This map shows us where the commodity crop grains of oats, popcorn, rice, rye, and wheat are grown here in the U.S. It was compiled using data obtained in the most recent USDA Census of Agriculture.
In July of 2014, The International Wheat Genome Sequencing Consortium (IWGSC) published in the international journal Science, a draft sequence of the bread wheat genome. This provides new insight into the structure, organization, and evolution of the large, complex genome of the world’s most widely grown cereal crop.
According to the journal Science, “The researchers estimate that wheat has about 124,000 genes and that its genome is 40 times larger than rice and seven times larger than corn, both of whose genomes have been deciphered. The wheat genome also is more than five times larger than the human genome, the researchers noted.”
This genome is so complex that previously it was thought impossible to sequence.
Though constantly in flux, the USDA’s projections for the four largest commodities are all trending down this year. As a consequence, farmland prices and machinery sales are also impacted.
Some expect that this year’s corn crop may reach 14.5 billion bushels and yield around 173 bushels an acre. Last year, we had a record corn crop with 13.9 billion bushels.
The expected soybean crop in the U.S. is for 3.8 billion bushels with a yield of 46 bushels an acre. The previous soybean record was 3.4 billion bushels in 2009.
In addition, China, a largest consumer of DDG product, has stopped buying DDG which may contain GM traits they have not approved, causing a huge recent price drop in this niche corn export market product.
The oversupply and lower prices of corn and soybeans also makes it very doubtful that biofuels mandates (and subsidies) will be reduced by the EPA, since lobbyists have a strong foothold around those regions of D.C.
From the USDA…
Current USDA forecasts show declines in U.S. average farm prices for major U.S. field crops—corn, soybeans, wheat, and cotton—of 4 to 19 percent in 2014/15. For corn, soybeans, and wheat, this would be the second consecutive year of declining prices. Soybean prices are forecast to decline the most in 2014/15, based on an expected record U.S. crop, combined with ample supplies from Brazil and Argentina.
U.S. corn prices are forecast to fall 10 percent in 2014/15, after a 35-percent decline in 2013/14, also based on a large U.S. corn crop forecast and competition from other exporters like Brazil, Argentina, and Ukraine. U.S. wheat prices are forecast to decline about 4 percent in 2014/15, despite the forecast for smaller U.S. supplies, due to adequate supplies from both traditional and Black Sea wheat exporters.
Although smaller cotton crops are forecast for China and India—the top two global producers—a larger U.S. crop is expected to lead to a fifth consecutive year of rising global cotton stocks and a 12-percent drop in U.S. prices in 2014/15.
For this post, I’ve gathered together some recent and especially noteworthy USDA charts with their accompanying descriptions. The subjects vary widely, so there should be something of interest for everyone.
1. Conservation Program Funding in the New Farm Bill
While the new CRP acreage cap cuts maximum enrollment by 25 percent, the impact on program enrollment and related environmental benefits may be relatively modest. CRP acreage has been declining since 2007, falling from 36.8 million acres to 25.6 million—30 percent—by December 2013. Environmental benefits, however, may not be diminishing as quickly as the drop in enrolled acreage might suggest. CRP has shifted rapidly from enrolling whole fields or farms (through general signup) to funding high-priority, partial-field practices, including riparian buffers, field-edge filter strips, grassed waterways, and wetland restoration (through continuous signup). On a per-acre basis, these practices are believed to provide greater environmental benefits than whole-field enrollments while taking less land out of crop production. Because partial-field practices are more expensive, however, CRP annual payments have fallen by only 10 percent since 2007. At the end of 2013, the average annual payment for partial-field practices was $103 per acre, versus only $50 per acre for whole fields.
2. Global Demand and Rising Costs to Affect Prices of Corn, Wheat and Soybeans
Although market responses to high crop prices in recent years, both in the United States and in other countries, are projected to lower U.S. crop prices over the next couple of years, in the longer term prices for corn, wheat, and soybeans are projected to remain high relative to historical prices. The continuing influence of several long-term factors—including global growth in population and per capita income, a low-valued U.S. dollar, increasing costs for crude petroleum, and rising biofuel production—underlies these price projections. Corn prices are projected to decline through 2015/16, but then begin increasing in 2016/17 as ending stocks tighten due to growth in feed use, exports, and demand for corn by ethanol producers. Soybean prices are expected to initially fall from recent highs but then rise moderately after 2015/16, reflecting strengthening demand for soybeans and soybean products. Wheat prices are projected to fall through 2016/17, in response to rising wheat stocks and falling corn prices, but strengthen in the longer term due to export growth, moderate gains in food use, and declining stocks.
3. Agriculture’s role in climate change: greenhouse gas emissions and carbon sequestration
The greenhouse gas (GHG) profile of the agricultural and forestry sector differs substantially from the profile of other sectors. Agriculture is an emission-intensive sector; it accounted for less than 1 percent of U.S. production (in real gross value-added terms), but emitted 10.4 percent of U.S. GHGs in 2012. Energy-related CO2 emission sources—which dominate GHG emissions in most other production sectors—are dwarfed in agriculture by unique crop and livestock emissions of nitrous oxide and methane. Crop and pasture soil management are the activities that generate the most emissions, due largely to the use of nitrogen-based fertilizers and other nutrients. The next largest sources are enteric fermentation (digestion in ruminant livestock) and manure management. Agriculture and forestry are unique in providing opportunities for withdrawing carbon from the atmosphere through biological sequestration in soil and biomass carbon sinks. The carbon sinks, which are largely due to land use change from agricultural to forest land (afforestation) and forest management on continuing forest, offset 13.5 percent of total U.S. GHG emissions in 2012. ERS is currently involved in research on the economic incentives farm operators have, or could be provided with, to take steps to both mitigate GHG emissions and adapt to climate change.
4. U.S. Wheat Export Market Share Projected to Continue to Fall
Although global and U.S. wheat exports are projected to rise over the next decade, the U.S. share of the world market is projected to continue to decline because of competition from other exporters. Global demand for wheat is expected to expand, driven primarily by income and population growth in developing country markets, including Sub-Saharan Africa, Egypt, Pakistan, Algeria, Indonesia, the Philippines, and Brazil. The number of major exporting countries has, however, expanded in recent years from the traditional wheat exporters–the United States, Argentina, Australia, Canada, and the European Union–to include Ukraine, Russia, and Kazakhstan. Although variable, the wheat export volume of those three Black Sea exporters together now rivals that of the United States. Low production costs and new investment in the agricultural sectors of the Black Sea region have enabled their world market share to climb, despite the region’s highly variable weather. Competition from the Black Sea region, as well as from traditional exporters, has resulted in a decline in the U.S. share of expanding world exports from an average of about 39 percent in the first half of the 1980s to an average of about 20 percent over the last 5 years.
5. Food loss in U.S. grocery stores, restaurants, and homes valued at $162 billion in 2010
In the United States, 31 percent—or 133 billion pounds—of the 430 billion pounds of the available food supply at the retail and consumer levels in 2010 went uneaten. The estimated value of this food loss was $161.6 billion, using 2010 retail prices. Food loss by retailers, foodservice establishments, and consumers occurs for a variety of reasons—a refrigerator malfunctions and food spoils, a store or restaurant overstocks holiday foods that do not get purchased, or consumers cook more than they need and choose to throw the extra food away. Food loss also includes cooking loss and natural shrinkage, such as when leafy greens wilt. In 2010, the top three food groups in terms of share of total value of food loss were meat, poultry, and fish ($48 billion); vegetables ($30 billion); and dairy products ($27 billion). Meat, poultry, and fish’s 30-percent share in value terms is higher than its 12-percent share when measured on a weight basis due to these foods’ higher per pound cost relative to many other foods.
6. Dynamic growth projected for world poultry trade
Poultry meat imports by major importers are projected to increase by 2.5 million tons (34 percent) between 2013 and 2023, led by rising import demand in North Africa and the Middle East (NAME), Mexico, and Sub-Saharan Africa (SSA). Similar factors are expected to drive import growth in each region. Rising incomes and the low cost of poultry meat relative to other meats are projected to favor growth in poultry meat consumption among the low- and middle-income consumers in each region. At the same time, limited local supplies of feed grains and feed protein in all three regions are expected to continue to limit the expansion of indigenous poultry meat production. The NAME region currently accounts for 47 percent of imports by the major poultry importers, and is projected to account for nearly 80 percent of the increase in their poultry meat imports between 2014 and 2023. In contrast, little import growth is projected for Russia, where policies continue to deter imports in favor of domestic producers, and for China, where domestic production is projected to keep pace with demand.
7. World population growth is projected to continue slowing over the next decade, rising about 1.0 percent per year for the projection period compared to an annual rate of 1.2 percent in 2001-10.
• Developed countries have very low projected rates of population growth, at 0.4 percent over 2013-23. The projected annual average population growth rate for the United States of about 0.8 percent is the highest among developed countries, in part reflecting immigration.
• Population growth rates in developing economies are projected to be sharply lower than rates in 1990-2010, but remain above those in the rest of the world. As a result, the share of global population accounted for by developing countries increases to 82 percent by 2023, compared to 79 percent in 2000.
• China and India together accounted for 36 percent of the world’s population in 2013. China’s population growth rate slows from 1.0 percent per year in 1991-2000 to less than 0.4 percent in 2013-23, with its share of global population falling. The population growth rate in India is projected to decline from 1.8 percent to 1.2 percent per year over the same period, increasing its share of world population.
• Brazil’s population growth rate falls from 1.6 percent per year in 1991-2000 to 1.0 percent annually in 2013-23. The population growth rate in Indonesia is projected to decline from 1.7 percent to 0.9 percent per year over the same period. Although Sub-Saharan Africa’s population growth rate declines from 2.6 percent to 2.4 percent per year between the same periods, this region continues to have the highest population growth rate of any region in the world and its population decline is modest relative to other regions of the world.
• Countries with declining populations include Greece, Germany, most central European countries, Russia, Ukraine, and Japan.
8. Global trade: Wheat, coarse grains, and soybeans and soybean products
Global trade in soybeans and soybean products has risen rapidly since the early 1990s, and has surpassed global trade in wheat and total coarse grains (corn, barley, sorghum, rye, oats, millet, and mixed grains). Continued strong growth in global demand for vegetable oil and protein meal, particularly in China and other Asian countries, is expected to maintain soybean and soybean- products trade well above either wheat or coarse grain trade throughout the next decade.
• Globally, the total area planted to grains, oilseeds, and cotton is projected to expand an average of 0.5 percent per year. Area expands more rapidly in countries with a reserve of available land and policies that allow farmers to respond to prices. Such countries include Russia, Ukraine, Brazil, Argentina, some other countries in South America, and some countries in Sub-Saharan Africa. On the other hand, in many countries area expansion is less than half that rate, and cropped area even contracts in some countries. Over half of the projected growth in global production of grains, oilseeds, and cotton is derived from rising yields, even though growth in crop yields is projected to continue slowing.
• The market impact of slower yield growth is partially offset by slower growth in world population. Nonetheless, population growth is a significant factor driving overall growth in demand for agricultural products. Additionally, rising per capita income in most countries supplements population gains in the demand for vegetable oils, meats, horticulture, dairy products, and grains. World per capita use of vegetable oils is projected to rise 6.5 percent over the next 10 years, compared with 15 percent for meats and 7 percent for total coarse grains. In contrast, per capita wheat use does not rise, and per capita rice consumption drops 1 percent.
• Increasing demand for grains, oilseeds, and other crops provide incentives to expand the global area under cultivation and the intensity of cropping the land. The largest projected increases in the area planted to field crops are in the former Soviet Union (FSU) and Sub- Saharan Africa. Large expansions are also projected for Brazil, Indonesia, and Argentina, including some uncultivated land brought into soybean and palm oil production in response to increased world demand for vegetable oils.
I have been a fan of the fine job that Daryll E. Ray and Harwood D. Schaffer do in analysis and writing over at the Agricultural Policy Analysis Center, University of Tennessee, in Knoxville. This fall they have been writing about the changing role that U.S. agricultural exports are playing in the increasingly competitive global market. Below, I’ve republished their entire writing about corn, followed by links to their articles about the export situations for soybeans, wheat, cotton, and rice.
Corn exports: A case of unrealized expectations and farm policies that did not deliver
Corn is, without a doubt, the most important crop grown by US farmers and yet for the 2012 crop year US corn exports are projected to be a paltry 715 million bushels, the lowest level since 1970. In addition, for the first time since 1970, wheat exports exceeded corn exports.
The short explanation for this situation lays blame on a severe drought in the major corn production areas in the US. The longer explanation is a bit more complicated than that. The drought is just part of a larger story that has played out over the last half-century.
In 1960, US corn production was just under 4 billion bushels, nearly the same as non-US corn production (all years are harmonized to a standard crop year that that begins in what closely corresponds to the US fall harvest in the named year and ends at the beginning of the next crop year). By 2010, US corn production had tripled to 12.5 billion bushels before falling to 10.8 billion bushels in 2012. During that same period, non-US corn production increased to 20.3 billion bushels.
While both US and non-US yields nearly tripled between 1960 and 2010, US harvested acres increased by 14 percent. At the same time, non-US corn harvested acres increased by 79 percent, accounting for the lion’s share of the gain in production, relative to the US.
World corn exports as a percent of domestic consumption was 7.2 percent in 1960. By 1975 world exports had jumped to over 16 percent of domestic consumption and remained above that level until 1982 when it fell to 14 percent. In the years since 1982, corn exports relative to domestic consumption have remained below 16 percent, falling to 10.7 percent in 2012.
At 275 million bushels in 1960, US exports were an almost half of world corn exports. In 1972 US corn exports jumped to 77.9 percent of world corn exports and remained above 70 percent for sixteen of the next twenty-three years. In five of those years, the US share of world corn exports exceeded 80 percent, including 1995. With the drought in 2012, it was the non-US exports that stood at 80 percent, a level unseen in the preceding 52 years.
The 1970s was a time of unprecedented growth in US corn exports. Growth continued into in the early 1980s, but fell sharply in the mid-1980s. While the US share of world corn exports was relatively high off-and-on over part of the period after the mid-1980s, there has been no upward trend in US corn exports during the last 28 years.
Non-US corn exports on the other hand have expanded greatly, reaching 1 billion bushels in 1999 and hitting 3 billion bushels in both 2011 and 2012. In 2012, for the first time, the US was not the world’s largest exporter of corn, falling to third behind Brazil and Argentina. As recently as 1998, Brazil exported just 315 thousand bushels, compared to 965 million bushels in 2012.
Clearly, corn production and exports are subject to long-term trends. For production, the trend has been decidedly upward in the US and elsewhere in the world. Increases in technology and the rate of adoption of new technologies have the potential to keep this trend going.
So what does all this tell us?
Beginning with the 1985 Farm Bill, the US has pursued policies thought to be consistent with getting grain exports—corn exports specifically—back on an upward trend similar to the 1970s. Those efforts have been doomed to failure in large measure by the steady increase in corn acreage in the rest of the world. Furthermore, additional future increases in worldwide corn acreages will be coming from places like Brazil, not the US. Also, the rate of increase in non-US corn yields may well accelerate in the future.
The US will continue to be an important player in the corn export market. But declarations and farm policies predicated on the expectation that corn exports will be the primary driver for a prosperous US agriculture are no more likely to deliver in the future than they have over the last nearly three decades.
In contrast to corn where US exports have generally been flat since hitting a peak between 1979 and 1981, US soybean exports have generally trended upward over time. The US exported 5.8 MMT (million metric tons) of soybeans in 1964, passed the 10 MMT threshold in 1969, the 20 MMT threshold in 1978 falling below that level in 7 of the next 27 years before passing the 30 MMT level in 2006 and the 40 MMT level three years later in 2009. With a drought reduced crop, 2012 US soybean exports were 35.8 MMT….
US wheat production stood at 1.4 billion bushels in 1960, dropping to 1.1 billion bushels before taking off as the export boom of the 1970s began to surge. By 1981 and 1982, US wheat production had reached 2.8 billion bushels, double its level just 20 years earlier. And farmers and politicians alike thought that ever-expanding exports had solved the “farm problem.” Since then US wheat production has leveled off remaining in the 2.0 to 2.5 billion-bushel range as producers sought more profitable alternatives….
During the last half century, cotton production has had its share of ups and downs; though this year’s cotton production is expected to be near what it was fifty-plus years ago. Cotton demand has also been variable, but what is most striking is the shift in where the cotton is utilized, that is, processed. Traditionally domestic demand in the form of purchases by US cotton mills dominated US cotton demand, but in recent years export demand has become as dominate as domestic demand used to be….
US production and consumption of rice have increased markedly over the last half-century, but compared to Asian countries, the US plays a bit-role in world rice production. Most of the rice consumed in the US is domestically grown, though less now than years ago….