Fixed payments regardless of price. Payments no longer increase when target price falls. Lower loan rates increase amount price could decline. Maintain competitiveness in world market. Flexibility Previously, farmers required to plant within base to receive payments.
Producers effectively lock into producing base acreage.
Now farmers can produce virtually any crop in any quantity. More switches in cropping patterns than many anticipated results in greater price risk. Farmers' ability to anticipate and lock-in favorable prices becomes critically important. Reserve stock programs limited in quantity. Lower stocks mean more price volatility.