ACREAGE ELASTICITIES FOR CORN AND SOYBEANS

Because corn (Zea mays L.) and soybeans [Glycine max (L.) Merr.] are t he top two cash crops in the USA, the choice between planting corn and soybeans plays a crucial role in determining the impact of policy cha nges on the U.S. agricultural sector. This study examined the joint de cisionmaking process between corn and soybeans among U.S. farmers, the effects of dynamic processes for anticipating future prices and yield s, and the impact of government programs on the substitutability of so ybeans for corn in planting decisions. The effects of past planting de cisions, productivity, and net returns, as well as shifts in commodity program parameters, are considered in a systematic framework for mode lling the behavior of corn and soybean acreage, yield, and market pric es. These responses are constrained in the model by the availability o f land appropriate for crops, which is fixed in the short term. The in creased flexibility of program provisions for permitting movements bet ween program and nonprogram crops (such as between corn and soybeans) for the period covered by the 1973 farm legislation produced elasticit ies of supply that were 80% and 13% higher for corn and soybeans than for the period covered by the 1985 Food Security Act, widely viewed as the least flexible legislation. Estimated own-price and cross-price e lasticities exhibited the expected signs and fell within the range of earlier analyses on this topic. Incorporating both corn and soybeans i n a dynamic joint supply-response framework provides useful informatio n in estimating the effects of policy changes on the crucial relations hip between these key crops in terms of acreage allocation.