Posts

Showing posts with the label history

US Corn, Soybeans, and Wheat in World Perspective: Importance of the US Cropped Acre Constraint

By Carl Zulauf, Agricultural Economist - The Ohio State University & Krista Swanson, University of Illinois ACES
link to farmdoc Daily article

Wide-spread concern exists over the large decline in US share of world corn, soybean, and wheat exports (see Figure 1). Moreover, quantity of corn and wheat exports have never consistently exceeded their early 1980 levels (see Figure 2). Tariff wars have heightened the concern. Long term impact of the tariff wars is a concern, but this article argues that graphs such as Figures 1 and 2 exaggerate the decline in US agriculture’s international standing and mask key relationships that frame private and public decisions. Data cited in this article come from PSD (Production, Supply, and Demand website).







Reasons for Exaggeration Growth in domestic US use is ignored. US consumption of meat, livestock products, and especially biofuels has grown, displacing exports, everything else remaining the same. Zulauf estimates US corn exports are 1.4 billion bushels smaller than if US corn market trends of 1984–2004 had continued to hold (farmdoc daily, 11/20/2019).

US policy changes are ignored. In particular, CRP (Conservation Reserve Program, which was authorized in 1985, pays for taking environmentally sensitive cropland out of production. Fewer cropped acres mean prices are higher than they would otherwise be. Higher prices reduce demand for exports more than domestic demand, resulting in fewer exports or slower growth in exports.
Broader markets in which a crop exists are ignored. Corn is a feed grain, soybean is an oilseed, and wheat is a food grain. Corn and soybeans are preferred among these crops around the world. However, their share of harvested feed grain-food grain-oilseed acres has increased more in the US (from 50% in 1972–1976 to 71% in 2015–2019 vs. 15% to 29% for rest of the world). Faster growth in preferred crops imparts an advantage to the US.

Conclusion

A more encompassing and likely more accurate measure of US agriculture’s international role is its share of aggregate world feed grain-food grain-oilseed production.
US share of world feed grain-food grain-oilseed production has declined, but by much less: from 19.3% in 1972–1976 to 16.2% in 2015–2019 (see Figure 3 and Data Note). This conclusion also holds for relative share decline. Relative decline in US share of world corn exports is –52%. It is calculated as percent change in 2015–2019 share from the 1972–1976 share, specifically [1 – (34.9% / 72.8%)] (percent values from Figure 1). Relative decline in US export share is –62% for soybeans and –69% for wheat. In contrast, relative decline in US share of world feed grain-food grain-oilseed production is only –16% (1 – (16.2% / 19.3%).




Closer Look

Because magnitude of a share matters, it is important to examine a share over its range of values (0% to 100%), as Figure 3 does. But, such a graph can mask important smaller, shorter-run changes. Figure 4, a smaller magnitude picture, clearly reveals 2 periods of decline. The first peak-to-trough is from 1982 (20.9%) to 1991 (16.3%). It closely follows the 1973–1980 crop prosperity period. The second peak-to-trough is from 2007 (17.6%) to 2015 (15.9%). It largely overlaps the 2007–2013 crop prosperity period. However, declines in 2018 and 2019 beg a question, “Have the tariff wars undone a possible stabilization in US share following large price declines since 2012?” Between the two declines, US share partially recovered, likely due in part to the large reduction in US prices due to policy changes enacted in the 1985 farm bill.




Role of US Acres Since the early 1980s, all growth in cumulative US production of feed grains, food grains, and oilseeds has come from yield as harvested acres declined by 26 million (see Figure 5). Since 2000, harvested acres have essentially not changed in the US while increasing by 301 million in the rest of the world. The constraint on US acres reflects both bioclimatic factors and public policy. It seems unlikely to change in the near future. The constraint means, if US domestic consumption grows faster than US yield, prices will increase, giving rest of the world an incentive to bring acres into production. This scenario played out as the US expanded its biofuel markets since 2000.




Summary Thoughts

A widely-expressed concern is the decline in US share of world corn, soybean, and wheat exports.
This decline however exaggerates the decline in US agriculture’s international standing. It also masks key relationships that frame private and public decisions.

A more accurate perspective is US share of world feed grain-food grain-oilseed production. This share has declined but by much less than US share of world corn, soybean, or wheat exports.
The decline occurred in two periods: 1982–1991 and 2007–2013. The second decline has, so far, been much less than the first. But, declines in 2018 and 2019 prompt the question, “Is the second decline resuming, especially in light of the tariff wars?”
A key feature of contemporary US agriculture is a constraint on cropped acres. Given this constraint, growing US demand faster than yield means most of the benefits accrue to the rest of the world as they bring more acres into production. Such has occurred since 2000 as the US expanded its biofuels markets.

The US cropland constraint prompts the following policy questions / issues. Given this constraint,
  • What is the appropriate role and funding for export promotion programs?
  • What should US biofuels policy be, in particular the size of mandated markets?
  • What should be the size and goal of US conservation land retirement programs?
  • What is the appropriate role and funding for public agricultural research?
These issues span multiple titles in the farm bill, suggesting the US cropped acres constraint could be a foundation theme directing debate over the next farm bill.

Historical Planted Acre Changes for Corn and Soybeans | an interview with Gray Schnitkey



Friday, March 31, 2017, USDA will release the Prospective Plantings report. The survey of U.S. farmers will estimate how many acres of corn and soybeans will be sown this spring. University of Illinois Agricultural Economist Gary Schnitkey talks with Todd Gleason about the historical changes in planted acres.



by Gary Schnitkey
see farmdocDaily post

At its annual Agricultural Outlook Conference in February, USDA projected that planted acres of corn would decrease from 94.0 million acres in 2016 to 90.0 million in 2017, a decrease of 4 million planted acres. At the same time, soybean acres are projected to increase from 83.4 million acres in 2016 to 88.0 million in 2017, an increase of by 4.6 million acres. Herein, we evaluate historical changes in acres across counties, thereby providing perspective on where likely 2017 acreage changes may occur.

U.S. Planted Acres

In 2016, planted acres to corn in the United States was 94.0 million acres (see Figure 1). This acreage level was the third highest number of planted acres since 2000, only being exceeded by 2012 (97.3 million acres) and 2013 (95.4 million acres). The 2017 projection of 90 million acres would be a 4.0 million acre decrease from the 2016 level. Plantings of 90.0 million acres would be about the same level as occurred in 2014 (90.5 million acres) and would be below the average planting for the last ten years.



In 2016, planted acres to soybeans was 83.4 million acres, the highest amount ever planted in the United States. Before 2014, planted acres to soybeans never exceeded 80 million acres (see Figure 1). Planted acres exceeded 80 million acres in each year since 2014: 83.2 million acres in 2014, 82.6 million in 2015, and 83.4 million in 2016.

In the following maps, acreage changes from 2011 to 2016 will be shown. In 2011, U.S. corn acres were 91.9 million, 1.9 million acres higher than in 2016. Reversing the corn acre increases during this five year period would go part way to reaching the decreases projected for 2017. The soybean acreage increase from 2011 to 2016 of 8.4 million represents twice the change projected from 2016 to 2017.
Corn Acre Changes

Figure 2 shows a map color coded to give changes in acres from 2011 to 2016. Counties colored blue had increases in acres, counties coded in orange had decreases in acres. Those counties that are yellow had essentially the same acres in 2016 as they did in 2011.



Several areas had pronounced increases. In particular, the northern Great Plains had sizeable increases. Between 2011 and 2016, North Dakota increased acres by 1.2 million, South Dakota by .4 million, and Minnesota by .4 million. Another area of sizable increase was Texas, with the planting .9 million more acres in 2016 than in 2011. Counties along the Mississippi River, especially in Arkansas, increased acres as well.

There were areas of notable decreases as well. Sizable decreases in corn acres occurred in Illinois. Between 2011 and 2016, planted acres in decreased by 1.0 million in Illinois. Indiana and Iowa had modest decreases as well.

Soybean Acre Changes

Figure 3 shows a map with planted acre changes for soybeans. Similar to corn, soybean acres increased in the upper Great Plans. Planted acres increased by 2.0 million acres in North Dakota, 1.1 million acres in South Dakota, and .5 million acres in Minnesota.



Other areas of significant increase were Illinois with a 1.1 million acres increase in planted soybeans. Planted acres also increased along the Mississippi River, parts of Kentucky and Tennessee, as well as areas in North and South Carolina.

Perspective on Changes for 2017

Areas with large acreage changes in the past likely will contribute in a significant way to acre changes from 2016 to 2017. These areas include the upper Great Plans, Texas, and the corn belt.

It seems conceivable that total corn and soybean acres could continue to increase in the upper Great Plains in 2017. Much of the acreage increases of corn and soybeans between 2011 and 2016 came from acres previously planted to wheat. In 2017, wheat acres could continue to decrease, leading to increases in corn and soybean acres. Whether corn acres will decrease while soybean acres increase in this region is an open question. One event that could lead to acre decreases is higher incidence of prevented planting. Prevented plantings were low in 2016, leaving open the possibility of increases in prevented planting acres in 2017.

Texas could see acreage shifts away from corn. Cotton prices look favorable, and an increase in cotton acres could contribute to fewer acres in corn.

Illinois and the corn belt in general could see shifts from corn to soybeans. Returns from crop budget suggest soybeans will be more profitable than corn (farmdoc daily, December 6, 2016), suggesting a shift is possible.

While budgets suggest the possibility, acre shifts have been slow in coming. Perhaps the most likely area where a shift will occur is where corn acres exceed soybean acres by a considerable margin. Corn acres divided by soybean acres exceed 1.0 in many counties in southern Minnesota, Iowa, northern and central Illinois, and western Indiana (see Figure 4). Bringing these areas back closer to a 50% corn - 5% soybean rotation, indicated by 1.0 corn divided soybean value, could increase profits suggesting that switches are possible.



Summary

Areas that experienced large acre changes in the past likely will be the ones where acres changes occur in 2017. This suggests focus on the upper Great Plains, Texas, and Illinois and the corn belt more generally. Continued corn and soybean acreage increases in the upper Great Plains seem reasonable to expect, except if prevented planting acres increase significantly. Texas could experience reduced corn acres. Budgets suggest switches to more soybeans from corn in the Midwest, although this is the case in previous years. Further indications of planting attentions will be received with the release of NASS’s Prospective Plantings report on March 31.