making a switch in that direction.
ERS says that producers with base acreage stand to benefit the most from eliminating fruit and vegetable planting restrictions, as they could see additional revenue by planting fruit and vegetables. The market effects of eliminating restrictions would probably have a small effect on the market, individual producers could see significant changes, the report says.