NOTE: AO has 10 issues in 1998.  Please note that reports are released in one
month, BUT THE ISSUE DATE IS FOR THE FOLLOWING MONTH; e.g., the May 1998 issue
is released in April.

AGRICULTURAL OUTLOOK -- SUMMARY                             December 21, 1998
January/February 1999, AO-258
     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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Net Farm Income To Decline but Remain Near 1990-98 Average

USDA's financial outlook for U.S. agriculture remains generally favorable,
despite recent price collapses for many commodities.  With prospects of lower
production expenses and additional government payments authorized by recent
legislation, net farm income for 1999 is forecast down $3.4 billion to $44.6
billion, still near the 1990-98 average of $45.5 billion.  Farmers' equity
should increase for the 10th straight year, reflecting the combination of a
relatively small increase in agricultural assets and a modest decline in farm
debt.  Nonetheless, specific segments of the industry and areas of the country
will continue to struggle with cash flow problems.  Mitch Morehart (202)
694-5581; morehart@econ.ag.gov

Financial Crises Abroad, Lower Feed Costs Shape Broiler Prospects

Economic crises in Asia and Russia have combined to depress U.S. poultry
export projections for 1998 and 1999, especially for broilers.  The 1998
broiler export estimate has been lowered to 4.5 billion pounds and the
forecast for 1999 reduced to 4.3 billion.  Because the export market impact
has been on dark meat, which represents only 25-35 percent of the value of a
broiler, the strength of the domestic market has offset potential negative
effects on profitability.  U.S. broiler producers? net returns were near
record levels this summer as wholesale meat prices have been up and feed costs
have been about 20 percent below a year earlier.  As a result, U.S. broiler
production is expected to grow about 5 percent in 1999.  David Harvey (202)
694-5177; djharvey@econ.ag.gov

Green Industry Receipts Grow Despite Imports

The U.S. green industry--producers of indoor and outdoor flowers and
plants--has seen cash receipts rise an average $500 million per year for more
than a decade despite a steady loss of domestic market share to foreign
growers.  Consumer confidence in a robust economy, and low interest rates that
spur new housing and businesses, will push retail floral and plant product
purchases to a record $54.6 billion in 1998, up $2.9 billion from 1997.  Doyle
C. Johnson (202) 694-5248; djohnson@econ.ag.gov

Cigarette Price Increase Follows Tobacco Pact

Key elements of the recent agreement between the tobacco industry and state
attorneys general require manufacturers to pay $206 billion to states over a
25-year period (including $250 million for research to reduce youth smoking)
and to spend $1.5 billion over 10 years to support anti-smoking measures. 
Combined with expenses from four previous individual state settlements, the
agreement will have an inflationary effect on cigarette prices -- the
wholesale price of cigarettes, including tax, has already gone up nearly 50
percent since January 1998.  Cigarette consumption is expected to decline,
curbing demand for tobacco leaf and reducing marketing quota levels.  This
year?s higher tobacco prices mask the potential for lower quotas to reduce
overall cash receipts for growers.  Thomas Capehart, Jr. (202) 694-5311;
thomasc@econ.ag.gov

Farming Under Contract

Nearly $60 billion of  U.S. crops and livestock - about one-third - was grown
or sold under contract in 1997, according to USDA's Agricultural Resource
Management Study, and more than 1 in 10 farm operators reported income from
contractual arrangements.  Two-thirds of farms with contracts (marketing
and/or production) in 1997 were small family farms (sales under $250,000), but
larger family farms (sales $250,000 and over) and nonfamily farms accounted
for more than three-fourths of the value of products grown and sold under
contract.  David Banker (202) 694-5559; dbanker@econ.ag.gov

Conservation on Rented Farmland: A Focus on U.S. Corn Production

ERS analysis indicates a significant relationship between land tenure and corn
farmers? decisions to adopt certain conservation practices.  Based on 1996
data, cash-renters and share-renters are less likely than owner-operators to
adopt contour farming, strip cropping, or grassed waterways--practices
offering only longer term benefits. Cash-renters are also less likely to adopt
conservation tillage, a practice that provides short-term profits as well as
longer-term benefits, while share-renters adopt this practice at about the
same rate as owner-operators.

These findings may have implications for resource use and environmental
quality in U.S. agriculture, since USDA?s Natural Resources Conservation
Service estimates that half of U.S. cropland needs additional conservation
treatment in order to maintain productivity.  If the percentage of farmland
rented, especially through cash leases, continues to rise as it has in recent
decades, future adoption of certain conservation practices, at least for corn
producers, may be lower than otherwise expected.  Meredith Soule (202)
694-5552; msoule@econ.ag.gov

Technology Eases Perishables? Journey

Advances in transportation technology have extended the marketing reach of
U.S. perishable products by reducing delivery times, maintaining product
quality, and reducing costs.  The revolution in perishable product shipping
technology began with containerization-handling standardized containers filled
with cargo, rather than handling the cargo itself.  Next came "reefers"-- 20-
or 40-foot boxes with their own refrigeration units -- and a further
refinement -- controlled atmosphere technologies -- which allowed shippers to
regulate gases and humidity within containers to slow ripening, retard
discoloration, and maintain freshness of supersensitive perishables. 
Conventional refrigerated carriers are meeting the container ship challenge by
concentrating into fewer and larger firms, utilizing capacity more effectively
year-round, speeding cargo handling, and installing highly efficient
refrigeration systems.  Nicole S. Ballenger (202) 694-5202; nicole@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 tomorrow at
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/.  For details
on electronic subscriptions, call (202) 694-5050.

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