June/July 2001
Economics Editor: Dennis
A. Shields
This issue was published in June 2001 by the Market and Trade
Economics Division.
Abundant Field Crop Supplies Expected in 2001/02—Large
supplies of major U.S. field crops are expected again in 2001/02,
keeping downward pressure on farm prices for the fifth year, according
to USDA's first forecast for the season. Soybean supplies are expected
to be record large, and average farm price is forecast to drop about
5 percent from 2000/01. Corn prices are expected to be relatively
unchanged, as higher carry-in stocks largely offset lower production.
Wheat deviates from the general projection, with production down
12 percent and season-average farm price up 16 percent. Gregory
K. Price (202) 694-5315.
Meat & Poultry Production To Rise Slightly in 2002—Production
of red meat and poultry in 2002 is forecast at nearly 83 billion
pounds, up 1 percent from this year's expected level, and marginally
higher than the 2000 record. Continuing increases in pork and poultry
production, bolstered by profitability and continued low corn and
soybean meal prices, will more than offset a modest decline in beef
output. Despite record red meat and poultry supplies, relatively
strong domestic and foreign demand are maintaining prices. Leland
Southard (202) 694-5187.
Plenty of California Peaches & Nectarines Expected in 2001—Despite
some adverse winter and spring weather, California should harvest
a plentiful supply of peaches and nectarines this year, forecast
down just 5 percent from 2000. While stone fruit supplies should
be ample to meet summer demand, reduced production and high quality
may push up prices from last year. Export markets, if they are as
strong as last year's, could also help boost prices for stone fruits.
Agnes Perez (202) 694-5255.
Mexican Cattle Exports to U.S.: Current Perspectives—For
generations, cattle have played a key role in bilateral trade between
the U.S. and Mexico, and the composition of cattle trade has remained
relatively constant. The U.S. exports breeding stock and cattle
for slaughter to Mexico, while Mexico exports primarily feeder cattle
(young stock to finish gaining weight in feedlots) to the U.S. The
U.S. is expected to remain a major market for Mexican cattle producers,
who raise cattle suited for feeding with seasonal forage supplies.
Leland Southard (202)
694-5187.
China's Fruit & Vegetable Sector: A Changing Market Environment—China's
potential as a strong competitor in international fruit and vegetable
trade will likely be realized over the next several years. Although
China exports less than 1 percent of its fruit and vegetable production,
private-sector investment is creating world-class operations that
deliver high-quality fruits and vegetables within China and to international
markets. Growth in domestic demand, improvements in marketing practices,
and China's future agricultural policies will largely determine
how soon and how strongly its produce sector affects U.S. and world
markets. Dennis A. Shields
(202) 694-5331.
Using Farm-Sector Income as a Policy Benchmark—Measures
of farm-sector income are valuable indicators of how well U.S. agriculture
is performing, but may not fully capture the financial situations
of farmers and farm families. Intended policy outcomes and the actual
results often diverge because aggregate measures do not reveal the
wide variations in income and circumstances among various farm groups,
do not reflect off-farm income and wealth, do not reveal farmers'
debt problems, and give no indication of how many farms fail financially.
Mitch Morehart (202)
694-5581.
Impact of Government Payments to Farms Varies by Level of Profitability
& Household Income—High levels of government payments to
the U.S. farm sector have forestalled a significant drop in national
farm income in recent years. While payments boost both profitability
and household income, the gains in profitability are disproportionately
greater for farms with the highest and lowest rates of return, and
the income gains are greater for those at the lowest and highest
ends of the household income distribution. Jeffrey
Hopkins (202) 694-5584.
Government Payments to Farmers Contribute to Rising Land Values—Value
of agricultural land depends largely on its expected future earnings
from farming. Government payments indirectly support farmland values
and contribute to higher rents, generally benefiting farmland owners.
But for farmers who rent the land they operate, higher rental rates
can increase the risk of operating losses if commodity prices and
government payments decline. ERS analysis indicates that the contribution
of government payments to U.S. farmland value rose from about 13
percent during 1990-97 to 25 percent during 1998-2001. James
Ryan (202) 694-5586.
Falling Prices & National Farm Policy: The Northern Great Plains—Fluctuating
crop prices and farm incomes can affect the economic well-being
of rural communities and even entire regions. This is especially
so in the Northern Great Plains. Low crop prices during 1998-2000
triggered marketing loan benefits (MLBs) and emergency market loss
assistance payments (MLAs), propping up farm income and generating
spillover effects in the regional economy. A regional economywide
model shows the effects of MLBs and MLAs in stemming losses in jobs
and in gross regional product when crop prices decline. Stephen
Vogel (202) 694-5368.
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