Excess Capacity in U.S. Agriculture: An Economic Approach to Measurement

This report measures excess capacity in U.S. agriculture, which is defined as the difference between potential supply of farm output (actual production plus potential output from acreage reduction programs) and commercial demand (total use adjusted for noncommercial exports) at prevailing prices. The study method enables analysts to assess and estimate excess capacity since 1940. Excess agricultural capacity has been increasing since 1979. The value of excess capacity in 1986 ($12.5 billion) exceeded the previous peak in the sixties, the result of greater agricultural output and a sharp decline in agricultural exports after 1981.