The Hagstrom Report

Agriculture News As It Happens


FAPRI posts corrected farm bill report, August market update

The Food and Agricultural Policy Research Institute at the University of Missouri today posted a corrected version of its report comparing the farm bills passed by the Senate and by the House Agriculture Committee, as well as an August update for U.S. agricultural markets.

The farm bill analysis corrects estimates of government outlays and net farm income under the two farm bills, FAPRI said in a statement.

An accounting error in the original analysis caused FAPRI to overestimate Commodity Credit Corporation outlays for cotton under the House Committee bill by a cumulative $377 million over the fiscal year 2013-FY 2022 period, the research organization said.

Correcting the accounting error has no impact on crop supply, demand or prices, but does change estimates of government outlays and net farm income, it said. After making the correction, the sum of 10-year CCC and crop insurance outlays is essentially identical under the two bills for the selected program changes examined in the report.

The August market report estimated:
  • Corn prices average $8.10 per bushel for the crop harvested in 2012, exceeding last year’s record by about 30 percent. Higher corn prices contribute to steep reductions in corn domestic use, exports and carryover stocks.
  • Soybean prices average $16.27 per bushel for this year’s crop, also about 30 percent above last year’s record. This results in sharply reduced levels of soybean crush and exports.
  • Higher prices for corn and soybeans support prices for other grains and oilseeds. Wheat prices, for example, increase to $8.42 per bushel, in spite of record 2012 U.S. wheat yields.
  • Ethanol production declines by 10 percent for the 2012-2013 corn marketing year. Higher ethanol prices contribute to sharply reduced ethanol exports and increased imports, but domestic ethanol consumption declines by just 2 percent.
  • The increase in feed prices results in reduced production of meat and milk, pushing up prices for those products. Consumer food prices increase by more than 4 percent in 2013.
  • High prices keep 2013 corn acreage near the 2012 peak, and soybean and wheat acreage both increase. Cotton acreage declines in 2013, due to weak cotton returns relative to competing crops.