Increased demand for corn by the ethanol industry has increased corn planted acreage from historical levels. From 2001 to 2006, an average of 79 million acres of corn was planted in the United States, with the highest acreage being 81.8 million acres in 2005. In 2007, corn acreage increased to 93.5 million acres. Figure 1 shows that a large proportion of the 2007 increase in corn acreage came from midwestern farmers reducing soybean acreage in favor of corn.

The Renewable Fuels Standard (RFS) mandates that the nation’s fuel supply contain at least 11.1 billion gallons of biofuels in 2009 and 12.9 billion gallons in 2010. Of these volumes, biodiesel must make up at least 500 million gallons in 2009 and 650 million gallons in 2010. Other “advanced” biofuels must make up 100 million gallons in 2009 and 200 million gallons in 2010. If the volumes of biodiesel and other advanced biofuels are exactly met, then the RFS mandates consumption of 10.5 and 12.0 billion gallons of conventional biofuels, the most important of which is domestic corn ethanol and Brazilian ethanol that is not used to meet the other advanced biofuels mandate. The corn and soybean lobbies, together with the biofuels industry, worked hard to get these mandates passed. The biofuels industry wanted guarantees that they would have a market for their product. Corn and soybean farmers wanted to lock in increased demand for their crops. An examination of the linkages between the RFS, energy prices, and crop prices shows how the RFS works in the interest of corn and soybean farmers by creating a floor under their commodity prices.

Negotiations to reach an agreement on import health requirements to reopen the Korean market to U.S. beef took place over the past few years amid enormous political and public resistance in Korea. The expected benefi ts, however, will make the negotiations well worth the effort for both sides. In 2003, Korean imports of U.S. beef reached $749.3 million before imports were banned when a case of bovine spongiform encephalopathy (BSE) was diagnosed in the United States. U.S. beef began fl owing back into Korea in July 2008, and the value of these exports reached $270 million by the end of November. Despite this success, rebuilding exports to reach the full potential of this market will take time. The following is a brief overview of several market conditions that are dampening sales in the early months of renewed trade and longer-term expectations for conditions that would greatly increase demand and market access.

U.S. farmers have until June 1 to decide if they want to enroll in ACRE (Average Crop Revenue Election) for the 2009 crop year. ACRE participants must give up eligibility for countercyclical payments and 20 percent of their direct payments. Participants are still eligible for marketing loans, but loan rates are reduced by 30 percent. Perhaps the most important factor that will infl uence ACRE participation is whether farmers believe that they will receive more payments from ACRE than they will give up. This is a diffi cult question to answer because the loss in direct payments is the only future payment that is known with certainty. Loan defi ciency payments (LDPs) depend on the level of market prices and yields. Countercyclical payments (CCPs) depend on the level of National Agricultural Statistics Service (NASS) season-average prices relative to target prices. ACRE payments depend on both NASS prices and state yields. None of these factors can be known at the time of sign-up. However, a careful examination of how prices and yields affect ACRE payments relative to traditional program payments reveals that unless prices move signifi cantly higher in the next few months, nearly all corn, soybean, and wheat farmers will fi nd that signing up for ACRE will improve their fi nancial position.