AGRICULTURAL OUTLOOK -- SUMMARY                        September 21, 1998
October, 1998, AO-255
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 within 3 working days following this summary 
release.    
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Value of U.S. Ag Exports To Decline in Fiscal 1999 

The value of fiscal 1999 U.S. agricultural exports is projected at $52
billion,down $2.5 billion from the revised 1998 forecast.  While overall
volume isprojected to increase nearly 5 percent, total value is declining
because prices for a number of key commodities are forecast lower.  The value
of bulk exports is forecast at $18 billion in 1999, down $2 billion from 1998. 
Behind the drop in prices and total export value are three major factors:
large world supplies, weak global demand, and a strong U.S. dollar.  Carol
Whitton (202) 694-5287; cwhitton@econ.ag.gov

Low Prices Test 1996 Farm Act

This year's significant decline in prices for many crops has raised questions
about policy tools for  counteracting current low prices.  Payment rates for
the new production flexibility contract (PFC) payments under the 1996 Farm Act
are fixed and not related to prevailing market conditions, unlike income
support payments under previous legislation.  The countercyclical policy
response under current law is provided by two other key policy
tools--nonrecourse marketing assistance loans and loan deficiency payments.
With declining commodity prices, farmers are taking advantage of these two
programs.  Dennis Shields (202) 694-5331; dshields@econ.ag.gov

Food Price Rises in 1998, 1999 Lowest in 5 Years

Large supplies of meats and a low general inflation rate in 1998 are
benefiting and will likely continue to benefit consumers.  With 8 months of
Consumer Price Index (CPI) data already collected, the annual average food CPI
is 2.1 percent above the first 8 months of 1997.  Food prices are forecast to
increase only 2 percent in 1998 and 2-2.5 percent in 1999.  Such modest
increases have not been seen since 1992 and 1993, when food prices increased
only 1.2 and 2.2 percent. Annette Clauson  (202) 694-5373;
aclauson@econ.ag.gov

Cuba's Economic Collapse Leads To Some Market Reforms

The Cuban economy collapsed after the loss of Soviet subsidies in the early 1990's. 
Cuban economic output fell 50 percent. Cuba responded to this crisis, in part, by 
beginning to open its economy to market forces and pursuing more open trade with 
other countries in the hemisphere. Initiating market oriented reforms, allowing 
foreign investment, and promoting diversified exports sets the stage for economic 
recovery. If Cuba joins the global market economy, its economic and agricultural 
influence in the Caribbean could increase significantly. Should U.S.-Cuba trade 
open, Cuba could be a new source for some U.S. agricultural and food products--
such as sugar, vegetables, tropical and citrus fruits, seafood, and tobacco--and
a destination for both U.S. investment and agricultural exports. Contact: William 
Kost, 202-694-5226, wekost@econ.ag.gov

Onions: Sweet Smell of Success

Onions rank fourth among U.S. vegetables in per capita consumption as well as
in value (behind potatoes, tomatoes, and lettuce).  Onion consumption in 1997,
at18.8 pounds per capita, was just under the record of 18.9 pounds set in
1995.  From 1995 to 1997, farm cash receipts for onions averaged $711
million--5 percent of receipts for all vegetables--with an estimated retail
value of over 2 billion.  Output and per capita use of the two major
categories of bulb onions grown in the U.S.--storage onions and the milder
spring/summer varieties--have increased during the 1990's.  The U.S. is a net
exporter of fresh and processed onions, with exports totaling $169 million in
1997 and imports at $131 million.  Gary Lucier (202) 694-5253;
glucier@econ.ag.gov

Hired Farm Labor in U.S. Agriculture

In 1997, the Department of Labor certified that U.S. workers were unavailable
to fill 23,352 farm jobs, mostly in the Southeast, opening them to temporary
foreign guestworkers through the H-2A  provisions of the Immigration and
Nationality Act.  The number is up from 17,557 in 1996 and 12,173 in 1994. 
Increased enforcement of immigration laws has led many farm employers to fear
the loss of much of the current labor supply in agriculture--estimates of the
share of fraudulently documented workers in the domestic hired farm labor
force range from 25 to 75 percent.  In response, the U.S. Senate passed a bill
in July to streamline the current H-2A procedures, leading to intensified
debate over the need for foreign guestworkers to supplement the domestic hired
farm labor force.  Anne B. W. Effland (202) 694-5319; aeffland@econ.ag.gov

Clean Water Action Plan To Affect Agriculture

An ambitious Federal proposal for improving and protecting water quality could
affect the way farmers manage their land in many parts of the country.  Issued
in February, the Clean Water Action Plan (CWAP) is a guidepost for future
national water quality policy involving a fundamental shift to emphasize
control of nonpoint sources of pollution.  Runoff from cropland and feedlots
in agriculture is generally recognized as the largest single contributor of
nonpoint-source water pollution in the U.S.  On September 17, the
Administration announced a major national strategy for managing livestock
waste, as part of the CWAP.  Marc Ribaudo (202) 694-5488; mribaudo@econ.ag.gov

Printed copies of Agricultural Outlook will be available in about 2 weeks. 
For further information call Dennis Shields  (202) 694-5331.  The full text of
the magazine will be available electronically within 2 working days at
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/.  For details
on electronic subscriptions, call (202) 694-5050.

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