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Agricultural Production and Prices

Markets for major agricultural commodities are typically analyzed by looking at supply-and-use conditions and implications for prices. From an economic perspective, these factors determine the market equilibrium. In the U.S. agricultural sector, there are many interactions and relationships between and among different commodities.

 
In terms of sales value, California leads the country as the largest producer of agricultural products (crops and livestock), accounting for almost 11 percent of the national total, based on the 2012 Census of Agriculture. Iowa, Texas, Nebraska, and Minnesota round out the top five agricultural producing States, with those five representing more than a third of U.S. agricultural-output value.
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California, Iowa, Illinois, Minnesota, and Nebraska are the five leading States in terms of value of crop sales. With its large horticultural sector, California’s overall crop value is about three-quarters above that of Iowa, the second-ranked State. In contrast to California, crop value in the next four leading States is based on grains and oilseeds, particularly corn and soybeans. For other crops, Washington State typically leads the country in apple production, while Florida is the largest producer of oranges.
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The five leading States for the sales value of livestock and their products are Texas, Iowa, California, Nebraska, and Kansas. The cattle sector is the dominant source of value in Texas, Kansas, and Nebraska. Milk from cows accounts for about 57 percent of livestock-sale value in California. Both the hog and cattle sectors are large sources of sale value in Iowa. North Carolina is the leading producing State of poultry and eggs, followed by Georgia.
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The value of agricultural production in the United States has risen over the past decade due to increases in production as well as higher prices. Yield gains for crops have been particularly important, although acreage has also risen recently in response to elevated prices since 2008. Falling prices led to a slight decline in value of crop production in 2013. While livestock production increased over the decade, prices were up more than 60 percent between 2003 and 2013, contributing to the rising value of livestock production.
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Since 1990, combined acreage planted to corn, wheat, soybeans, and upland cotton in the United States has ranged from 218 million to 242 million acres. Increased planting flexibility provided to farmers starting in the 1990s has allowed them to respond to market signals in their cropping choices. Overall, acreage has generally been higher in recent years, with the four highest combined annual planting totals for these crops from 1990 to 2013 occurring since 2008.
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Horticultural production has increased steadily over the past two decades. Grapes, apples, oranges, and strawberries top the list of fruits, while tomatoes and potatoes are the leading vegetables. Imports have increasingly supplemented production of domestic horticultural products to provide U.S. consumers with a wider and year-round variety than is provided from domestic sources.
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With only a few exceptions, production of broilers (the most efficient converter of feed to meat) has outpaced growth in beef and pork production since 1990, and poultry meat has been the major meat produced and consumed in the United States since the mid-1990s. Total domestic per capita beef, pork, and poultry disappearance (a proxy for use) has declined in recent years, reflecting higher feed costs and higher retail prices, as well as the effects of the 2007-09 economic recession. However, rising exports of meats and products have been a growing source of demand.
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The number of milk cows in the United States has generally fallen over the past 30 years, but milk output has risen more than 50 percent since 1980 and now exceeds 200 billion pounds per year. Genetic developments and technological improvements underlie a pronounced upward trend in milk output per cow. Consolidation in the dairy sector also has facilitated efficiency gains in milk production.
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Corn is the major agricultural input used in the United States to produce ethanol, accounting for 35-40 percent of U.S. corn use. Rapid expansion of ethanol production in the past decade reflects a response to high crude oil prices, the Renewable Fuel Standard, and other factors. Now, ethanol production is slowing as the gasoline market hits a 10-percent blend constraint.
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The elimination of textile and apparel import quotas that existed under the international Multifiber Arrangement was completed at the start of 2005, leading to increased U.S. imports of those products and contributing to reduced U.S. milling of cotton. Exports now account for more than 75 percent of overall use of U.S. cotton, compared with less than 40 percent in the 1990s. China is the largest destination of U.S. cotton exports.
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Although there is frequent year-to-year variation, prices for agricultural commodities have generally moved higher in the past 10 years. In these aggregate measures, nominal prices for crops are close to double their 2003 level, while livestock prices are up more than 60 percent.
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Increased productivity in crop production underlies a general decrease in inflation-adjusted prices for corn, wheat, and soybeans over the past century. This trend was reversed during the past decade by global growth in population and income, increasing biofuel production, and a depreciation of the U.S. dollar.
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Since 2000, inflation-adjusted meat prices have reflected slower production growth as meat output responded to lower producer profits due in part to higher feed costs. Cattle production costs, production, and prices also have been affected by poor forage conditions due to lingering droughts over much of the past decade, particularly in the Southern Plains.  
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Last updated: Tuesday, September 09, 2014

For more information contact: Lewrene Glaser

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