An Economic Analysis of Corn-based Ethanol Production

A global multi-commodity simulation model was developed to estimate the impact of changes in ethanol production on the U.S. corn industry. Increased ethanol production under the Energy Acts of 2005 and 2007 resulted in a significant increase in the price of corn. However, for corn-based ethanol production, the break-even price of corn is approximately $4.52 per bushel with a federal subsidy of$0.51 per gallon of pure ethanol and $2.50 gasoline. With a corn price of$4.52, the economically desirable ethanol production is approximately 11 billion gallons. In order to produce 15 billion gallons of corn-based ethanol and to maintain the price of corn at $4.52 per bushel, supply of corn in the U.S. should be increased substantially through increases in corn yield rather than increases in corn acres. The increased price of corn leads to major structural changes in the corn industry in the United States as well as other corn producing and consuming countries. Corn production would increase in response to higher price levels, corn used for livestock feed may decrease, and U.S. exports decrease due mainly to a surge in corn used for ethanol production. This decrease in U.S. exports should be met by additional production in other countries. The increased price of corn also leads to increases in the prices of soybeans, wheat, high fructose corn syrup (HFCS), and agricultural inputs, such as land value and cash rent, fertilizer and chemicals, and farm equipment. In addition, the current price of corn has resulted in an increase in the production cost of livestock. The increase in prices of agricultural commodities and inputs would cause increases in retail prices of food in the U.S.ethanol, price impacts, supply, demand, econometric simulation, HFCS, Resource /Energy Economics and Policy,

2005 OUTLOOK OF THE U.S. AND WORLD SUGAR MARKETS, 2004-2013

This report evaluates the U.S. and world sugar markets for 2004-2013 using the Global Sugar Policy Simulation Model. This analysis is based on assumptions about general economic conditions, agricultural policies, population growth, weather conditions, and technological changes. Both the U.S. and world sugar economies are predicted to improve slightly over the next nine years after the current over-supply is reduced. World demand for sugar is expected to grow faster than world supply, resulting in Caribbean sugar prices gradually increasing from 8.40 cents/lb in 2004 to 8.70 cents/lb in 2013. The U.S. wholesale price of sugar is projected to decrease from 26.15 cents/lb in 2004 to 24.89 cents/lb in 2013, if the United States maintains its sugar programs. The CAFTA agreement is expected to increase U.S. imports slightly, but with little impact on U.S. prices. It is projected that Mexico will be able to export 405 thousand metric tons of sugar to the United States by 2013. World trade volumes of sugar are expected to increase throughout the forecast period.Crop Production/Industries,

AN ECONOMIC ANALYSIS OF PRODUCING CARROTS IN THE RED RIVER VALLEY

This report evaluates the U.S. carrot market using a quadratic programming algorithm. North Dakota ships carrots locally and to Minnesota under both the base and 1,000 acre scenarios. North Dakota starts to ship carrots to Illinois as it produces more under other alternative scenarios. This clearly indicates that North Dakota has a comparative advantage in producing carrots over other neighboring states. North Dakota could produce about 8,000 acres of carrots and market them to North Dakota, Minnesota, and Illinois. Additional production of carrots in North Dakota may not affect the national average price of carrots, but local prices may be affected due to regional competition.carrots, quadratic programming, North Dakota, Marketing, Production Economics,

ECONOMIC ANALYSIS OF ALTERNATIVE FARM BILL PROPOSALS

Various farm organizations and political parties are taking sides on whether the FAIR Act needs to be scraped or just modified. This study analyzes three such proposals: the U.S. House of Representatives proposal (H.R. 2646), the American Farm Bureau proposal, and the National Farmers Union proposal. The continuation of the FAIR Act is also included as an another alternative. The H.R. 2646 and the American Farm Bureau proposals are modifications of the FAIR Act while the National Farmers Union proposal is a totally redesigned bill. The H.R. 2646 and the Farm Bureau proposals are very similar in their results. They provide higher net farm income for the large size farm than the Farmers Union proposal does early in the forecast period, but the Farmers Union proposal provides higher net farm income in the last three years of the time period. The Farmers Union proposal provides higher net farm income for the medium and small size farm than either the H.R. 2646 or the Farm Bureau proposals because of the targeting feature. The FAIR Act provides less net farm income for all size farms than any other proposal.Farm Bill, Targeting, North Dakota Representative Farms, H.R. 2646, National Farmers Union, American Farm Bureau, Agricultural and Food Policy,

1999 OUTLOOK OF THE U.S. AND WORLD SUGAR MARKETS

This report evaluates the U.S. and world sugar markets for 1998-2008 by using the World Sugar Policy Simulation Model. This analysis is based on assumptions about general economic conditions, agricultural policies, population growth, weather conditions, and technological changes. Both the U.S. and world sugar economies are predicted to be strong for the next ten years. World demand for sugar is expected to grow faster than world supply, gradually increasing sugar prices. World trade volumes of sugar are expected to expand.Sugar, Production, Exports, Consumption, Ending Stocks, Agricultural and Food Policy, Marketing, International Relations/Trade,

ECONOMIC ANALYSIS OF THE FARMERS UNION FARM BILL PROPOSAL

The lack of a safety net for farm income in the FAIR Act has become evident in recent years because of the necessity of federal legislation each year, 1998-2001, to support farm income. In recent years, U.S. agriculture has experienced a rapid loss of mid-size family farms. The number of small-size farms has increased substantially and the number of large farms has increased slowly. The Farmers Union Farm Bill Proposal is a targeted plan which utilizes varying loan rates based on the USDA's full cost of production for program crops and a Farmer Owned Reserve (FOR). The proposed loan rates decrease as the value of the crop loans increase. The FOR is targeted towards a Limited Renewable Energy Reserve and a Humanitarian Assistance Reserve. The objectives of the study were to develop a distribution of farms in North Dakota by size and estimate the statewide government cost of the Farmers Union Proposal under the baseline and Farmers Union price scenario and compare it to the continuation of the FAIR Act.Farm Bill, Targeting, Government Agricultural Spending, North Dakota Representative Farms, Agricultural and Food Policy,

2005 OUTLOOK OF THE U.S. AND WORLD WHEAT INDUSTRIES, 2004-2013

This report evaluates the U.S. and world wheat markets for the 2004-2013 period using the Global Wheat Policy Simulation Model. This analysis is based on a series of assumptions about general economic conditions, agricultural policies, weather conditions, and technological change. Both the U.S. and world wheat economies are predicted to improve for the next nine years. World demand for both common and durum wheat are expected to grow faster than world production, resulting in gradual increases in prices of the wheat varieties. However, the higher price levels experienced in 2002 and 2003 due to weather conditions will not be maintained in the short term. World trade volumes of both classes of wheat are expected to expand, but trade volume of durum wheat may grow faster than that of common wheat.common wheat, durum wheat, production, exports, consumption, ending stocks, Crop Production/Industries,

UNITED STATES AND CANADIAN AGRICULTURAL HERBICIDE COSTS: IMPACTS ON NORTH DAKOTA FARMERS

Pesticides have become a major farm production cost over the past 25 years. There are price and label differences for agricultural herbicides between the United States and Canada. Trade names are different in some cases, label restrictions vary, and weights and measures are different. The reasons for the price differences are unclear. Whether they are due to increased costs in labeling requirements, different levels of competition and use, or market segmentation is not determined. The largest total impact of using lower priced Canadian herbicide is on HRSW, followed by durum and corn. The largest per acre impact is for canola, corn, and HRSW. Herbicides with the largest total impact are Puma, followed by Roundup and Fargo. Net farm income for large, medium, and small size representative farms would increase 3.8%, 4.6%, and 5.2%, respectively, if Canadian priced herbicides could be used in the United States. The statewide impact is $1.46 per acre, but regional or individual impacts could be much greater depending on crops grown or the specific weed problem faced by the individual producer.Agricultural Herbicide Costs, Trade armonization, North Dakota Representative Farm, Land Value, Pesticides, Crop Production/Industries,

Competitiveness of Regional Sugar Production under Alternative Production Conditions and Policies

Agricultural and Food Policy, Production Economics,

ECONOMIC ANALYSIS OF THE U.S. HOUSE OF REPRESENTATIVES FARM BILL, THE SENATE AGRICULTURE COMMITTEE FARM BILL PROPOSAL, AND THE AGRICULTURAL CONSERVATION RURAL ENHANCEMENT ACT OF 2001

This study analyzes three farm bill proposals that could replace the Federal Agricultural Improvement and Reform Act: The U.S. House of Representatives Bill H.R. 2646, the Senate Agriculture Committee Proposal, and the Agricultural Conservation Rural Enhancement (ACRE) Act. All proposals try to incorporate the additional emergency federal funding that agriculture received in 1998 through 2001 into legislative language. All proposals provide substantially higher net farm income than the continuation of the FAIR Act. The ACRE Act provides higher net farm income than either the House Bill or the Senate Proposal, however net farm income under the House Bill is higher than under the Senate Proposal given the Food and Agricultural Policy Research Institute's (FAPRI's) commodity price estimates. Regions of the state which produce row crops, corn, and oilseeds, would have higher net farm income under the Senate Proposal. If commodity prices increase faster than FAPRI's estimates, the ACRE Act should provide more support because more of the governmental support is in the form of direct payments. However, if prices lag behind FAPRI's estimates, the Senate Proposal should provide higher support because of the higher loan rates.Farm Bill, North Dakota Representative Farms, H.R. 2646, Senate Agriculture Committee Proposal, ACRE Act, Agricultural and Food Policy,