In order to get a broader picture of the impact of policy changes on crop production, we have begun to look at the experience of other nations. While we don't profess to be experts on international agriculture, we have uncovered some interesting information.
Data compiled by APAC's Chad Hellwinckel show that, in Australia, planted area for wheat, coarse grains, and oilseeds have all increased since 1991. Yes, you read that right, increased. These increases continued unabated through the years following 1995 when wheat prices declined by 40 percent.
Was there a policy change in Australia that brought about this change? In 1991, the Australian government began liquidating the large amount of wool that it had been accumulating in an attempt to raise prices. Prices tumbled dramatically. Since 1990, sheep inventories have declined by nearly 53 million head, a decease of 31 percent.
Cattle inventories have increased by nearly 3 million head from 1990 through 2000; an increase of 12 percent. As sheep production declined, pastures in the "wheat-sheep" zone were converted to cattle production and crop agriculture. Between 1991 and 2002, 17 million additional acres were brought into crop production. This occurred in spite of the low world crop prices since 1996. Five million of the additional acres were brought into production since 1996.
There are no doubt numerous factors involved. But the numbers are quite interesting. In this country, we usually think of pastureland being converted to cropland when crop prices are extraordinarily "high" but, in the case of Australia, pastureland in the "wheat-sheep" zone appears to have been converted to cropland during a time when livestock prices were extraordinarily "low."
Undoubtedly some Australian sheep pasturage has been idled since the collapse of the wool buffer stock scheme, but acreage that can support crop agriculture has not been routinely left idle. Shades of the U.S: farmers tend to use every acre possible whenever possible.
For a chart of the changes in Australian sheep and crop production and copies of past Daryll Ray articles, go to http://www.agpolicy.org.
Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of the UT's Agricultural Policy Analysis Center. (865) 974-7407; Fax: (865) 974-7298;