The number of licensed U.S. dairy herds fell by more than half between 2002 and 2019, with an accelerating rate of decline in 2018 and 2019, even as milk production continued to grow. As a result, production has been shifting to much larger but fewer farms. Larger operations realize lower costs of production, on average, and those advantages persist. This structural change also features shifts in the location of dairy farming and in the production practices used on farms. This report, following upon two earlier ERS reports on the subject, details how the dairy sector has been transformed, and assesses the financial and productive factors behind that transformation.
Agricultural commodity prices play an important role in the production decisions of farmers and ranchers, including planted/harvested acreage of crops or inventory of livestock and, thus, the supply of agricultural commodities. This report examines changes in global demand and supply factors that contributed to agricultural commodity price declines during 2014-19 and changes that contributed to the rising trend in prices that peaked in 2007/08 and 2011/12. Additionally, the report projects how global commodity prices and trade could change out to 2021/22 given various assumptions on key factors, such as the growth in Gross Domestic Product (GDP) and agricultural production across countries. Information on these factors and their market impacts can inform and enhance public and private decision making on issues relating to agricultural markets. Model results suggest that if GDP growth slows in developing and emerging economies by 2.3 percentage points annually (the average annual rate of decline experienced in these countries over 2007-09), commodity prices would decrease on average by 4 percent per year over 2018/19 to 2021/22. However, the volume of global commodity trade would remain relatively stable. Second, if crop production by major producing countries (including the United States) were to decline by 3 percentage points, commodity prices are projected to rise by an average of 12 percent per year over 2018/19 to 2021/22. The volume of global commodity trade is projected to fall by an average of 2 percent per year for this scenario. Third, if U.S. crop production increases by an average of 1 percentage point, average commodity prices decline by 2 percent, and the volume of global commodity trade increases by an average of less than 1 percent over 2018/19 to 2021/22.
An estimated 88.9 percent of U.S. households were food secure throughout the entire year in 2018, with access at all times to enough food for an active, healthy life for all household members. The remaining households (11.1 percent, down from 11.8 percent in 2017) were food insecure at least some time during the year, including 4.3 percent with very low food security (not significantly different from 4.5 percent in 2017), where the food intake of one or more household members was reduced and their eating patterns disrupted at times because the household lacked money and other resources for obtaining food. The 2018 prevalence of food insecurity declined, for the first time, to pre-recession (2007) levels. Among children, changes from 2017 in food insecurity and very low food security were not statistically significant. Children and adults were food insecure in 7.1 percent of U.S. households with children in 2018; very low food security among children was 0.6 percent. In 2018, the typical food-secure household spent 21 percent more on food than the typical food-insecure household of the same size and household composition. About 56 percent of food-insecure households participated in one or more of the three largest Federal food and nutrition assistance programs (Supplemental Nutrition Assistance Program (SNAP, formerly food stamps); Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); and the National School Lunch Program) during the month prior to the 2018 survey.
Programs that help farmers manage risk are a major component of the Federal Government’s support to rural America. Changes to this risk—and thus to the Government’s fiscal exposure— are expected as weather averages and extremes change over the coming decades. This study uses a combination of statistical and economic modeling techniques to explore the mechanisms by which climate change could affect the cost of the Federal Crop Insurance Program (FCIP) to the Federal Government, which accounts for approximately half of Government expenditures on agricultural risk management. Our approach is to compare scenarios of the future that differ only in terms of climate. Using weather scenarios for 2060-99 from general circulation models, we project decreases in corn and soybean yields and mixed changes to winter wheat yields, compared to a baseline scenario in which climate is identical to that of the past three decades. We use an economic model of the U.S. agricultural sector to estimate how projected yield changes may induce farmers to change what and where they plant, and the resulting impacts on production and output prices. These ingredients allow us to explore drivers of change in the cost of the FCIP’s Revenue Protection program, which is used as a heuristic for potential farm safety net programs that could exist in the future. Differences between the scenarios are driven by increasing prices for the three crops studied, caused by relatively lower production in the presence of inelastic demand, as well as by changing volatility in both yields and prices.
The Supplemental Nutrition Assistance Program (SNAP) is one of the largest safety net programs in the United States—the U.S. Department of Agriculture spent $65.3 billion on the program in fiscal year 2018 and served an average of 40.3 million people per month. By design, SNAP has a countercyclical effect on the wider economy, that is, program enrollment increases when incomes fall and vice versa. The Great Recession of 2007-09 motivated new interest in the impacts of different Federal stimulus tools, including SNAP spending. We examine the countercyclical impacts of SNAP by measuring how SNAP benefits affect gross domestic product, employment, and incomes across the farm economy and for all other industries impacted by SNAP. A review of the literature suggests that SNAP spending during a recession stimulates economic output more than several other fiscal policy tools that have been used to increase economic activity. We estimate multiplier effects of SNAP expansion using a newly compiled Social Accounting Matrix multiplier model and the most recent data available for this purpose. We find that $1 billion in SNAP benefits spent during an economic downturn provides direct added income to the businesses where those benefits are spent and indirect added income to their suppliers and their employees, who in turn spend more and further increase the effect of the initial outlay. This multiplier effect generates an additional $0.5 billion, making the total effect of the $1 billion in SNAP benefits $1.5 billion in gross domestic product, which supports 13,560 new jobs—including $32 million added income going to agricultural industries that support 480 agricultural jobs.
