Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana  
February 28, 1967
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Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
The Cost of Reducing Corn Production
Under the Feed Grain Program
by Richard J. Edwards and ]. Carroll Bottum, Agricultural Economics
INDIANA  FARMERS
It cost a little under a dollar per bushel to take approximately one billion bushels of feed grains per year out of
production through the use of the 1961-64 feed grain program. The feed grain program included torn, sorghum
and barley. Whether one believes this to be an excessive or
reasonable cost lor the maintenance of farm income depends upon the other alternatives one believes acceptable
and how these compare with the cost of the feed grain
program.
Production Decline
To determine the cost per bushel of feed grain taken out
ol production, it is first necessary to judge what decline in
production occurred. This was clone by calculating the
effective decrease in the acreages of these crops in each state
and multiplying these acreages by the average yields anticipated on diverted land in that state.
The acreage leased from farmers and placed in the program for diversion from feed grain production totaled 25
million acres in 1961. This was increased to 32 million
acres by 1964. About 70 percent of this was corn acreage
with grain sorghum and barley making up the rest. The
acreage diverted represents between 20 and 26 percent of
the 125 million acre feed grain base.
The average of 27.5 million acres shifted out of production for the four-year period in the United States, 1.2 million per year in Indiana, was adjusted for several factors.
Because of the voluntary nature of the program, farmers
not participating could increase their acreage without publicly imposed limits. They increased their acreage more
each succeeding year. By 1964, farmers not in the program
planted 9.0 million acres more than their 1959-60 average
as indicated by the base acreage. This planting was partly
offset by participants cutting back even more than the limit
lor which they could receive payment. Much of this under-
planting resulted from odd sized fields and the risks attached to exceeding their acreage limit. In 1964. participants planted 5.9 million acres or 14 percent less than they
were allowed. Compensations were made for the upward
adjustments farmers were allowed in their base acreage and
for the land released from the conservation reserve program
which was eligible for entry into the feed grain program.
After these adjustments were made, it was judged that the
effective decline in acreage averaged 23.7 million acres in
this four-year period.
The effective decline in planted acreage ol each crop of
each state was multiplied b\ NO percent of the average yield
in that state. Eighty percent was judged as sufficient to
compensate for the average land selection. Although independent studies have shown that participating farms have
yields ecjual to the average ol the stale, land selection with-
in each farm occurs. Yield per planted acre was used to, in
part, reflect crop failures and difficulties with harvest.
Table I gives a summary of the attempt to estimate the
decline in production dining the first four years ol the pro-
gram. The decline in production was not evenly distributed throughout the United States. Almost 40 percent ol
the total decline occurred in the five Corn Belt Stales. The
southeast and plains accounted lor 47 percent while the
three Lake states accounted lor almost all the remainder.
While this absolute decline is as would be expected, the
percentage decline in production of the three crops from
the 1959-60 base year production is interestingly different.
The Corn Belt with its vast total production ol Iced grain
is attributed with a drop ecpial to 14 percent ol its 1959-60
production. The southern areas with their relatively greater
acreage diversion are estimated to have cut production 27
percent. Thus, because half of the feed grain production is
in the five heartland states, the largest block ol production
was removed in this area.  But. a smaller percentage ol total
Table 1. 1959-60 average production of corn, barley
and grain sorghum in corn equivalents compared
with the estimated average yearly decrease in production, 1961-64
1959-60
Avg. yearly
Decrease
average
decrease
relative to
Region
production
1961-64
1959-60 avg.
mil. bu.
mil. bu.
percent
Northeast
179.7
11.3
6.3
Corn Belt
2,837.1
387.1
13.6
Lake States
666.6
101.9
15.3
Southeast & S. C.
559.9
148.4
26.5
Northern Plains
670.8
130.7
19.5
Southern Plains
664.4
183.0
27.5
Mt. and Pacific
182.0
24.5
13.5
U.S.
5,760.5
986.9
17.1