Retail Values of U.S. Agricultural Commodities

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Retail Values of U.S. Agricultural Commodities

The economic value of an agricultural commodity and the commodity's impact on the U.S. economy can be measured by its retail value.

This document updates a 1979 report comparing the retail values of the following agricultural commodities: cane and beet sugar, corn, cotton, grain sorghum, rice, soybeans and wheat. In 1979 and 1994, cotton, including lint and seed, had the highest values of all commodities considered. In 1994, cotton accounted for 40 percent of the total retail value of the commodity crops covered in this report.

Essentially, retail value is the product of the unit value (bushel or pound) at the retail level and the size of the respective crop. Virtually all commodities experienced increases in per unit retail values and annual crop size between 1979 and 1994. The only decline in a unit retail value was wheat for winter seed. Only grain sorghum experienced a loss in crop size while all others increased at least 10 percent, with the largest increase occurring in the soybean crop (+70 percent).

Retail values are estimated using the latest USDA data available and the assumption that the entire crop for each commodity is used domestically (unless otherwise noted). Any further assumptions are specified in the reports for the individual crops.

Cotton

The retail value for cotton for the 1993/1994 average crop is estimated to be $120.6 billion.

This value was determined using an average of the 1993 and 1994 crops. In 1993, cotton crop production was 16.134 million bales and in 1994, was 19.662 million for an average production level of 17.9 million bales.

The components of cotton's retail value are cotton lint used in textiles and apparel and cottonseed.

The NPD Group estimates total 1994 U.S. retail purchases apparel and home furnishings were $141.3 billion. Cotton's share of each market is derived from the National Cotton Council's annual publication "Cotton Counts It Customers". The retail value of cotton apparel and home furnishings in 1994 totaled $85.7 billion.

Apparel and home furnishings accounted for roughly 82 percent of the U.S. cotton lint market in 1994. The retail value of industrial end uses of cotton lint was approximated by adjusting the $85.7 billion to include industrial uses. Therefore 85.7/ .82= $105.2 billion as a total retail value of cotton apparel, home furnishings and industrials sold in the US.

In 1993, net domestic cotton fiber consumption, defined as the sum of domestic mill use plus imports of textiles and apparel minus exports of textiles and apparel, totaled 15.78 million bales. Net domestic cotton consumption total 16.5 million bale in 1994, for a two year average of 16.14 million bales. The estimated retail value of cotton lint divided by the net domestic consumption in bales gives a retail value of $6,518 per bale. Applying this per bale value to an average U.S. crop of 17.9 million bales puts the retail value of cotton lint at $116,658,587,361.

The retail value of cottonseed is determined by defining its value in different end uses. The following cottonseed products will be considered in determining the retail values: feed, oil, hulls and linters.

Retail values of beef, swine, poultry and dairy products were used in determining the retail value of cottonseed and cottonseed meal as feed. The contribution (as a percentage) of the feed to each respective meat or dairy product was multiplied by the respective product's retail value to determine the retail value of cottonseed and cottonseed meal as feed. Cottonseed and cottonseed meal as feed has an estimated retail value of $1,877,660,322.

There were 2,048,789,000 pounds of cottonseed oil (323 pounds per ton of cotton) from the average crop. It is assumed that all cottonseed oil was processed into oil, magarine or shortening. BLS reports that the retail value of oil as a food product is $0.85 per pound. At this price, cottonseed oil has an estimated retail value of $1,741,470,650.

There were 3,387,162,000 (534 pounds per ton of cotton) pounds of hulls in the two year average crop. The price for hulls is reported at $0.04 per pound. At this price, the value of hulls in the averaged crops was $135,486,480.

There were 1,040,252,000 (164 pounds per ton of cotton) pounds of linters in the crop being considered. The price received for linters was $0.18 per pound. At this price, the retail value of cottonseed linters was $187,245,360.

The total retail value of cottonseed products was estimated as $3,941,862,812. Adding the retail values of cottonseed and cotton lint provide a total retail value of $120,600,452,050 from the average of the 1993 and 1994 cotton crops.

Cane and Beet Sugar

The combined retail value of the 1994 sugarbeet and sugarcane crop was about $5.1 billion.

Production of sugarbeets and sugarcane in 1994 was 59,220,000 tons. After refining losses, there are 235 pounds of sugar per ton of sugarbeets and 195 pounds in a ton of sugarcane. It is estimated that sugar production by source was 6,838,500,000 pounds from sugarbeets and 5,873,400,000 pounds from sugarcane.

For this report, it was assumed that the entire sugar crop was processed into refined white sugar.

According to the Bureau of Labor Statistics, the 1994 retail price for refined sugar was $0.40 per pound. At $0.40 per pound, the 1994 retail value of sugarbeets was $2,735,400,000 and the retail value of sugarcane was $2,349,360,000. The total sugar crop retail value was $5,084,760,000.

Rice

The retail value of the 1994 rice crop was about $6.4 billion, and production equaled 17,690,000 pounds. During the converting process, there is a 48 percent loss of weight. Processing leaves 11,638,157 pounds of rice available for retail sale.

For this report it was assumed that the entire rice crop was used for food.

In 1994, the BLS reported the retail price of rice to be $0.547 per pound. At $0.547 per pound, the retail value of the 11,638,157 pounds of rice would have been $6,366,072,368.

Wheat

The retail value of the 1994 wheat crop was about $24 billion, and production was 2,396,000,000 bushels.

The crop is distributed among domestic end uses as follows: 70 percent or 1,677,200,000 bushels to food, 8 percent or 191,680,000 bushels to seed and 22 percent or 527,120,000 bushels to feed. By allocating total production among these three uses, exports are assumed as domestic use.

In determining the retail value of wheat as food, it is assumed that all food is flour. There are 44 pounds of flour per bushel of raw wheat. Thus, 73,796,800,000 pounds of flour are available from the 1994 wheat crop.

The BLS determined the 1994 retail price for wheat flour was $0.23 per pound. At $0.23 per pound, the 73,796,800,000 pounds of flour have a retail value of $16,973,264,000.

Winter and spring wheat were considered in determining the retail value of wheat as seed. Of the wheat allocated to seed, 61 percent or 116,924,800 bushels are winter wheat and 39 percent or 74,755,200 bushels are spring wheat. Winter wheat seed is valued at $5.00 per bushel. At $5.00 per bushel, winter wheat's retail value as seed is $584,624,000. Spring wheat seed is valued at $7.00 per bushel. At $7.00 per bushel, spring wheat's retail value is $523,286,400. The combined retail value of wheat as seed in 1994 is $1,107,910,400.

Retail values of beef, swine, poultry and dairy products were used in determining the retail value of wheat as feed. The contribution (as a percentage) of the feed to each respective meat or dairy product was multiplied by the respective product's retail value to determine the retail value of wheat as feed. The estimated retail value wheat as feed is $5,896,933,787.

The total value of wheat as food, seed and feed is an estimated $23,951,108,187.

Grain Sorghum

The retail value of the 1993/1994 average grain sorghum crop is about $11.6 billion.

For this report, an average was taken of the 1993 and 1994 crops in order to give a more accurate picture of the crop's average size. In 1993, grain sorghum production was 534,000,000 bushels and in 1994, was 655,000,000 bushels, for an average of 594,500,000 bushels.

The entire crop was assumed to be used as feed.

Retail values of beef, swine, poultry and dairy products were used in determining the retail value of sorghum as feed. The contribution (as a percentage) of the feed to each respective meat or dairy product was multiplied by the respective product's retail value to determine the retail value of grain sorghum as feed. Grain sorghum as feed has an estimated retail value of $11,659,257,419.

Soybeans

The estimated retail value of the 1994 soybean crop is $72 billion, and production was 2,194,000,000 bushels.

It is assumed that the entire crop was used domestically, that all oil was used as food and that the remainder was used as meal. For every bushel of soybeans there are 11.1 pounds of oil and 47.8 pounds of meal. Based on crop size, in 1994, there were 27,938,700,000 pounds of oil available and 120,312,600,000 pounds of meal available for sale.

The price of oil reported by BLS was used in determining the retail value of soybeans as food oil. In 1994, the BLS reported the retail price for cooking oil to be $0.85 per pound. At this price, the retail value for soybeans used in oil is estimated at $23,747,895,000.

Retail values of beef, swine, poultry and dairy products were used in determining the retail value of soybean meal as feed. The contribution (as a percentage) of the feed to each respective meat or dairy product was multiplied by the respective product's retail value to determine the retail value of soybean meal as feed. The estimated retail value of soybean meal as feed is $48,300,000,000. The total value of the soybean crop for 1994 is estimated to be $72,047,895,000.

Corn

The retail value of corn for the average of the 1993 and 1994 crops was about $99.1 billion.

For this report, an average of the 1993 and 1994 crop was taken in order to give a more accurate picture of corn's retail value. In 1993, corn production was 6,336,000,000 bushels and in 1994, it was 10,103,000,000, for an average of 8,219,500,000 bushels.

The crop is distributed among domestic end uses as follows: sweetener is 6 percent or 541,154,370 bushels, ethanol is 7 percent or 602,827,828 bushels, food is 10 percent or 818,684,935 bushels, and feed is 76 percent or 6,256,832,867 bushels. By allocating total production among these four uses, exports are assumed as domestic use.

A bushel of corn yields 33 pounds of sweetener. Applying 6 percent of sweetener use to an average crop of 8.2 billion bushels produces 271,243,500,000 pounds of sweetener available for sale. The retail price for corn sweetener is $0.39 per pound. At this price, the retail value of corn sweetener is $6,964,656,736.

A bushel of corn yields 2.5 gallons of ethanol. If 7 percent of an average corn crop goes to ethanol there are 20,548,750,000 gallons of ethanol for retail sale. The retail price for ethanol is reported at $1.09 per gallon. At this price, the retail value of ethanol is $1,642,705,833.

A bushel of corn provides 50 cans of corn for food. At this conversion, with 10 percent of an average crop in food uses, there are 410,975,000,000 cans of corn available for food. It is assumed in this report that all food is canned corn. The retail price for canned corn is reported at $0.67 per can. At this price, the estimated retail value of corn as food is $27,425,945,307.

Retail values of beef, swine, poultry and dairy products were used in determining the retail value of corn as feed. The contribution (as a percentage) of the feed to each respective meat or dairy product was multiplied by the respective product's retail value to determine the retail value of corn as feed. Corn as feed has an estimated retail value of $63,090,130,709.

The sum of the retail values for corn end uses is $99,123,438,585.

Conclusion

Cotton's retail value grew 192 percent in the last 15 years. The two components of growth included a 43.2 percent growth in crop size and a 56.8 percent growth in retail value per pound. Only grain sorghum, which increased its total retail value by 300 percent, grew faster than cotton.

Cotton's closest total retail dollar value competitor is corn. Corn accounts for more than 30 percent of the total retail value of the commodities considered, while cotton accounts for 40 percent of the total.

If the next 15 years see U.S. cotton growing at the same rate as the past 15 years, then cotton's retail value in 2009 could be more than $300 billion.