U.S. agricultural exports are expected to increase in the next year, but their value will continue to drop for another year before recovering, according to a Food and Agricultural Policy Research Institute study released Feb. 23.
"The decline in export value is due to low commodity prices," said John Beghin, FAPRI director and professor of economics at Iowa State University. "But with the Asian financial crisis behind us and as global food demand progressively recovers, the United States is in an excellent position to capitalize on expanding consumption, especially in meats and feed grains."
Most agriculture sectors are expected to do poorly when compared to previous decades, the annual report said. Net farm income is forecast to drop until 2005 when any recovery will be partially offset by rising production costs. Net farm income is expected to stay around $40 billion per year for the next five years, which is lower than 1999's $48.7 billion. The farm income baseline assumes no additional government assistance packages.
The value of exports, after dipping this year, is predicted to rise by more than 40 percent by 2009 while direct feed-grain exports are expected to increase by 16 million metric tons. This growth in grain exports is linked to an anticipated increase in per capita meat consumption.
"World meat production will increase 16.5 percent over the next decade to supply the additional meat demand around the globe, which consequently raises the use of feed grains," said Samarendu Mohanty, FAPRI crop analyst.
The study, which is used by the government to analyze farm policy, predicted food cost increases of two percent per year while the overall consumer price index increases 2.5 percent per year. In 1999, food prices rose 2.1 percent, led by dairy and fruit prices.
Other forecasts:
Beef: The beef cycle, now in liquidation phase of the U.S. cow herd, continues to tighten the supply on feeder calves and market cattle, raising prices for the coming three years. Fed cattle, based on Nebraska markets, are expected to average $70 per hundredweight this year and reach $76 in 2003.
Hogs: Two hog cycles are predicted in the coming decade with the first rising from an average of $38 per hundredweight in 2000 and peaking at $43.50 in 2003. The report shows hogs averaging $5 per hundredweight lower over the baseline period than for the previous decade.
Poultry: Broilers are expected to increase 4.6 percent next year and stay at that rate through the decade. Broiler producers sold 29.4 billion pounds of chicken in 1999. Broiler prices are not expected to rise above the 57 cents per pound projected for 2001.
Dairy: Prices for 2000 are expected to average $12.86 per hundredweight at the farm gate, down $2.50 from 1998. Milk production increased 3.4 percent last year and is projected to continue upward 1.2 percent per year through 2009. Milk prices are expected to remain stable at an average of $12.86 from 2000 to 2009.
Soybeans: Soybean prices are expected to drop this year about a dollar below the U.S. loan rate of $5.26 per bushel. By the end of the decade, prices are projected to average $5.60.
Corn: The FAPRI sees a decline in corn stocks by 20 million bushels this year, allowing prices to rise above an average of $2 per bushel in 2000 and continue to $2.50 by 2009. Corn exports are projected to increase to more than 2 billion bushels in 2000.
Wheat: World supplies have depressed prices, leading to lower plantings. Export demand is expected to recover and continue growing. Prices are seen at $2.81 per bushel in 2000 and are expected to increase to about $3.50 by the end of the decade.
The FAPRI is funded in part by Congress and the Agricultural Experiment Stations of the participating land-grant universities.
Copyright c 2000 by The Bureau of National Affairs, Inc., Washington D.C.:
