| Scope and method of study. The magnitude of excess capacity for seven major U.S. field crops was determined. Excess capacity is defined as the ability to produce in excess of the quantity demand, at an acceptable price. A conceptual model of excess capacity was developed and discussed. Econometric models of aggregate demand and potential supply were developed in order to forecast excess capacity requirements in the intermediate future. Excess capacity was estimated and evaluated for the period 1950 thru 1990, and predicted for the period 1992 thru 1996 for wheat, corn, soybeans, oats, barley, sorghum, and cotton. The impacts of alternative assumptions about production and diverted acreage on excess capacity were evaluated and discussed.;Findings and conclusions. The magnitude of excess capacity varies over time for each commodity analyzed. In production units, wheat and corn exhibited the largest levels of excess capacity, while cotton and oats were determined to have the lowest levels of excess capacity. As a percent of potential supply, soybeans, cotton, and oats showed the greatest annual variability. Several economic, political and natural events caused the observed changes in excess capacity. Recent trends illustrate greater variability in excess capacity caused mainly by government policy and weather. If excess capacity (which includes stocks) had not been maintained in years prior to a drought (eg. 1983 and 1988), demand would have exceeded supply, and a food crises would not have been unlikely. Observation of the lowest and highest levels of excess capacity over time, can be used to determine an "optimal" level of excess capacity. |
