Agricultural Outlook May 2002

Nora Brooks, Economics Editor

Agricultural Outlook No. (291) May 2002

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 30 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. Release of summary for the June/July 2002 issue: May 21, 2002. Release of complete text-only version: May 22.

In this report ...

Articles are in Adobe Acrobat PDF format.

Contents, 65 kb

In This Issue, 42 kb

Agricultural Economy

• Farm Credit Use to Expand Moderately in 2002—Farm lending, which has been growing since 1992, is expected to rise again in 2002. Last year, U.S. farmers held $192.8 billion in farm loans. For 2002, a rise of 1.9 percent is forecast, the smallest annual growth in a decade. With limited or no gains in farm commodity prices expected this year, and uncertainties about future levels of direct government payments, farmers and lenders may be more cautious about adding debt. Jerome Stam (202) 694-5365, 115 kb.

• Interest Rates on Farm Loans to Increase During 2002-03—Borrowers, including farm borrowers, are likely to encounter rising interest rates in 2002 and 2003 after enjoying declining rates since mid-2000. The upward pressure comes from the economic rebound that began in late 2001, stronger business credit demand, tighter domestic monetary policy, and gradually accelerating economic growth. Farm loan rates are expected to increase less than most interest rates. Paul Sundell (202) 694-5333, 104 kb.

Briefs

• Increased Fall Potato Acreage Expected—Significantly higher grower prices and relatively low stocks this spring are among the factors pointing to an increase in potato acreage for fall harvest this year. However, other factors such as uncertain processor demand, potential for increased Canadian competition, and acreage intentions for several alternative crops put the extent of potato acreage increase in question. Planted acreage is forecast to increase by 4 to 7 percent. Charles Plummer (202) 694-5256, 147 kb.

Commodity Spotlight

• Soybean & Cotton Plantings to Decline in Favor of Corn in 2002—Planting intentions in 2002 for the eight major U.S. field crops amount to 248.3 million acres, nearly identical to last year's plantings despite widespread weak price signals. Corn planting intentions are up 4 percent from last year, due partly to reduced fertilizer costs for corn production and lower anticipated returns for competing crops. Crop rotation considerations and uncertainty about the farm bill may also draw acreage from soybeans to corn. William Lin (202) 694-5303, 141 kb.

• Oats Market Strong in 2001/02—Oats, least prominent of the feed grains, have gained attention as prices climb and buyers scramble to ensure supplies. The U.S. currently imports about 30 percent of its total oats supply, primarily from Canada. While world stocks are projected to increase in 2001/02 due to larger global production, stocks of high-quality milling oats are projected to decline significantly-e.g., in Canada. William Chambers (202) 694-5312, 73 kb.

World Agriculture & Trade

• Argentina's Economic Crisis: Can the Ag Sector Help?—A simple resolution to Argentina's severe economic crisis does not appear imminent. Although devaluation of the Argentine peso could eventually generate an export-led recovery, agricultural production and exports will likely be hindered by new export taxes, capital controls, higher input prices, and tight credit. To improve cash flow and reduce expenses, Argentine farmers may switch some corn production to a soybean-wheat double-cropping rotation. David Torgerson (202) 694-5334, 158 kb.

• Could the NIS Region Become a Major Grain Exporter?—Western analysts have predicted that reform in the New Independent States (NIS) of the former Soviet Union could transform the region from a large grain importer into a major grain exporter. This will depend mainly on whether it can produce grain at a relatively low cost. Recent research by USDA's Economic Research Service indicates that production costs relative to other producing countries do not currently support large NIS grain imports or exports. William Liefert (202) 694-5156, 122 kb.

• Farmland Protection Programs: What Does the Public Want?—Public support has been growing for government farmland protection programs, driven by the perception that farmland produces more for society than food and fiber, such as scenic views, environmental benefits, and maintaining an agrarian heritage. Designing and implementing a cost-effective farmland protection program with maximum benefits requires an understanding of public preferences for particular amenities as well as which amenities are best provided by preserving farmland. Dan Hellerstein (202) 694-5613, 109 kb.

Special Article

• China: En Route to a New Role in Global Agriculture—Beyond the events that have recently captured the attention of policymakers is a broader picture of China's evolving role in agricultural markets. As China develops and integrates with the world economy, it is likely to become an even larger and steadier customer for agricultural imports. China could also become a competitive exporter of fruits, vegetables, fish, meat, and poultry if its production were modernized, its marketing infrastructure improved, and food safety and animal health issues resolved. Fred Gale (202) 694-5215, 58 kb.

Statistical Indicators, 175 kb.

Introducing a new electronic newsletter/yearbook on floriculture and environmental horticulture, 43 kb

Entire issue, 701 kb.

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Updated date: May 2002