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                        March 20, 2000
April 2000, ERS-AO-270
     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. Organic Agriculture Gaining Ground

U.S.-certified organic cropland more than doubled during the 1990's, and two
organic livestock sectors--eggs and dairy--grew even faster, according to a
new study by USDA's Economic Research Service.  U.S. producers are turning to
organic farming systems as a way potentially to lower input costs, decrease
reliance on nonrenewable resources, capture high-value markets and premium
prices, and boost farm income.  Markets for organic vegetables, fruits, and
herbs have been developing for decades in the U.S., and organic grain and
livestock markets are beginning to emerge.  Under USDA's new proposal for
regulating organic production and handling in the U.S., announced March 7,
2000, purchasers of organic foods would be able to rely on uniform and
consistent national standards for defining the term "organic." Catherine
Greene (202) 694-5541; cgreene@ers.usda.gov

Near-Term Weakness Remains in U.S. Farm Economy

Overall conditions in the farm economy in early 2000 are largely a replay of
last year.  Markets for major commodities, particularly field crops, are very
weak as supplies remain relatively large.  Despite the severity of the market
downturn for many producers, an overall farm economic crisis has not
materialized, due in large part to built-in government support and
supplemental emergency economic and disaster assistance.  Positive
developments in U.S. agriculture this year include higher cattle and hog
prices and a fairly strong national farm balance sheet.

Longer term developments, including movement back to sustained global economic
growth, will strengthen agricultural trade and income prospects for U.S.
farmers, according to USDA's 10-year baseline projections. Economic recovery
is now underway in most of the countries affected by the global financial
crisis of the late 1990's.  Economic growth, especially in developing
countries, is providing a foundation for gains in global demand, agricultural
trade, and U.S. agricultural exports.  Incomes in many developing countries
are at levels where consumers eat more meat and other higher valued food
products and where consumer food demand is particularly responsive to income
changes.  Paul Westcott (202) 694-5335; westcott@ers.usda.gov

Modest Food Price Rise Expected

The consumer price index for all food is expected to increase 2-3 percent in
2000, following a 2.1-percent increase in 1999, the smallest since 1992's 
1.2-percent gain.  The 2000 rise will be closer to the high end of the 
projected range if energy prices remain at elevated levels for 6 months or 
more or if there is greater-than-expected demand for meat products, which
appears to be strengthening despite higher prices. Annette L. Clauson (202)
694-5389; clauson@ers.usda.gov

Free Trade Area of the Americas: Implications for U.S. Agriculture

Progressive elimination of trade and investment barriers within the Western
Hemisphere is the goal of the Free Trade Area of the Americas (FTAA), a
regional agreement now under negotiation among 34 countries, including the
U.S.  The FTAA will expand market opportunities for U.S. agricultural products
in the hemisphere by progressively eliminating tariffs and nontariff barriers,
facilitating investment, and helping to lock in the unilateral policy reforms
of member countries.  The agreement will also consolidate the many subregional
free trade agreements in the Western Hemisphere that could otherwise put
nonparticipating countries, including the U.S., at a competitive disadvantage. 
U.S. agricultural export growth, and the more efficient resource reallocation
that follows reduction of trade barriers, will strengthen U.S. farm income. 
The commitment of the pact to implement and advance WTO disciplines suggests
that the FTAA can complement U.S. efforts to liberalize agriculture in a
multilateral setting.  Mary Burfisher (202) 694-5235; burfishr@ers.usda.gov

Emerging Trade Issues for Developing Countries

Global trade negotiations will involve increasingly significant participation
by developing countries, both in setting agendas and in forging agreements. 
Since agriculture often provides a large share of export earnings for
developing countries, major policy change influencing global agricultural
trade directly affects their earnings and their financing of imports. 
Improved market access for agricultural products is among the agricultural
trade issues of importance to all developing countries.  Key issues for
particular countries are determined by the specific commodities they trade, by
their economic and trade policies, and by their level of development. 
Developing countries are recognizing that participation in multilateral trade
negotiations provides an opportunity to enhance their trading position and
advance their development goals.  Michael Trueblood (202) 694-5169;
trueb@ers.usda.gov

Biotechnology: Implications for U.S. Corn & Soybean Trade & Grain Handlers 

Uncertainty in marketing bioengineered crops abroad stems in part from
potential limitations from government policies and the direction and intensity
of consumer preferences.  One key factor in assessing the degree and nature of
potential impacts is export share of use, which for U.S. corn was about 18
percent in 1998/99 and for soybeans was even higher at 42 percent.  With the
U.S. supplying two-thirds of global corn trade, importers cannot easily
satisfy such large demand with alternative sources.  Traditional competitive
forces (primarily prices) appear to be the main driving factors behind changes
in observed bilateral trade patterns for soybeans.  The biotech issue has
potential to influence world trade flows, and consumer preferences may create
two potential markets in the future. Nicole Ballenger (202) 694-5013;
nicole@ers.usda.gov

Segregation of biotech and nonbiotech commodities could become a consideration
for grain handlers.  Keeping nonbiotech products separate from
undifferentiated "standard" commodities can be accomplished by either "crop
segregation" or "identity preservation."  These marketing practices to
preserve a commodity's unique characteristics are not new, but are an
extension of practices already used to preserve differentiation of value-
enhanced commodities such as high-oil corn and low-saturated-fat soybeans. 
USDA's Economic Research Service has developed a scenario indicating that
added costs for segregating nonbiotech corn and soybeans could be higher than
the added costs of segregating value-enhanced crops.  William W. Lin (202)
694-5303; wwlin@ers.usda.gov

Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available tomorrow 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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