Key Accomplishments, FY 2010
USDA Priority Goal 1: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving
Enhanced understanding by policymakers, regulators, program managers, and those shaping public debate of economic issues affecting rural development, rural well-being, farm and household income, and rural communities.
Market Performance and Futures Markets. The past 5 years have seen large increases in the trading of corn, soybean, and wheat futures contracts by nontraditional traders, a trend that coincided with historic price increases for these commodities. ERS analysis investigates whether changes in the composition of traders participating in the market have contributed to movements in commodity prices beyond the effects of market fundamentals.
Market Analysis and Outlook. ERS-working closely with the World Agricultural Outlook Board, the Foreign Agricultural Service, and other USDA agencies-conducts market analysis and provides short- and long-term projections of U.S. and world agricultural production, consumption, and trade. The market and outlook program has enhanced the quality, transparency, and accessibility of data and analytical information.
New Commodity Programs Affect Farmers. The recent Farm Bill introduces a new commodity program called the Average Crop Revenue Election (ACRE) program, which is based on revenue variability at the farm and State levels rather than variability of prices. Revenue variability differs across crops and geographical regions. ERS analysis has analyzed the relationship between historic and expected market prices and differences in yield levels and variability across crops and regions, and how these lead to differences in potential ACRE payments.
Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture. Next-generation U.S. biofuel capacity should reach about 88 million gallons in 2010, thanks in large measure to one plant becoming commercially operational in 2010, using noncellulosic animal fat to produce green diesel. Near-term sector challenges include reducing high capital and production costs, acquiring financial resources for precommercial development, developing new biomass supply arrangements (many of which will be with U.S. farmers), and overcoming the constraints of ethanol's current 10-percent blending limit with gasoline.
Geographic Targeting Issues in the Delivery of Rural Development Assistance. A 2010 ERS report discusses potential tradeoffs for distressed rural areas when shifting from one form of rural development assistance to another, particularly when shifting to greater use of Government-guaranteed loans. The study documents the extent of targeting rural development programs to highly rural areas and to rural areas experiencing distress in the form of poverty, low employment, and population decline. Findings indicate that distressed rural areas might fare worse than other nonmetro areas with some kinds of shifts, such as reducing grants and direct Government loans to fund increases in guaranteed loans. The effects on distressed areas would depend on the form of distress, the programs involved, and how they are targeted geographically.
Farm Household Well-Being: Comparing Consumption- and Income-Based Measures. Household economic well-being can be gauged by the financial resources (income/wealth) available to the household or by the standard of living enjoyed by household members (consumption). ERS has long published estimates of farm household income and wealth. A 2010 ERS report presents, for the first time, estimates of consumption-based measures of well-being for farm households based on new questions in USDA's annual Agricultural Resource Management Survey (ARMS). The consumption measure provides a different perspective than income or wealth on farm households' well-being relative to that of all U.S. households.
America's Family Farms. Most U.S. farms-98 percent in 2007-are family operations, and even the largest farms are predominantly family run. Large-scale family farms and nonfamily farms account for 12 percent of U.S farms but 84 percent of the value of production. In contrast, small family farms make up most of the U.S. farm count but produce a modest share of farm output. Small farms are less profitable than large-scale farms, on average, and tend to rely on off-farm income for their livelihood. Generally speaking, farm operator households cannot be characterized as low-income when both farm and off-farm income are considered. Nevertheless, limited-resource farms still exist and account for 3 to 12 percent of family farms, depending on how "limited-resource" is defined.
Small Farms in the United States: Persistence Under Pressure. Ninety-one percent of U.S. farms are classified as small, with gross cash farm income (GCFI) of less than $250,000. About 60 percent of these small farms are very small, generating GCFI of less than $10,000. These very small noncommercial farms, in some respects, exist independently of the farm economy because their operators rely heavily on off-farm income. The remaining small farms-small commercial farms-account for most small-farm production. Overall farm production, however, continues to shift to larger operations, while the number of small commercial farms and their share of sales maintain a long-term decline.
Energy Use in the U.S. Food System. Energy is an important input in growing, processing, packaging, distributing, storing, preparing, serving, and disposing of food. Analysis using the two most recent U.S. benchmark input-output accounts and a national energy data system shows that in the United States, use of energy along the food chain for food purchases by or for U.S. households increased between 1997 and 2002 at more than six times the rate of increase in total domestic energy use. This increase in food-related energy flows represents over 80 percent of energy flow increases nationwide over the period. The use of more energy-intensive technologies throughout the U.S. food system accounted for half of this increase, with the remainder attributed to population growth and higher real (inflation-adjusted) per capita food expenditures.
USDA Priority Goal 2: Ensure our national forests and private working lands are conserved, restored, and made more resilient to climate change, while enhancing our water resources
Enhanced understanding by policymakers, regulators, program managers, and those shaping public debate of economic issues related to developing Federal farm, natural resource, and rural policies and programs that respond to the challenges of climate change and the need to protect and maintain the environment while improving agricultural competitiveness and economic growth.
Participation in Conservation Programs by Targeted Farmers: Beginning, Limited-Resource, and Socially Disadvantaged Operators' Enrollment Trends. Beginning, limited-resource, and socially disadvantaged farmers make up as much as 40 percent of all U.S. farms. Some Federal conservation programs contain provisions that encourage participation by such "targeted" farmers. This report compares the natural resource characteristics, resource issues, and conservation treatment costs on farms operated by targeted farmers with those of other participants in the largest U.S. conservation programs. Some evidence shows that targeted farmers tend to operate more environmentally sensitive land than other farmers, have different conservation priorities, and receive different levels of payments. The different conservation priorities among types of farmers suggest that if a significantly larger proportion of targeted farmers participate in these programs, the programs' economic and environmental outcomes could change.
Markets for Conservation. Farmers produce a variety of goods and services for which markets generally do not exist, including improved water quality, carbon sequestration, wildlife habitat, open space, and water supplies. An ongoing program of research focuses on the economic and environmental implications of alternative approaches to the design of markets for ecosystem services. Accomplishments in 2010 include two short reports on agriculture's potential role in greenhouse gas mitigation. One provides a broad overview while the other examines the potential role that land ownership might play in determining the agricultural sector's involvement in carbon sequestration programs. By estimating the carbon sequestration potential of agricultural producers who own most of the land they operate, this report finds that land ownership should not be a constraining factor in agriculture's ability to provide carbon offsets.
The Farm Act's Regional Equity Provision: Impacts on Conservation Program Outcomes. The 2002 and 2008 Farm Acts set a minimum threshold for conservation funding for each State-one that exceeds historical funding for some States-for enrolling agricultural producers in specified conservation programs. This study examines the impacts of the Regional Equity provision of the 2002 Farm Act, and explores tradeoffs that occur among conservation program goals when legislation gives primacy to fund allocation. The study found that cross-state shifts in funding reduced the acres receiving conservation treatment for many resource problems, but increased the net economic benefits from treatments on some of them. Overall impacts on the types of producers enrolled were small.
USDA Priority Goal 3: Help America promote agricultural production and biotechnology exports as America works to increase food security
Enhanced understanding by policymakers, regulators, program managers, and organizations shaping public debate of economic issues related to adoption of economically and environmentally sustainable technologies, factors affecting imports of U.S. agricultural products (including biotech products), and strategies to increase markets for U.S. products, including biotech crop exports.
Ethanol and a Changing Agricultural Landscape. The Energy Independence and Security Act (EISA) of 2007 established specific targets for the production of biofuel in the United States. This ERS report summarizes the estimated effects of meeting the EISA targets for 2015 on regional agricultural production and the environment. Meeting EISA targets for ethanol production is estimated to expand U.S. cropped acreage by nearly 5 million acres by 2015, an increase of 1.6 percent over what would otherwise be expected. Much of the growth comes from corn acreage, which increases by 3.5 percent over baseline projections. Water quality and soil carbon will also be affected by changes in the amount of cropped land. The economic and environmental implications of displacing a portion of corn ethanol production with ethanol produced from crop residues are also estimated.
Food Security Assessment, 2009-2010. Despite ongoing concern about the potential for serious food security challenges in traditionally food insecure countries, recent ERS analysis finds that the global food security situation improved between 2009 and 2010, as the effects of previous price spikes and the global downturn moderated. These promising results, however, do not mask the need for continued vigilance as ERS analysis warns of a long-term deterioration in food security in some regions, most notably Sub-Saharan Africa.
Trade Negotiations and Policy Analysis. ERS research on trade policy is focused on providing analysis that evaluates the impacts of changes in U.S. and other countries' agricultural trade policies. ERS research in support of WTO negotiations has helped to inform and strengthen U.S. negotiating positions on agriculture. Despite strong critics of WTO, membership continues to grow as countries seek the benefits of expanding trade. In the WTO, member countries trade concessions to gain access to foreign markets, benefiting foreign producers and consumers in the aggregate.
Assessing the Benefits of Public Research Within an Economic Framework: The Case of USDA's Agricultural Research Service. Evaluation of publicly funded research can help provide accountability and prioritize programs. This report finds that peer review-used primarily for establishing scientific merit-is the most common method of evaluation. Economic analysis focuses on quantifying ultimate research outcomes, whether measured in goods with market prices or in nonmarket goods such as environmental quality or human health. However, standard economic techniques may not be amenable for evaluating some important public research priorities or for institutional assessments. This report reviews quantitative methods and applies qualitative economic reasoning and stakeholder interviewing methods to the evaluation of economic benefits of Federal intramural research using three case studies of research conducted by USDA's Agricultural Research Service. Differences among the case studies highlight the need to select suitable assessment techniques from available methodologies, the limited scope for comparing assessment results across programs, and the inherent difficulty in quantifying benefits in some research areas.
USDA Priority Goal 4 :Ensure that all of America's children have access to safe, nutritious, and balanced meals
Enhanced understanding by policy makers, regulators, program managers, and those shaping public debate of economic issues related to improving the efficiency, efficacy, and equity of public policies and programs relating to food prices and availability at home and abroad, consumer food choices, nutrition and health outcomes, nutrition assistance programs, and the protection of consumers from unsafe food.
Local Food Systems. A new report from ERS provides a comprehensive overview of local food systems, explores alternative definitions of local food, estimates market size and reach, describes the characteristics of local consumers and producers, and examines early indications of the economic and health impacts of local food systems. There is no consensus on a definition of "local" or "local food systems" in terms of the geographic distance between production and consumption. But defining "local" based on marketing arrangements-such as farmers selling directly to consumers at regional farmers' markets or to schools, is well recognized. Statistics suggest that local food markets account for a small, but growing, share of U.S. agricultural production. For smaller farms, direct marketing to consumers accounts for a higher percentage of their sales than for larger farms. Findings are mixed on the impact of local food systems on local economic development and better nutrition levels among consumers, and sparse literature is so far inconclusive about whether localization reduces energy use or greenhouse gas emissions.
A second ERS report relies on a series of coordinated case studies to compare the structure, size, and performance of local food supply chains with those of mainstream supply chains. Interviews and site visits with farms and businesses, supplemented with secondary data, describe how food moves from farms to consumers in 15 food supply chains. Key comparisons between supply chains include the degree of product differentiation, diversification of marketing outlets, and information conveyed to consumers about product origin. The cases highlight differences in prices and the distribution of revenues among supply chain participants, local retention of wages and proprietor income, transportation fuel use, and social capital creation.
The U.S. Food Environment Atlas. The Atlas is a web-based mapping tool developed by ERS that allows users to compare U.S. counties in terms of their "food environment"-the set of factors that help determine and reflect a community's access to affordable, healthy food. The 90 indicators of the food environment currently included in the Atlas cover a wide range of demographic, health, and food access characteristics, most at the county level. The basis of the U.S. Food Environment Atlas is a recognition that factors-such as store/restaurant proximity, food prices, food and nutrition assistance programs, and community characteristics-interact to influence food choices and diet quality. The Atlas also allows users to get data on any and all of the county-level indicators for a particular county.
Taxing Caloric Sweetened Beverages. The link between high U.S. obesity rates and the overconsumption of added sugars, largely from sodas and fruit drinks, has prompted public calls for a tax on caloric sweetened beverages. Faced with such a tax, consumers may reduce consumption of these sweetened beverages and substitute nontaxed beverages, such as bottled water, juice, and milk. This study estimated that a tax-induced 20-percent price increase on caloric sweetened beverages could cause an average reduction of 37 calories per day, or 3.8 pounds of body weight over a year, for adults and an average of 43 calories per day, or 4.5 pounds over a year, for children. Given these reductions in calorie consumption, results show an estimated decline in adult overweight prevalence (66.9 to 62.4 percent) and obesity prevalence (33.4 to 30.4 percent), as well as the child at-risk-for-overweight prevalence (32.3 to 27.0 percent) and the overweight prevalence (16.6 to 13.7 percent). Actual impacts would depend on many factors, including how the tax is reflected in consumer prices and the competitive strategies of beverage manufacturers and food retailers.
Does SNAP Decrease Food Insecurity? Untangling the Self-Selection Effect. Self-selection by more food-needy households into the Supplemental Nutrition Assistance Program (SNAP, formerly called the Food Stamp Program) makes it difficult to observe positive effects of the program in survey data. This study investigates self-selection and ameliorative program effects by examining households' food security month by month for several months prior to initial receipt of SNAP benefits and for several months after joining the program. The results are consistent with a moderate ameliorative effect of SNAP-reducing the prevalence of very low food security among recent entrants by about one-third-although they do not conclusively demonstrate that extent of amelioration.
Foodborne Illness Cost Calculator. ERS's estimates of the costs of illness and premature death for a number of foodborne illnesses have been used in regulatory cost-benefit and impact analyses. Like all cost estimates, the ERS estimates include assumptions about disease incidence, outcome severity, and the level of medical, productivity, and disutility costs. Changes to any of these assumptions could change the cost estimates and, as a result, change the way policy makers rank risks, prioritize spending, and formulate food safety policies. The Foodborne Illness Cost Calculator provides information on the assumptions behind foodborne illness cost estimates-and gives users the opportunity to make their own assumptions and to calculate their own cost estimates.
Food Assistance and Nutrition Research Program, Final Report: Fiscal 2009 Activities. This report summarizes ERS's Food Assistance and Nutrition Research Program (FANRP) activities and accomplishments in fiscal 2009, including newly awarded projects and recent publications. FANRP supports intramural and extramural research on a wide range of policy-relevant food assistance and nutrition topics. The three perennial program themes are (1) Program Outcomes and Economic Well-Being of Participants, (2) Program Access and Economic Determinants of Participation, and (3) Program Dynamics and Efficiency. The core food and nutrition assistance programs include the Supplemental Nutrition Assistance Program (SNAP)-formerly the Food Stamp Program-the child nutrition programs, and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
Consumer Data and Information Program (CDIP). ERS continued development of a consumer and data infrastructure needed for analyses of food policy issues. Particularly important was the planning and development of a national survey of food acquisition focusing on low-income households. Additional CDIP efforts included improving ERS's Food Availability Data System, obtaining information on Americans' time use on eating and preparing food using the Bureau of Labor Statistics American Time Use Survey; gathering information on consumer knowledge about diets and health, as well as economic content using the National Health and Nutrition Examination Survey (NHANES); and understanding the characteristics of proprietary datasets. ERS initiated an effort to make the data collected through NHNAES more readily available to researchers, and launched a new effort to design the content of the 2009-10 module for NHANES. To support price analysis and consumer food choice behavior, ERS continued the acquisition and use of Nielsen's Homescan data on packaged and random weight food purchases.
Food Availability (Per Capita) Data System. The ERS food availability (per capita) data system includes three distinct but related data series on food consumption. The data serve as popular proxies for actual consumption. Food availability data are now available through 2007 at the national level. Also included are data on nutrient availability in the food supply and data on loss-adjusted food availability. This latter data series uses dietary recommendations from the 2005 Dietary Guidelines for Americans and its supporting guidance document MyPyramid Plan. This data series provides estimates, for example, of the pounds of beef available for domestic consumption per capita per year. The data are available on an annual basis. Most data extend back to 1909.
The Impact of Food Away From Home on Adult Diet Quality. Food away from home (FAFH) has been associated with poor diet quality in many studies. It is difficult, however, to measure the effect of FAFH on diet quality since many unobserved factors, such as food preferences and time constraints, influence not just our choice of where to eat but also the nutritional quality of what we eat. The effects vary depending on which meals are consumed away from home. On average, breakfast away from home decreases the number of servings of whole grains and dairy consumed per 1,000 calories and increases the percent of calories from saturated and solid fat, alcohol, and added sugar (SoFAAS) in a day. Dinner away from home reduces the number of servings of vegetables consumed per 1,000 calories for the average adult. Breakfast and lunch away from home increase calories from saturated fat and SoFAAS, on average, more among dieters than among non-dieters. Some of the overall negative dietary effects of FAFH decreased between 1994-96 and 2003-04, including those on whole grain, sodium, and vegetable consumption.
Changing Participation in Food Assistance Programs Among Low-Income Children After Welfare Reform. In 1996, the safety net for poor households with children fundamentally changed when Federal legislation replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF). This study investigates participation in, and benefits received from, AFDC/TANF and food assistance programs, before and after the legislation, for children in low-income households (income below 300 percent of the Federal poverty line). The results show that, between 1990 and 2004, the share of children receiving food stamp benefits declined, most notably among children in the poorest households (income below 50 percent of the Federal poverty line). The share of children receiving benefits from the school meals programs and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) rose, mainly among children in low-income households with income above the Federal poverty line. Overall, the share of children in households that received benefits from AFDC/TANF or food assistance programs grew from 35 percent in 1990 to 52 percent in 2004. However, the net result of these changes is that average total inflation-adjusted household benefits from all programs examined declined. The decline was largest among children in the poorest households.