Producer supply response for area planted of seven major U.S. crops

The U.S. Department of Agriculture's Agricultural Baseline provides a 10-year outlook for seven major U.S. crops (corn, soybeans, wheat, sorghum, barley, oats, cotton) and plays an important role in predicting farm program expenditures in the President's annual budget proposal. To provide the best-possible projections, it is necessary to frequently revisit the underlying models behind the baseline to ensure that they are theoretically consistent and produce realistic projections. This study examined the performance of the existing area planted equations for seven major U.S. crops in the U.S. baseline model relative to observed historical area planted values. It subsequently estimated a system of equations for seven major U.S. crops to produce price consistent supply (i.e., higher price increases own supply but decreases other crop supplies).