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Supply Response Under The 1996 Farm Act And Implications For The U.S. Field Crops Sector

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  • Torre Ugarte, Daniel de la
  • Sanford, Scott
  • Skinner, Robert A.
  • Westcott, Paul C.
  • Lin, William W.

Abstract

The 1996 Farm Act gives farmers almost complete planting flexibility, allowing producers to respond to price changes to a greater extent than they had under previous legislation. This study measures supply responsiveness for major field crops to changes in their own prices and in prices for competing crops and indicates significant increases in responsiveness. Relative to 1986-90, the percentage increases in the responsiveness of U.S. plantings of major field crops to a 1-percent change in their own prices are wheat (1.2 percent), corn (41.6 percent), soybeans (13.5 percent), and cotton (7.9 percent). In percentage terms, the increases in the responsiveness generally become greater with respect to competing crops' price changes. The 1996 legislation has the least effect on U.S. wheat acreage, whereas the law may lead to an average increase of 2 million acres during 1996-2005 in soybean acreage, a decline of 1-2 million acres in corn acreage, and an increase of 0.7 million acres in cotton acreage. Overall, the effect of the farm legislation on regional production patterns of major field crops appears to be modest. Corn acreage expansion in the Central and Northern Plains, a long-term trend in this important wheat production region, will slow under the 1996 legislation, while soybean acreage expansion in this region will accelerate. The authors used the Policy Analysis System-Economic Research Service (POLYSYS-ERS) model that was jointly developed by USDA's Economic Research Service and the University of Tennessee's Agricultural Policy Analysis Center to estimate the effects of the 1996 legislation.

Suggested Citation

  • Torre Ugarte, Daniel de la & Sanford, Scott & Skinner, Robert A. & Westcott, Paul C. & Lin, William W., 2000. "Supply Response Under The 1996 Farm Act And Implications For The U.S. Field Crops Sector," Technical Bulletins 33568, United States Department of Agriculture, Economic Research Service.
  • Handle: RePEc:ags:uerstb:33568
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    References listed on IDEAS

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    Cited by:

    1. Bhaskar, Arathi & Beghin, John C., 2008. "Decoupled farm payments and the Role of Base Updating under uncertainty," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6339, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Kanlaya J. Barr & Bruce A. Babcock & Miguel A. Carriquiry & Andre M. Nassar & Leila Harfuch, 2011. "Agricultural Land Elasticities in the United States and Brazil," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(3), pages 449-462.
    3. Westcott, Paul C. & Young, C. Edwin & Price, J. Michael, 2002. "The 2002 Farm Act: Provisions And Implications For Commodity Markets," Agricultural Information Bulletins 33745, United States Department of Agriculture, Economic Research Service.
    4. Fabienne Femenia & Alexandre Gohin & Alain Carpentier, 2010. "The Decoupling of Farm Programs: Revisiting the Wealth Effect," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 836-848.
    5. Liang, Yan & Miller, J. Corey & Harri, Ardian & Coble, Keith H., 2011. "Crop Supply Response under Risk: Impacts of Emerging Issues on Southeastern U.S. Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(02), pages 181-194, May.
    6. Johansson, Robert C. & Livingston, Michael J. & Westra, John V. & Guidry, Kurt M., 2006. "Simulating the U.S. Impacts of Alternative Asian Soybean Rust Treatment Regimes," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 1), pages 1-12, April.
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    8. Arathi Bhaskar & John C. Beghin, 2010. "Decoupled Farm Payments and the Role of Base Acreage and Yield Updating Under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 849-858.
    9. Hikaru Hanawa Peterson & William G. Tomek, 2005. "How much of commodity price behavior can a rational expectations storage model explain?," Agricultural Economics, International Association of Agricultural Economists, vol. 33(3), pages 289-303, November.
    10. Bucholtz, Shawn & Roberts, Michael J., 2002. "Slippage Or Spurious Correlation: An Analysis Of The Conservation Reserve Program," 2002 Annual meeting, July 28-31, Long Beach, CA 19714, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Zahniser, Steven & Hoppe, Robert A. & Johnson, James D. & Banker, David E., 2002. "Structural Change In An Era Of Increased Openness: A Background Paper On The Structure Of U.S. Agriculture," Structural Change as a Source of Trade Disputes Under NAFTA; Proceedings of the 7th Agricultural and Food Policy Systems Information Workshop - 2001 16872, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    12. Price, Gregory K. & Lin, William W. & Falck-Zepeda, Jose Benjamin & Fernandez-Cornejo, Jorge, 2003. "Size And Distribution Of Market Benefits From Adopting Biotech Crops," Technical Bulletins 33562, United States Department of Agriculture, Economic Research Service.
    13. Lee, Donna J. & Kim, C.S. & Schaible, Glenn D., 2006. "Estimating the Cost of Invasive Species on U.S. Agriculture: The U.S. Soybean Market," 2006 Annual meeting, July 23-26, Long Beach, CA 21113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    18. Richards, Peter D., 2012. "Exchange Rates, Soybean Supply Response, and Deforestation in South America," Graduate Research Masters Degree Plan B Papers 138606, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    19. Kim, C.S. & Schaible, Glenn D. & Garrett, Lynn & Lubowski, Ruben N. & Lee, Donna J., 2006. "Biological Invasions: The Case of Soybean Aphid Infestation," 2006 Annual meeting, July 23-26, Long Beach, CA 21163, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Bento, Antonio M. & Klotz, Richard & Landry, Joel R., 2011. "Are there Carbon Savings from US Biofuel Policies? Accounting for Leakage in Land and Fuel Markets," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 104008, Agricultural and Applied Economics Association.
    21. Lin, William W. & Lucier, Gary, 2008. "Effects of Marketing Loans on U.S. Dry Peas and Lentils: Supply Response and World Trade," Economic Research Report 56454, United States Department of Agriculture, Economic Research Service.
    22. Langholtz, Matthew & Graham, Robin & Eaton, Laurence & Perlack, Robert & Hellwinkel, Chad & De La Torre Ugarte, Daniel G., 2012. "Price projections of feedstocks for biofuels and biopower in the U.S," Energy Policy, Elsevier, vol. 41(C), pages 484-493.
    23. Fumasi, Roland J., 2005. "Estimating The Impacts Of Differing Price-Risk Management Strategies On The Net Income Of Salinas Valley Lettuce Producers: A Stochastic Simulation Approach," 2005 Annual Meeting, July 6-8, 2005, San Francisco, California 36310, Western Agricultural Economics Association.
    24. Langholtz, Matthew H. & Coleman, Andre M. & Eaton, Laurence M. & Wigmosta, Mark S. & Hellwinckel, Chad M. & Brandt, Craig C., 2016. "Potential land competition between open-pond microalgae production and terrestrial dedicated feedstock supply systems in the U.S," Renewable Energy, Elsevier, vol. 93(C), pages 201-214.
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