Agricultural Outlook April 2001

Dennis A. Shields, Economics Editor

Agricultural Outlook No. (280) April 2001

About this magazine

AO is the main source of USDA's farm and food price forecasts. AO emphasizes the short-term outlook for all major areas of the agricultural economy. It also presents long-term analyses of such issues as U.S. agricultural policy, trade forecasts and export-market development, food safety, the environment, and farm financial institutions. Each issue includes 25 pages of data on individual commodities, the general economy, U.S. farm trade, farm income, production expenses, input use, prices received and paid by farmers, per capita food consumption, and related issues. AO is published 10 times per year by the Economic Research Service, U.S. Department of Agriculture. Materials may be reprinted without permission. Contents have been approved by the World Agricultural Outlook Board.

In this report ...

Articles are in Adobe Acrobat PDF format.

Contents

In This Issue...

Agricultural Economy

• U.S. Farm Economy in 2001--While the general weakness in agricultural markets of the past couple of years continues, early signs of recovery are evident. Many farm sector indicators remain favorable, including asset values and debt levels, due in large part to record government payments. However, the next couple of years are unlikely to see a strong rebound in farm prices and market income for major crops, unless global crop output drops significantly.

Briefs

• Modest Rise in Food Prices This Year­Consumers can expect modest increases in food prices in 2001, with the Consumer Price Index (CPI) for all food projected up 2 to 2.5 percent. For food prepared at home, the CPI in 2001 is projected to rise 2 to 2.5 percent while food away from home is expected up 2.5 to 3 percent. Continuing large meat production, lackluster growth in exports, and a slowing domestic economy may pressure meat prices downward. Reduced winter acreage in first-quarter 2001and several bouts of sub-freezing weather in Florida have raised fresh-market produce prices. Annette L. Clauson (202) 694-5389.

• Sheep & Lamb Inventory Continues To Decline--The U.S. sheep industry continues a long-term trend of negative growth that has seen inventory shrink from a 1942 peak of 56 million head to 6.92 million head on January 1, 2001. This year's inventory is 2 percent below the level on January 1, 2000, and 50 percent below 1975, reflecting decreasing U.S. demand for wool and for lamb and mutton, and rising competition from Australia and New Zealand. Keithly Jones (202) 694-5172.

Commodity Spotlight

• Lettuce: In & Out of the Bag--Lettuce has never been more popular in the U.S. The average American consumed 33 pounds of lettuce in 2000, an all-time high. In response to growing consumer demand for variety, freshness, and convenience and as a result of technological innovations in packaging materials, lettuce shippers offer customers everything from heads of iceberg to ready-to-eat salads. They have also adopted various business strategies to manage demand for greater volume, broader product lines, and year-round availability. Lewrene Glaser (202) 694-5246.

World Agriculture & Trade

• Japan's Changing Agricultural Policies--Japan's government is revising its agricultural policies and programs to stem the decline in self-sufficiency in food production, and to ensure that its farm program expenditures will be exempt from reductions required under World Trade Organization rules. Major initiatives are underway to change the structure of farming and to make it more efficient. Japan's new policy stance explicitly recognizes that food security depends on continued imports and available stocks, as well as on maintaining domestic production capability. John Dyck (202) 694-5221.

Policy

• Recommendations: Commission on 21st Century Production Agriculture--The Commission on 21st Century Production Agriculture, established under the 1996 Farm Act, released its report on January 31, 2001, concluding that the Federal government should develop policies and programs promoting global competitiveness of U.S. farm products. The Commission recommended specific legislative approaches to assure an income safety net for producers, enhance risk management options, support conservation and environmentally beneficial practices, improve agricultural trade opportunities, revise individual commodity policies, and assist small and limited-resource farms. Edwin Young (202) 694-5336.

Resources & Environment

• Smart Growth: Implications for Agriculture in Urban Fringe Areas--Smart growth is a catch-all phrase to describe a number of land use policies to influence the pattern and density of new development. Smart growth directs development to designated areas (cities and older suburbs) through incentives and disincentives. Landowners most likely to experience the effects are those in close proximity to existing population centers or planned growth areas. One of the greatest impacts of smart growth policies on local agriculture will be changes in farmland values because farm real estate dominates total farm assets. Cynthia Nickerson (202) 694-5626.

Statistical Indicators

Accessing Outlook Forum Speeches & Projections

Entire issue

Next Issue: The summary for the May 2001 issue is released on April 18, 2001. The complete text-only version is available the following day.

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Updated date: April 2001