NOTE: AO has 10 issues in 2000.  Please note that reports are released in one
month, BUT THE ISSUE DATE IS FOR THE FOLLOWING MONTH; e.g., the May 2000 issue
is released in April.

AGRICULTURAL OUTLOOK -- SUMMARY                        July 20, 2000
August 2000, ERS-AO-273
     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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U.S. Wheat Economy Confronts Challenges

The U.S. wheat sector enters the new century facing many challenges, despite a
strong domestic market for wheat products. U.S. wheat area is trending down
because of declining returns relative to other crops, due partly to continued
sharp competition from abroad.  U.S. share of the world wheat market has
eroded for more than two decades, with exports holding fairly steady while
global wheat trade increased.  During the past quarter century, U.S. per
capita consumption of wheat as food products shows an upward trend, and the
rise has benefited the U.S. wheat processing industry, although foreign
producers have captured a share of the expanded domestic market.  Gary Vocke
(202) 694-5285; vocke@ers.usda.gov

Global wheat consumption will outpace production for a third year, causing
worldwide wheat stocks to drop 10 percent in 2000/01.  But exporters' stocks
remain large, and U.S. prices are forecast little changed from a year earlier. 
The extent of an increase in world wheat trade--forecast to reach its highest
level in nearly 10 years--is likely to be crucial for wheat prices in 2000/01. 
 Edward W. Allen (202) 694-5288; ewallen@ers.usda.gov
U.S. Field Crop Acreage Expands 

Planted area for the eight major U.S. field crops totals 254.9 million acres
in 2000, up more than 3 million acres from last year when prices were lower
for most crops at planting time.  According to USDA's June 30 Acreage report,
increases in soybean, corn, barley, wheat, and cotton area more than offset
declines in sorghum, oats, and rice.  U.S. farmers have planted a record 74.5
million acres of soybeans in 2000, 1 percent over last year's record.  Corn
plantings increased to an estimated 79.6 million acres, up 3 percent. Normal
weather in the coming months would result in large output and stable or
declining farm prices for most U.S. field crops in 2000/2001.  Robert A.
Skinner (202) 694-5313; rskinner@ers.usda.gov

Slow Growth Persists for U.S. Meat Exports
 
Growth in overall U.S. red meat and poultry exports is expected to continue on
a slow course this year and actually flatten in 2001, as increases in pork and
broilers are offset by declines in beef and turkey.  Sluggish growth in total
meat exports in recent years can be traced to a healthy economy in the U.S.,
where strong domestic demand has bid up prices of meat products.  At the same
time, buying power of some major importers of red meats and poultry (e.g., in
Russia and Asia) dropped as incomes fell and currencies collapsed.  Leland
Southard (202) 694-5187; southard@ers.usda.gov

U.S. Agricultural Imports Head Higher

U.S. imports of agricultural commodities and products are projected to reach
$39 billion in fiscal 2000, a 72-percent increase from 1990. This astonishing
growth results in part from exceptional U.S. economic expansion during the
decade.  In the last half of the decade, the strong U.S. dollar and sluggish
growth or recessions elsewhere in the world have also contributed to the surge
in U.S. imports.  Continued strong U.S. economic growth, the dollar's high
purchasing power, and relatively low global  commodity prices point toward
higher imports in 2001. Alberto Jerardo (202) 694-5323; ajerardo@ers.usda.gov

Consolidation in Food Retailing

The U.S. food retailing industry has undergone unprecedented consolidation and
structural change in recent years.  Driven by expected efficiency gains from
economies of size, large retailers have since 1996 purchased almost 3,500
supermarkets, representing annual grocery store sales of more than $67
billion.  The nationwide share of sales for the four largest retailers rose
from nearly 16 percent in 1992 to almost 29 percent in 1998.

Widespread consolidation in the grocery industry raises questions about the
implications for consumers and food market suppliers such as grower-shippers,
food processors, and wholesalers.  Some consumers fear that fewer food
retailers will eventually mean higher grocery prices and less variety. 
Grocery suppliers worry that fewer but larger buyers could force prices lower
for products and services that food retailers purchase.  Retailers are likely
to continue consolidating in order to maintain profitability as competition
for the consumer food dollar heightens. Phil R. Kaufman (202) 694-5376;
pkaufman@ers.usda.gov

Does Genetic Engineering Reduce Crop Pesticide Use?

Planting genetically engineered (GE) crops appeals to producers because of the
potential to simplify pest management, reduce pesticide use, and help control
costs.  Analysis by USDA's Economic Research Service indicates that adoption
of GE corn, soybeans, and cotton is associated with a decrease in the number
of acre-treatments of pesticides (number of acres treated multiplied by number
of pesticide treatments).  Reduction in volume of active ingredients applied
is less consistent, since adoption alters the mix of pesticides used in the
cropping system, as well as the amounts used.  Comparison of different mixes
of pesticides involves evaluating tradeoffs between the amounts used and the
environmental characteristics, primarily toxicity and persistence.  For
example, the herbicide-tolerance trait in soybeans allows substitution of
glyphosate herbicides for other synthetic herbicides that are at least three
times as toxic as glyphosate and that persist in the environment nearly twice
as long. Ralph E. Heimlich (202) 694-5504; heimlich@ers.usda.gov

Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available 7/21 at
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2000/
The magazine in PDF will be posted in about 5 days, and printed copies will be
available in about 2 weeks.

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