NOTE: AO has 10 issues in 1999.  Please note that reports are released in one
month, BUT THE ISSUE DATE IS FOR THE FOLLOWING MONTH; e.g., the May 1999 issue is
released in April.

AGRICULTURAL OUTLOOK -- SUMMARY                        December 20, 1999
January/February 2000, ERS-AGO-268
     Approved by the World Agricultural Outlook Board
--------------------------------------------------------------------------------
This SUMMARY is published by the Economic Research Service, U.S. Department
of Agriculture, Washington, DC 20036-5831.  The complete text of the 
report will be available electronically 2 working days following this summary
release.    
--------------------------------------------------------------------------------
U.S. Economy Shows Continuing Strength

U.S. economic expansion continued in 1999 near the 4-percent rate of 1997 and
1998, but growth in Gross Domestic Product is expected to slow slightly in
2000 to 3.5 percent.  Over 2.5 million jobs will be added in 2000, and
compensation will rise 3.6 percent overall, triggering a strong rise in
personal income.  Solid consumer spending growth brought on by rising personal
income and stock market returns in 1999 will slow in 2000, but should be quite
strong, reflecting high consumer confidence.  The robust 1999 economic growth
was spurred by consumer and investment spending, which more than offset the
rise in the trade deficit.  David A. Torgerson (202) 694-5334;
dtorg@econ.ag.gov

Ag Trade & International Financial Crises

The 1997-99 international financial crises that began in parts of Asia and
spread to the former Soviet Union and Brazil led to currency depreciation,
reduced economic growth, and higher interest rates in those countries. 
Currency depreciation helped some agricultural producers in the crisis
countries by making their products more competitive in export markets and
raising domestic prices.  But consumption of agricultural commodities in
crisis countries fell as currency depreciation brought on higher prices for
domestic and imported goods and as income declined.

The economic upheaval in the crisis countries had global impacts.  For the
U.S., the financial crises, along with depressed global commodity prices,
reduced agricultural exports and decreased the agricultural trade surplus, but
lowered costs for imports and helped to keep inflation in check.  The recovery
of the crisis economies in 1999 will help boost  the volume of U.S.
agricultural exports in FY2000, although the overall value is expected to
remain flat.  Suchada Langley (202) 694-5227; slangley@econ.ag.gov

Growing Pressure on China's Water Resources

China is one of the world's most water-deficient economies, and water scarcity
is viewed as a major threat to China's long-term food security.  While the
agriculture sector is still by far the largest user of China's water
resources, rapid population expansion and economic growth are generating
rising demand for urban and industrial use.  China's leaders state that urban
and industrial users will have first priority and that the proportion of water
for irrigation purposes will decrease incrementally in the next few decades. 
While some areas continue to use water at unsustainable rates, the dominant
current trend is for both policy makers and farmers to begin adjusting to
conditions of less water available for agriculture.  The effects on crop mix
could have consequences for trade.  Frederick W. Crook (202) 694-5217

Cigarette Consumption Declines As Prices Climb

U.S. tobacco growers continue to be significantly affected by the November
1998 Global Tobacco Settlement between cigarette manufacturers and state
attorneys general.  Cigarette manufacturers increased prices to cover costs of
the settlement, pushing cigarette consumption to the lowest level since 1957. 
This resulted in reduced demand for tobacco leaf.  With cigarette and tobacco
leaf exports also falling, grower incomes are likely to decline.  Thomas
Capehart, Jr. (202) 694-5311; thomasc@econ.ag.gov

Tree Nut Supply Bountiful

Record world supplies of almonds, walnuts, and hazelnuts--the three most
important tree nuts in terms of global production and trade--are pushing
availability of tree nuts to all-time highs and depressing grower prices. 
This season's large supply and low nut prices overall will likely boost
consumption and trade volume in the U.S. and abroad.  U.S. exports of almonds-
-the top-value U.S. horticultural export--are forecast to rise 13 percent from
last year, due partly to a weakening U.S. dollar.  Exports of U.S. walnuts are
expected to reach a record high.  Doyle Johnson (202) 694-5248;
djohnson@econ.ag.gov

Analyzing Farm Safety Net Scenarios

USDA's Economic Research Service (ERS) has analyzed the concept of government
assistance to agriculture based on ensuring some minimum standard of living
for farm households.  Guided by examples from existing Federal programs that
assist low- and  middle-income households, ERS constructed several safety-net
scenarios for assisting farm households, retaining current government
commodity programs.  Results indicate, for example, that households of almost
all farms classified as limited-resource in the ERS farm typology would
receive safety-net payments, compared with less than one-fifth who received
direct government payments in 1997.  Total safety-net payments going to
households of family farms with annual sales over $250,000 would be half the
amount of direct payments made to farmers in 1997.  Mitchell Morehart (202)
694-5581; morehart@econ.ag.gov

Approved by the World Agricultural Outlook Board
Printed copies of Agricultural Outlook will be available in about 2 weeks.

END_OF_FILE
