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  • NAFTA’s Liberalization of Corn Trade Approaches the Finish Line

    Amber Waves, September 03, 2007

    Implementation of NAFTA, signed in 1995 is nearly complete, and all remaining trade barriers among the U.S., Canada, and Mexico will be phased out in 2008. One of the few remaining commodities to be liberalized under NAFTA is corn, which has had a 14-year transition period. But the TRQ has become less restrictive over the period, so the final phase-out is not expected to generate much additional impact.

  • U.S. Farmers Increase Adoption of Genetically Engineered Crops and Favor Multiple Traits - Amber Waves September 2007

    Amber Waves, September 03, 2007

    New 2007 USDA data show that adoption by U.S. farmers of genetically engineered (GE) soybeans, cotton, and corn with herbicide tolerance and/or insect resistance (Bt) traits has been rapid over the 12-year period following commercial introduction.

  • Impact of Rising Natural Gas Prices on U.S. Ammonia Supply

    WRS-0702, August 06, 2007

    The volatile and upward trend in U.S. natural gas prices from 2000-06 has led to a 17-percent decline in the Nation's annual aggregate supply of ammonia. During the period, U.S. ammonia production declined 44 percent, while U.S. ammonia imports increased 115 percent. Also, the share of U.S.-produced ammonia in the U.S. aggregate supply of ammonia dropped from 80 to 55 percent, while the share from imports increased from 15 percent to 42 percent. Meanwhile, ammonia prices paid by farmers increased from $227 per ton in 2000 to $521 per ton in 2006, an increase of 130 percent. Natural gas is the main input used to produce ammonia. Additional increases in U.S. natural gas prices could lead to a further decline in domestic ammonia production and an even greater rise in ammonia imports.

  • Ethanol Expansion in the United States: How Will the Agricultural Sector Adjust?

    FDS-07D-01, May 18, 2007

    A large expansion in ethanol production is underway in the United States. Cellulosic sources of feedstocks for ethanol production hold some promise for the future, but the primary feedstock in the United States currently is corn. Market adjustments to this increased demand extend well beyond the corn sector to supply and demand for other crops, such as soybeans and cotton, as well as to U.S. livestock industries. USDA's long-term projections, augmented by farmers' planting intentions for 2007, are used to illustrate anticipated changes in the agricultural sector.

  • Feed Grains Backgrounder

    FDS-07C01, March 30, 2007

    The U.S. feed grain sector, largest of the major U.S. field crops, faces unprecedented demand conditions. The size and speed of the expanding use of corn by the ethanol industry is raising widespread issues throughout U.S. agriculture. Debate is ongoing over the use of grain for fuel instead of for food or feed and the adequacy of future grain supplies. Increased productivity (yield) and additional area from land planted to competing crops, land enrolled in conservation programs, or idled land is expected to provide an increased supply of feed grains. The outlook is for higher feed grain prices, in part, as a result of renewable energy policies and high energy prices, with feed grain prices rising above farm program support levels. During the ongoing farm policy debate, the U.S. feed grain sector faces uncertainty about the future level and type of government support.

  • NAFTA at 13: Implementation Nears Completion

    WRS-0701, March 29, 2007

    Implementation of the North American Free Trade Agreement (NAFTA) is drawing to a close. In 2008, the last of NAFTA's transitional restrictions governing U.S.-Mexico and Canada-Mexico agricultural trade will be removed, concluding a 14-year project in which the member countries systematically dismantled numerous barriers to regional agricultural trade. During the implementation period, the agricultural sectors of Canada, Mexico, and the United States have become much more integrated. Agricultural trade within the free-trade area has grown dramatically, and Canadian and Mexican industries that rely on U.S. agricultural inputs have expanded. U.S. feedstuffs have facilitated a marked increase in Mexican meat production and consumption, and the importance of Canadian and Mexican produce to U.S. fruit and vegetable consumption is growing.

  • The Changing Face of the U.S. Grain System

    ERR-35, February 28, 2007

    Specialty grains coming onto the market (e.g., fiber-enriched wheat) are requiring adjustments in the marketing system, including information documentation and management, in order to preserve their added value or prevent accidental commingling with standard grains.

  • Valuing Counter-Cyclical Payments: Implications for Producer Risk Management and Program Administration

    ERR-39, February 22, 2007

    Counter-cyclical payments supplement incomes of eligible producers enrolled in commodity programs. ERS developed a computer program that improved upon USDA's method of estimating payment rates and that producers and forecasters can use.

  • USDA Agricultural Projections to 2016

    OCE-2007-1, February 14, 2007

    This report provides longrun (10-year) projections for the agricultural sector through 2016. Projections cover agricultural commodities, agricultural trade, and aggregate indicators of the sector, such as farm income and food prices.

  • Ethanol Reshapes the Corn Market

    Amber Waves, April 01, 2006

    This article examines the possible market impacts of the ongoing expansion of the U.S. ethanol sector. To meet the sector's growing demand for corn, some of the corn produced in the United States is likely to be diverted from exports. In the future, corn may cease to be the main feedstock for U.S. ethanol production if cellulosic biomass is successfully developed as an alternative.

  • Ethyl Alcohol Becomes a Global Commodity

    Amber Waves, April 01, 2005

    Use of corn to produce ethyl alcohol has increased rapidly in the U.S., mainly because when added to gasoline, it can cut harmful air emissions. But ethyl alcohol can be produced from any commodity containing starch or sugar, including sorghum, barley, grasses, and even paper. Rising U.S. demand has led to an increase in imports of ethyl alcohol. In 2003 the largest supplier was Brazil, which produces ethyl alcohol from sugar.

  • Forecasting the Counter-Cyclical Payment Rate for U.S. Corn: An Application of the Futures Price Forecasting Model

    FDS-05A-01, January 28, 2005

    The 2002 Farm Act provides for counter-cyclical payments when prices are below specified levels. Producers and policy analysts have a need to forecast counter-cyclical payments to plan for these program benefits/outlays. A futures price forecasting model provides forecasts of the counter-cyclical payment rate for corn in conjunction with forecasts for the season-average price received.

  • Mexico's Corn Industries and U.S.-Mexico Corn Trade

    Amber Waves, June 01, 2004

    U.S. corn exports to Mexico have tripled since the signing of NAFTA in 1994. To forecast future trade, one must understand that there are two distinct corn markets in Mexico: yellow corn for livestock feed and white corn for human consumption, used mainly in tortilla productions. Further growth of Mexico's market for yellow corn is virtually assured by growing consumer demand for meat and the likely expansion of Mexico's livestock sector. The future of the white corn market is more difficult to assess.

  • U.S.-Mexico Corn Trade During the NAFTA Era: New Twists to an Old Story

    FDS-04D-01, May 01, 2004

    Although the growing U.S.-Mexico corn trade has changed significantly since the implementation of the North American Free Trade Agreement in 1994, it retains many of its pre-trade-liberalization characteristics. The majority of U.S. corn exports to Mexico still consists of yellow corn, which is primarily used as an ingredient in animal feed. From 1998 to 2002, the United States also exported to Mexico substantial quantities of white corn, which is used to make tortillas, but these exports have since diminished, possibly due to Mexican Government support for domestically produced white corn. The number of agricultural producers in Mexico declined substantially during the 1990s, but the Mexican corn sector still features a large number of small-scale producers, whose efforts are also supplemented by government payments. Broader access to U.S. yellow corn is fostering the expansion of hog and poultry production in Mexico, while Mexico's large flour companies are increasing their role in tortilla production, not only in Mexico but also in the United States.

  • India's Poultry Sector: Development and Prospects

    WRS-0403, February 02, 2004

    Poultry meat is the fastest growing component of global meat demand, and India, the world's second largest developing country, is experiencing rapid growth in its poultry sector. In India, poultry sector growth is being driven by rising incomes and a rapidly expanding middle class, together with the emergence of vertically integrated poultry producers that have reduced consumer prices by lowering production and marketing costs. Integrated production, market transition from live birds to chilled and frozen products, and policies that ensure supplies of competitively priced domestic or imported corn and soybeans are keys to future poultry industry growth in India.

  • China's Corn Exports: Business as Usual, Despite WTO Accession

    FDS-1202-01, December 12, 2002

    A decline in China's corn exports was expected to be a main effect of that country's accession to the World Trade Organization in December 2001. Instead, China's corn exports continued at a near-record pace during 2002. China has canceled direct export subsidies, but other policies have replaced them, although details of these new measures are not clear. This year's rising international prices have given an added boost to China's corn export program and delayed an expected increase in China's corn imports. In the long run, government policies that encourage exports may prove too costly to continue, and restructuring of China's corn and livestock sectors may reduce the flow of exports.

  • Price Determination for Corn and Wheat: The Role of Market Factors and Government Programs

    TB-1878, August 02, 1999

    Annual models for U.S. farm prices for corn and wheat are developed based on market factors as well as government agricultural commodity programs. The pricing relationships utilize a stocks-to-use modeling framework to capture the effects of market supply and demand factors on price determination. This formulation is augmented by factors that represent the changing role of agricultural policies, particularly government price support and stockholding programs. For wheat, international market effects as well as wheat feed use and related cross-commodity pricing considerations also are included. Model properties and model performance measures are presented. Additionally, recent price-forecasting applications of the models are discussed. The relatively simple structure of the estimated price models and their small data requirements lend themselves to use in price-forecasting applications in conjunction with market analysis of supply and demand conditions. In particular, the models have been implemented into USDA's short-term market analysis and long-term baseline projections. In these applications, the models provide an analytical framework to forecast prices and a vehicle for making consistency checks among the Department's supply, demand, and price forecasts.

  • Estimating the Net Energy Balance of Corn Ethanol

    AER-721, July 01, 1995

    Studies conducted since the late 1970's have estimated the net energy value of corn ethanol. However, variations in data and assumptions used among the studies have resulted in a wide range of estimates. This study identifies the factors causing this wide variation and develops a more consistent estimate. We conclude that the net energy value of corn ethanol has become positive in recent years due to technological advances in ethanol conversion and increased efficiency in farm production. We show that corn ethanol is energy efficient as indicated by an energy ratio of 1.24.

  • Market-Oriented Agriculture: The Declining Role of Government Commodity Programs in Agricultural Production Decisions

    AER-671, June 01, 1993

    The portion of U.S. agricultural production covered by government income support payments has declined over the span of the last two 5-year farm acts. Consequently, nongovernmental supply and demand factors (market forces) are becoming more important in influencing farmers' production decisions. This report illustrates how agricultural supply has moved toward greater reliance on market forces (market orientation) by examining the declining role of government commodity programs in production decisions for corn, wheat, rice, and upland cotton. Payment coverage ratios, which measure the percentage of expected production covered by deficiency payments (income support payments made by the Federal Government to producers of certain agricultural commodities), have decreased. Thus, the role of government commodity programs in influencing farmers' production decisions at both the individual farm and national (aggregate) levels has declined. As a result, the share of US. cropland on which planting decisions are made based on market signals has increased, a trend toward market orientation that began with the 1985 farm act and continued with 1990 farm legislation.

  • Corn: Background for 1990 Farm Legislation

    AGES-8947, September 01, 1989

    This report address considerations in the 1990 farm bill debate for corn, including market conditions, policy proposals, trade agreements, and the interactions between policy and markets for selected commodities. Corn is the leading U.S. crop, both in volume and in value. In 1987, farmers planted about 65 million acres and harvested 7.1 billion bushels. The farm value of production totaled about $13 billion, about 36 percent of farm receipts from crops. Rising corn yields and market prices strengthened corn farmers' cash flow positions in the late 1970s; however, per bushel real returns above cash expenses declined in recent years. Lower loan rates, the issuance and exchange of generic certificates, and devaluation of the U.S. dollar relative to the mid-1980s all contributed to the growth of U.S. corn exports in recent years. Government program costs for corn averaged more than $4.6 billion a year during the 1984-88 crop years, or 30 percent of the 15.7 billion corn crop value. Higher feed grain prices stemming from the programs comprise an additional cost to the livestock sector and consumers.