USDA Agricultural Baseline Projections to 2008

by Paul Westcott

This report provides long-run baseline projections for the agricultural sector through 2008. Projections cover agricultural commodities, agricultural trade, and aggregate indicators of the sector, such as farm income and food prices. The baseline assumes no shocks and is based on specific assumptions regarding macroeconomic conditions, policy, weather, and international developments. The projections assume that current agricultural law of the 1996 Farm Act remains in effect throughout the baseline. The baseline projections presented are one representative scenario for the agricultural sector for the next decade. As such, the baseline provides a point of departure for discussion of alternative farm sector outcomes that could result under different assumptions. The projections in this report were prepared in October through December 1998, reflecting a composite of model results and judgmental analysis. This year's baseline reflects the effects of a number of international factors which have combined to weaken the U.S. agricultural trade outlook for the next 10 years, either by reducing global demand or increasing world supplies. Global supplies for many agricultural commodities are initially large, and expanding production potential in a number of foreign countries result in strong export competition throughout the baseline. The economic crisis in Asia and, to a lesser extent, the near-term economic contraction in Russia contribute to a prolonged period of weak global agricultural demand. Additionally, revised assumptions for China result in lower grain import demand through the baseline. In the initial years of the baseline, much of the U.S. agriculture sector is adjusting to a combination of weak demand and large global supplies. In the longer run, strong export competition and only moderate grain import demand in China continue to influence the baseline projections. Nonetheless, more favorable long-term global economic growth supports gains in trade and U.S. agricultural exports in the last half of the baseline, resulting in rising nominal market prices, gains in farm income, and increased stability in the financial condition of the U.S. agricultural sector.

Keywords: Projections, baseline, crops, livestock, trade, farm income, food prices

In this publication...

• USDA Agricultural Baseline Projections to 2008
• Frontmatter
• Introduction, Summary of Projections
• Macroeconomic Assumptions
• Agricultural Policy Assumptions
• Crops
• Livestock
• Farm Income and Farm Financial Conditions
• Food Prices and Expenditures
• Agricultural Trade

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