Comparing current and 1970 farm prosperity: Cash farm expenses
Figure 1 also presents cash farm expenses excluding interest as well as feed, livestock, and poultry purchased by farms. The latter three expense categories are removed because I would like to focus this post on crop production expenses. While some of the other input categories used by USDA include expenses for livestock and poultry production, these expenses are entirely related to livestock and poultry production. The resulting category of generally crop-related expenses also had increased more by 1978 than by 2011, although the difference was much smaller than for interest: 35% between 1968-1972 and 1978 vs. 27% between 2001-2005 and 2011. This comparison thus suggests that deflated cash crop production expenses have increased by less during the current period of farm prosperity than during the 1970 period of farm prosperity.
Principal Crop Acres
A key difference between the two periods of farm prosperity is the different path of principal crop acres. Despite the profitability of crop production, only 6 million, or 2%, more acres were planted to principal crops in 2012 than in 2005 (see Figure 2). In contrast, between 1972 and 1979 acres planted to principal crops increased by 51 million or 17%. Principal crop acres increased by another 18 million between 1979 and 1981, which is the peak year for principal crop acres over the last half century (363 million principal crop acres).
The different paths in principal crop acres likely reflect a number of contributing factors. One is that land in set aside programs in 1972 could readily return to production. Between 1972 and 1973, principal crop acres increased by 24 million. However, the U.S. eliminated annual land set aside programs in the 1996 Farm Bill, causing principal crop acres to increase by 15.5 million between 1995 and 1996. Thus, no reserve of annual set-aside land existed when the current period of farm prosperity began. In fact, principal crop acres during the current period of prosperity have still not exceeded the 334 million acres planted to principal crops in 1996.
Another factor is the role of conservation programs. Of particular relevance are the Conservation Reserve Program (CRP), which pays farms to produce environmental services as opposed to crops, and the sodbuster and swampbuster provisions, which prevent farms from bringing these types of land into crop production. These 3 conservation programs were first enacted in the 1985 Farm Bill. Approximately 25 million acres are currently enrolled in CRP. In addition, approximately 2 million acres are enrolled in the Wetlands Reserve Program.
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