The name is absent

1960s, the U.S. market was characterized by
surplus stocks and fairly stable prices. The only
significant source of instability was the weather.
However, as U.S. agriculture has moved more
prominently into world markets, the situation has
changed.

The importance of exports to U.S. agriculture
is demonstrated in Figure 1, with the share of
domestic production going to world markets that
are highly significant for wheat, soybeans, rice
and cotton. Of perhaps even greater importance
is the proportion that U.S. exports make up of
total world trade in various farm products (Fig-
ure 1). Coarse grains and soybeans originating on
U.S. farms have consistently accounted for more
than half of the world trade in these com-
modities; wheat trade is also highly dependent on
U.S. participation. Taken together, these two
measures demonstrate the problematic nature of
agricultural exports—their critical importance to
domestic producers and the exposure to world
market shocks that they permit. In part, this ex-
posure is a function of the dominant position of
U.S. commodities in particular markets. The fact
that the United States holds an estimated one-
quarter of the world’s wheat stocks and nearly
half of the world’s coarse grain stocks is also
important. Because of the exposure that exports
permit, changes in importing countries’ produc-
tion, general economy, and government policies
are transferred to U.S. farmers through the ex-
port market. For instance, the several countries
that employ policies protecting their domestic
consumers and producers from the price and
quantity adjustments of the world market effec-

FIGURE 1. U.S. Exports: Share of Domestic
Production and World Trade

Crop ум» for Siiam ol domestic production. Milled rice.

Source: 1981 Handbook for Agricultural Charts, Agricul-
ture Handbook No. 592, U.S. Department of Agriculture.

tively shift and exacerbate the adjustment shock
onto residual suppliers such as the United States.

As indicated in Table 2, the level of interannual
variability in the foreign demand for major export
commodities has trended upward throughout the
past 30 years. Consider the most recent 15-year
period in comparison to the 1950-64 period: in-
terannual variability for wheat exports was
nearly double; for coarse grains, it was more than
quadruple; for rice, it was nearly 50 percent
greater; and for soybeans it was more than 7
times higher. As a percent of exports, these an-
nual swings in foreign demand now amount to
almost 15 percent for wheat and 10 percent for
coarse grains.

Although not so clearly documented, there ap-
pears to be a rather strong cause and effect rela-
tionship between this variation in exports and
that which has been experienced in farm prices
and incomes. Examination of the coefficients of
variation for the index of prices received (Table
3) shows a marked increase in variability moving
from the 1950s, through the 1960s, and up to the
late 1970s. This is especially true for crop prices.
Cash receipts follow a similar pattern (Table 3)
with variation noticeably greater during the
1970s. These results tend to track quite closely
with the increase in variability noted for export
volume.

Farm income also exhibits a significant in-
crease in variability by the mid 1970s (Table 3).

TABLE 2. Interannual Variability in Foreign
Demand for U.S. Products^a

^a Estimates of variability based on standard errors of the
regression for successive best fit 15 linear and curvilinear
time trends.

Source: O’Brien, P. M. “Global Prospects for Agricul-
ture,” Agricultural-Food Policy Review: Perspectives for the
1980’s, AFPR-4, ESS, USDA, 1981, p. 15.

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