U.S. sugar producers have been protected from foreign competition by import quotas. Cotton and rice exports fell sharply in the early 1980s, a situation that was reversed by the introduction of marketing loans as a new policy tool of the 1985 Farm Bill. The 1996 Farm Bill abandoned most income supports for program crops and this will allow market forces to set prices, including domestic and international supply and demand. Farmers' production decisions will be made in response to these market signals. A second reason for the South's high stake in world agricultural trade is that the South is a marginal production area for most of the major nationally important farm commodities such as wheat, corn, soybeans.
Production costs are generally higher in the South.
Therefore, when prices for these commodities have been relatively high, the South has rapidly expanded acreage and production, as was the case for soybeans in the 1960s and wheat in the 1970s. But when prices are low and profit margins are squeezed, as has been the case in recent years, the biggest downward adjustments also occur in the South. For example, from 1982 to 1992 the U.S. soybean acreage declined about 9 million acres or 13 percent. Virtually all of this adjustment occurred in the South where the acreage declined by more than 50 percent. Because of the South's unique position as a producer of regional specialty crops and a high-cost producer of most of the major, nationally grown commodities, southern agriculture is especially sensitive to the impact of world events.