The report also found that agricultural industries in the United States that are not recipients of current farm program support would be the major beneficiaries of US farm policy reform.

The findings are contained in the new report, US agriculture without farm support, released today by Dr Brian Fisher, Executive Director of ABARE.

With the 2002 US farm bill due to expire in 2007, consideration of replacement legislation is under way in the United States. Implementing meaningful reforms will be vital to the medium to long term growth prospects of the US farm sector and the economy more generally.

"Farm policy reform, and associated industry adjustment, does not mean that all previously supported agricultural sectors will disappear in the United States. US farm policy reform would, over time, lead to improvements in agricultural productivity," Dr Fisher explained.

"It is evident in many countries that exposure to market signals and increased competition can lead to positive industry adjustment and facilitate the development of a well functioning agriculture sector. The farm policy reform and industry adjustment experiences of Australia and New Zealand May provide some useful insight into the future policy reform direction for the US farm sector," Dr Fisher said.

Analysis presented in the report indicates that US farm policy reform, in the presence of multilateral trade reform, could benefit lightly supported and unsupported agricultural industries in the United States. In addition, adjustment costs associated with US farm policy reform could potentially be lower.

Potential US budget savings (in net present value terms) are estimated to be around US$120 billion (in 2005 dollars) over the period 2007-2020 relative to what would otherwise be the case were existing farm policies to be maintained. The estimated net present value of the change in US agricultural gross incomes, during the same period, would be an increase of US$7 billion (in 2005 dollars), relative to what would otherwise be the case.