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                             April 20, 1999
May 1999, ERS-AO-261
Approved by the World Agricultural Outlook Board
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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.    
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Feed Grain & Wheat Planting Intentions Down  

Planting intentions for the eight major U.S. field crops total 250.7 million
acres in 1999, down 2.1 percent from last year's planted area and down 3.9
percent from the most recent peak in 1996.  With prices depressed from a year
earlier, farmers intend to reduce corn plantings to the lowest level in 4
years, cutting back other feed grain area as well, and to plant the fewest
wheat acres in 26 years.  In contrast, farmers intend to plant more soybeans,
cotton, and rice.  While prices for these crops are also lower, expected
returns are higher than for competing crops, bolstered in part by prospective
gains under government nonrecourse marketing loan programs for soybeans and
cotton.  Planting intentions and trend yields suggest a very large U.S.
soybean crop and a slightly reduced but still large corn crop in 1999.  If
wheat yields approximate the average for the last 3 years, production will
decline.  William Lin (202) 694-5303; wwlin@econ.ag.gov

Catfish Industry to Haul in Higher Revenues
     
Catfish is the dominant, and most successful, sector of the U.S. aquaculture
industry, and accounts for over 50 percent of aquaculture production. 
Production is concentrated in four states--Mississippi, Alabama, Arkansas, and
Louisiana--with Mississippi's 65-percent share leading the way.  From 1990 to
1998, annual production of catfish rose from 392 to 599 million pounds, a 
53-percent increase, the result of a rise in both total acreage devoted to
catfish ponds and average per-acre production.  The 5-7 percent increase
forecast for 1999 would bring total production to 630-640 million pounds. 
Since both farm and wholesale prices are expected to remain about the same as
1998, farm sales for the catfish industry in 1999 should approach $500
million, up from $469 million. David Harvey (202) 694-5177;
djharvey@econ.ag.gov


Farmers to Cut Borrowing Amid Income Uncertainty
     
Farm sector borrowing is expected to decline by $1.3 billion in 1999, ending 
7 years of debt expansion. Given the expectation of lower crop prices and farm
income in 1999, as well as continuing uncertainty about the economies of some
major importers of U.S. farm products, farmers are likely to remain cautious
about debt use.  The 1999 debt forecast reflects the likelihood of fewer new
capital investments, as well as a relatively low incidence of farmers
borrowing their way out of cash-flow problems.  At yearend 1998, total farm
business debt was an estimated $170.4 billion, an increase of 3 percent from
1997, with nonreal estate loans up 3.4 percent and real estate loans up 2.6
percent.  The strong financial position of most commercial agricultural
lenders at yearend 1998 is expected to carry over into 1999.  Jerome Stam
(202) 694-5365; jstam@econ.ag.gov


Recent Developments in Crop Yield & Revenue Insurance
     
The Federal crop insurance program in the 1990's has broadened the scope and
variety of risk protection products offered to producers.  The list of covered
crops has grown from about 50 in the early 1990's to more than 70 in 1999.  A
major reform in 1994 dramatically increased acreage covered by crop insurance
by increasing insurance premium subsidies, adding a basic coverage level
(catastrophic), and linking insurance to other farm programs. Maximum optional
coverage levels have also been raised under pilot programs for some crops in
some areas of the country. Revenue insurance, a relatively new product that
provides income protection against both price and yield fluctuations, has
captured significant shares of the crop insurance business. At the same time,
private insurance companies have played a larger role in delivering crop
insurance, developing new products, and sharing underwriting risk.  Still,
questions remain about the adequacy of crop insurance coverage.   Robert
Dismukes (202) 694-5294; dismukes@econ.ag.gov


Tax-Deferred Savings Accounts for Farmers  
     
A program of tax-deferred savings accounts for farmers is among the
alternatives currently under consideration by Congress to help farm operators
manage year-to-year income variability.  A farmer could deposit funds into a
special Farm and Ranch Risk Management (FARRM) account during years of high
net farm income and draw on it during years with abnormally low income;
Federal income taxes would be deferred until withdrawal.  Taxpayers could
benefit if the additional financial diversification and liquidity these
accounts provide to farmers reduce the need for continued income support
programs or ad hoc farm disaster relief.  The program's effectiveness could be
limited if benefits are concentrated among operators with large farms and
relatively high off-farm income, or if farmers fund FARRM accounts with
existing liquid assets instead of new savings.  James Monke (202) 694-5358;
jmonke@econ.ag.gov


Concentration & Competition in the U.S. Food & Agricultural Industries
     
Concentration and competition have come into focus as the U.S. food and
agricultural sector continues to industrialize, with farms or factories
expanding in size, becoming more specialized, and relying more on contractual
and administrative methods for buying or selling agricultural commodities. 
Concentration--a sharp decline in the number of buyers or sellers in an
industry--may limit competition and affect prices, depending on such factors
as ease of entry into the market, availability of substitutes for the product,
and the nature of rivalry among existing firms in the market.  Broad
structural changes associated with industrialization also raise issues
unrelated to competition and market prices, such as environmental concerns
involving large livestock operations or processing plants.  James MacDonald
(202) 694-5391; macdonald@econ.ag.gov

END_OF_FILE
