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Farmers adjust to rising fertilizer prices in a variety of ways

Thursday, September 1, 2016

Fertilizer prices have increased overall since 2006, reaching historical highs in 2008. Fertilizers are an important input into farming and higher prices have forced farmers to alter their use. Beginning in 2006, USDA?s Agricultural Resource Management Survey (ARMS) asked farm operators how they adjusted their operations in response to higher fertilizer and fuel prices. For most crops (soy, cotton, and wheat) farmers responded to higher prices by reducing their application rate. However, the largest users of fertilizer?corn farmers?responded most often that they managed fertilizer use more closely, for example by using practices such as soil testing, split applications, variable-rate applications, or soil incorporation. This chart is found in the ERS report,?Agriculture?s Supply and Demand for Energy and Energy Products, EIB-112, May 2012.

U.S. farms have become more specialized over the last 100 years

Thursday, September 1, 2016

Most U.S. farms raised multiple species of livestock as late as 1960. As a result, most farms also raised corn to feed their animals. Since then, livestock production has become much more specialized, so that less than 5 percent of farms had chickens, hogs, or milk cows by 2010, and those purchase much of their feed. Many farms still raise beef cattle, usually in small cow-calf operations that require land for pasture but only modest labor commitments. Far fewer farms now grow corn, since they do not have herds of livestock, and corn production has concentrated on larger crop operations that grow corn along with 1 or 2 other crops, like soybeans, wheat, or alfalfa.? This chart is found in the ERS report, Farm Size and the Organization of U.S. Crop Farming, ERR-152, August 2013.?

Soybeans dominate expansion of cropland in Argentina

Thursday, September 1, 2016

Land planted to soybeans in Argentina grew from fewer than 5 million hectares in 1992/93 (April-March) to 20 million hectares in 2015/16, while wheat and corn area has seen little or no growth over this period (1 hectare = 2.47 acres). Soybean meal is a major component of livestock feed, and growing demand for meat and livestock products worldwide has supported increased soybean production and trade. In Argentina, tax policies have played a role in soybean production as well. In 2002, the country imposed taxes on its agricultural exports as a way to generate government revenue. Argentina applies lower export taxes on soybean meal and oil than it does on raw soybeans, which stimulated the construction of large oilseed crushing facilities and, consequently, led to more soybean meal and oil exports. In 2008, the Government of Argentina increased export taxes and imposed a permitting system that further restricted exports of products such as corn, wheat, and beef. Soybean products face fewer obstacles in export markets and abundant opportunities to expand planted area through double cropping and adjusting crop-pasture rotations on marginal lands in the northwest part of Argentina. As a result, Argentina?s soybean area has expanded rapidly and is projected to reach over 22 million hectares by 2025/26. This chart is from the May 2016 Amber Waves article, ?Major Factors Affecting Global Soybean and Products Trade Projections.?

China's demand for imported soybeans expected to remain strong

Thursday, September 1, 2016

China is the world?s largest importer of soybeans. The country?s dominance as an importer reflects government policies that favor imports of soybeans over feed grains, coupled with dietary shifts toward more animal proteins, which creates a strong demand for soybean meal used for livestock feed rations. In 1995, China adopted a policy of 95 percent self-sufficiency for grains, and from 2008 to 2012 the country increased price supports for wheat, rice, and corn at higher rates than those for soybeans, making soybean production less attractive to farmers and resulting in an 18-percent decline in domestic production while soybean imports jumped 50 percent. China?s border policies also favor soybean imports. Import tariffs for soybeans are lower than those for soybean meal or oil, resulting in China?s oilseed-crushing industry becoming the largest in the world, and supplied mainly with imported soybeans. With China?s policies continuing to favor grain production over soybeans and its feed and livestock industries expected to continue growing, the country?s demand for imported soybeans is projected to remain strong over the next decade, increasing from 83 million tons in 2016/17 to 109.5 million tons in 2025/26. This chart is from the May 2016 Amber Waves article, ?Major Factors Affecting Global Soybean and Products Trade Projections.?

Prices for grains and oilseeds projected to remain below recent highs

Wednesday, March 2, 2016

Larger global production of grains and oilseeds in response to higher prices in recent years has increased world supplies of corn, wheat, and soybeans. At the same time, income growth in developing countries has weakened and the U.S. dollar has strengthened, affecting both global agricultural demand and U.S. exports, resulting in lower near-term prices for those crops. Longer run developments for global agriculture and U.S. trade reflect steady world economic growth, population gains, and continued global demand for biofuel feedstocks. Those factors combine to support longer run increases in consumption, trade, and prices of agricultural products. Thus, following the near-term declines, moderate prices gains are projected over the next ten years. This chart is from USDA Agricultural Projections to 2025.

Composition of production expenses varies by farm commodity specialization

Friday, June 19, 2015

The variation in the percent of total expenses represented by individual expenses across different types of farms reflects how specialized U.S. agriculture has become. While wide differences generally exist between crop and livestock farms, USDA’s Agricultural Resource Management Survey (ARMS) allows a breakdown of expense shares within the major farm types. Livestock purchases are the largest component of total expenses for beef cattle farms, primarily because of the relatively high cost of feeder steers. Because of the lower cost of their animal purchases, feed expenses are the largest component of total expenses for other animal farms (primarily hog, poultry, and dairy). Specialty crop farms (fruit/nuts, vegetables, and nursery/greenhouse) have a higher share of labor expenses than field crop farms, because they occupy fewer acres and are less mechanized. In contrast, field crop farms, especially corn farms, have higher shares of expenses going to principal crop-related expenses (fertilizer, seeds, and chemicals), and rent. Fuel expenses are relatively consistent, varying between 3 percent of total expenses for other animal farms to 8 percent for other field crop farms. This chart is based on results from USDA’s ARMS Farm Financial and Crop Production Practices data.

Lower energy prices reduce crop production expenses

Friday, June 12, 2015

Oil and natural gas prices dropped in the latter half of 2014, with expectations that energy prices would remain lower than previously projected through 2016. Lower energy prices affect crop production expenses, which in turn influence planting decisions and commodity prices. The effect of energy prices on the cost of producing particular crops depends on the level and share of production costs for direct energy inputs such as fuel and oil, as well as for inputs such as energy-intensive nitrogen fertilizers and agricultural chemicals. Rice, cotton, and corn have high energy-related production expenses, so lower energy prices are expected to reduce operating expenses for those crops the most. Lower production costs provide an incentive to plant additional acreage, so plantings of most crops are expected to rise from what they would have been without the decline in energy prices. The exception is soybeans, whose plantings are estimated to fall initially due to relatively small production cost changes and large cross-commodity influences from corn, as they often compete with one another. Nonetheless, the estimated acreage changes due to lower energy prices are small. This chart is based on information found in Effects of Recent Energy Price Reduction on U.S. Agriculture, BIO-04, June 2015.

California's irrigation varies by crop

Monday, April 27, 2015

The California drought continues into 2015—as of April, 44 percent of the State is classified under the exceptional drought rating (meaning that there are exceptional and widespread crop/pasture losses; and shortages of water in reservoirs, streams, and wells creating water emergencies, as determined by U.S. Drought Monitor, produced by the interdepartmental U.S. Government National Integrated Drought Information System [NIDIS]). Farmers in California grow a wide variety of crops using off-farm surface water, groundwater, and—to a limited extent—on-farm surface water. Crops such as rice, cotton, and beans that are most dependent on off-farm surface water are the most vulnerable to reductions in snowpack and reservoir storage due to the ongoing drought. In addition, farmers use a variety of irrigation technologies to apply water. Farms that use the least amount of gravity irrigation, such as orchards/vineyards/tree nuts, vegetables, and berries, are the most able to limit evaporation losses during the drought. In many cases, the most capital intensive crops and irrigation systems, such as almond orchards using drip irrigation systems, have been strategically located over the most reliable water supplies, which is why these crops are more likely to continue irrigating during the drought. The crops that represent the predominant sources of agricultural water use—orchards, rice, hay, and vegetables—consume large amounts of water primarily because they are grown on large amounts of acreage. This chart visualizes information found in California Drought: Farm and Food Impacts in the ERS newsroom, updated April 2015.

Half of U.S. cropland now on farms with 1,200 acres or more

Tuesday, February 17, 2015

The average (mean) number of acres on crop farms has changed little over 3 decades, with a slight increase from 241 acres in 2007 to 251 in 2012. However, the mean misses an important element of changing farm structure; it has remained stable because while the number of mid-size crop farms has declined over several decades, farm numbers at the extremes (large and small) have grown. With only modest changes in total cropland and the total number of crop farms, the size of the average (mean) farm has changed little. However, commercial crop farms, which account for most U.S. cropland, have gotten larger, aided by technologies that allow a single farmer or farm family to farm more acres. The midpoint acreage (at which half of all cropland acres are on farms with more cropland than the midpoint, and half are on farms with less) effectively tracks cropland consolidation over time. The midpoint acreage of total and harvested cropland has increased over the last three decades, from roughly 500-600 acres in 1982 to about 1,200 acres in the most recent census of agriculture data (2012). This chart is extended through 2012 from one found in the ERS report, Farm Size and the Organization of U.S. Crop Farming, ERR-152, August 2013.

Market factors have shifted U.S. crop acreage toward corn and soybeans over the last decade

Friday, May 31, 2013

Over the last decade, the amount of U.S. acreage devoted to corn and soybeans has expanded while area of other field crops, such as wheat, hay, rice, and cotton, has tended to decline. The magnitude of these shifts varies regionally, with the Midwest and Plains States showing the biggest gains in corn acreage, while the Plains, Atlantic and Southern regions all show growth in soybean acreage that combine to offset a decline in soybean acreage in the Midwest. U.S. acreage patterns reflect changes in domestic and international demand. In the U.S., ethanol production has expanded demand for corn, while China’s rapidly growing livestock industry has boosted demand for U.S. soybeans. On the other hand, U.S. wheat faces growing foreign competition, particularly from the Black Sea region, while U.S. cotton and rice are highly dependent on foreign demand but also face stiff competition from foreign suppliers. Improved varieties of corn and soybeans have, at the same time, expanded opportunities to produce these crops in drier and more northern regions traditionally limited to wheat or other grains. This chart is found in the June 2013 Amber Waves article, “Crop Outlook Reflects Near-Term Prices and Longer Term Market Trends.”

Farm sector exposure to drought worsened during the summer of 2012

Thursday, April 4, 2013

As of mid-August 2012, 43 percent of farms in the United States were experiencing severe or greater levels of drought and another 17 percent were facing moderate levels of drought (for a description of severity levels, see A striking aspect of the 2012 drought was how the drought rapidly increased in severity in early July, during a critical time of crop development for corn and other commodities. The chart shows the progression from mid-June to mid-August of severe or greater drought within the agricultural sector. While drought conditions eased some during early September, for most crop production, exposure to drought during June-August determined the drought’s impact on agricultural production. From mid-June to mid-August, the share of farms under severe or greater drought increased from 16 to 43 percent of all farms. Total cropland under severe or greater drought increased from 20 to 57 percent, while total value of crops exposed increased from 16 to 50 percent. As of mid-July, areas with over half of the value of cattle production were already exposed to severe drought; by mid-August, almost two-thirds were exposed. This chart is based on the table found in U.S. Drought 2012: Farm and Food Impacts on the ERS website, updated March 2013.

Brazil is now the world's leading exporter of soybeans and soybean products

Wednesday, December 19, 2012

In recent years, Brazil’s production of soybeans and soybean products have risen sharply as most areas of Brazil have seen rapid increases in area planted to soybeans and rising yields. Relatively high profits for soybean producers are expected to lead to an average increase in planted area of about 2 percent per year over the next decade, with increasing soybean plantings in the Cerrado region and expansion extending into the Legal Amazon region of Brazil. Brazil’s soybeans and soybean product exports have also increased significantly and are projected to continue doing so during the next ten years, making the country the world’s leading exporter of soybeans and soybean products, ahead of the United States and Argentina. In 2011, Brazil accounted for slightly more than 32 percent of world trade in soybeans and soybean products, as income and population growth in China, other Southeast Asia, Latin America, North Africa, and Middle Eastern countries contributed to rising demand for soybean and soybean product imports. This chart is an update of one found in the Brazil topic on the ERS website.

Base acreage and direct payment rates vary by commodity

Monday, November 26, 2012

Direct payments are farm program payments that are based on historical cropping patterns of major commodities, or "base acres," with per-acre rates fixed in legislation and not linked to current production or market prices. Direct payments per acre vary significantly by commodity. In 2008, rice and peanuts received the largest direct payments per acre ($96.25 and $45.85, respectively). Rice base acres were predominant in a few counties along the Gulf Coast and in the Pacific region, while peanut base acres were concentrated in the Southeast. Corn, wheat, and soybeans accounted for more than 80 percent of total base acres in 2008, but received lower direct payments per acre ($24.39 per acre, $15.21 per acre, and $11.54 per acre, respectively). Corn base acres dominated in the Corn Belt, Lake States, the Northeast and Appalachia while wheat base acres were prevalent in the Northern and Southern Plains as well as parts of the Mountain region. This chart is found in the ERS report, Potential Farm-Level Effects of Eliminating Direct Payments, EIB-103, November 2012.

Introduction of direct payments for oilseeds did not impact production decisions

Thursday, November 8, 2012

Direct payments are based on historic acreage and yields of program crops like corn and wheat and are often considered "decoupled" because they do not depend on a farmer's current production decisions. Nonetheless, because direct payments are linked to past production of program crops and because productive areas tend to remain productive over time, areas that currently have higher average yields and more acreage of program crops tend to receive more payments than areas with lower yields and fewer acres. This positive association between direct payments and production of program crops raises doubts about whether direct payments really are decoupled from current production decisions. The 2002 Farm Act authorized direct payments for the first time for oilseed crops, such as soybeans, triggering a sudden shift in direct payments toward areas with higher average production of oilseeds. By studying oilseed producers' response to the shift in payments between 2002 and 2007, ERS researchers found that direct payments had little effect on production decisions This chart appears in "Expansion in Direct Payments Did Not Lead to More Crop Production" in the September 2012 issue of ERS's Amber Waves magazine.

As drought continues, forecast yield for corn is lowered 23 bushels per acre

Friday, August 17, 2012

Based on crop conditions as of August 1st, the National Agricultural Statistical Service forecast U.S. 2012/13 corn yields 22.6 bushels per acre lower at 123.4 bushels, compared with last month's forecast of 146 bushels. As forecast, the 2012/13 corn yield would be the lowest since 1995/96. The yield reduction, combined with a decrease of 1.5 million in expected harvested acres, results in a crop of 10,779 million bushels, which is 2,191 million bushels lower than July's projection and 1,580 million below last season. This forecast would result in the lowest production since 2006/07. Unusually high temperatures and well below average precipitation across much of the Corn Belt in July sharply reduced yield prospects, despite the early planted crop. As of August 5th, only 23 percent of the corn crop was rated in good-to-excellent condition in the 18 major corn-producing States, down 37 percentage points from a year ago. Fifty percent of the crop was in the very poor-to-poor range, compared with 48 percent the previous week and 16 percent at this point last season. This chart comes from Feed Outlook, FDS-12h, August 2012.

Global private-sector research is considerably larger for crop inputs than for livestock

Thursday, August 9, 2012

In recent years, the gross value of global crop production has been about 70 percent higher than the gross value of global livestock production. However, private-sector research expenditures directed at crop production inputs -- crop genetic improvement and biotechnology, crop protection chemicals, farm machinery, and fertilizer -- have been 3.5 to 5.5 times higher than those directed at livestock production inputs -- animal health, animal genetic improvement, and animal nutrition. Furthermore, private-sector expenditures for crop-related research have grown in real terms in the last 5 years, while private sector expenditures for livestock-related research have remained essentially flat. This chart appeared in the June 2012 issue of ERS's Amber Waves magazine.

Ethanol strengthens the link between agriculture and energy markets

Monday, July 30, 2012

Historically, the correlation between agricultural prices and energy prices was weak and primarily reflected the role of energy as an input in agricultural production. However, the growing use of corn to produce energy has strengthened the link between these two markets. A recent study by an ERS economist found that price relationships between the U.S. corn and gasoline markets strengthened significantly after March 2008 and continue to be highly correlated. From March 2008 to March 2011, ethanol supply and demand accounted for about 23 percent of the variation in the price of corn, while corn market conditions accounted for about 27 percent of ethanol's price variation. At the same time, about 16 and 17 percent of gasoline price variation can be attributed to shocks to ethanol and corn markets, respectively. The impacts of corn and ethanol prices on gasoline price volatility are surprisingly large given that ethanol is only a small portion of the overall energy market. This chart appeared in the June 2012 issue of Amber Waves magazine.

Condition of U.S. soybeans worsens as drought continues

Thursday, July 26, 2012

A major part of the Midwest—extending from Kansas to Ohio—has been unusually dry during a formative period for crop development. The worst dryness stretches out from the Ohio River Valley, where June precipitation was less than half of average. Overall, only 40 percent of U.S. soybeans were rated in good-to-excellent condition as of July 8th. This is a sharp deterioration from 60 percent a month earlier and is the lowest percentage for this date since 1988. Given these circumstances, USDA lowered its expected 2012 soybean yield to 40.5 bushels per acre from 43.9 bushels last month. Although the harvested acreage estimate for soybeans was raised to 75.3 million acres, a lower expected yield reduces the 2012 production forecast this month by 155 million bushels to 3.05 billion. This chart is found in the July 2012 Oil Crops Outlook, OCS-12g.

Farm sector exposure to the 2012 drought increases from June to July

Monday, July 23, 2012

The 2012 drought in the U.S. is more extensive than any drought since the 1950's. A striking aspect of the drought is how rapidly it has increased in severity in early July, which is a critical time for crop development. This chart shows the growth in severe or greater drought within the agricultural sector between mid-June and mid-July. The share of farms under severe or greater drought increased from 16 percent of all farms to 33 percent. Total cropland under severe or greater drought increased from 17 percent to 39 percent, while the total value of crops and the total value of cattle exposed increased from 16 to 31 percent and 16 to 44 percent, respectively. For more information on the drought, visit U.S. Drought 2012-13: Farm and Food Impacts information page in the ERS Newsroom.

Early corn planting may result in harvesting prior to the start of the 2012/13 marketing year

Thursday, July 19, 2012

With relatively mild weather this past winter across much of the United States, prospects were favorable for the 2012 U.S. corn crop to be planted early this year. Planting progress data for corn indicated an advanced pace through much of the spring. This chart shows that corn plantings as of mid- April and late April 2012 were ahead of the typical pace. As a result, pros­pects also may be good for an early harvest, with the possibility of a higher than typical portion of the 2012 crop being harvested before September 1, the start of the official 2012/13 U.S. corn marketing year. An early harvest of new-crop corn has potential implications for non-feed-and-residual usage, ending stocks, and the derivation of feed and residual usage of corn for the old marketing year, as well as for available supplies in the first quarter of the new marketing year. This chart is found in Implications of an Early Corn Crop Harvest for Feed and Residual Use Estimates, FDS-12f-01, July 2012.

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