AGRICULTURAL OUTLOOK -- SUMMARY                        August 21, 2000
September 2000, ERS-AO-274
     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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On the Upswing: Online Buying & Selling by Farmers 

Increasing numbers of farmers and ranchers are doing business over the
Internet.  More than 600,000 U.S. farms and ranches accessed the Internet in
1999, with 15 percent conducting e-commerce transactions, based on new data
from USDA.  Of these farms, over 40 percent reported purchasing crop inputs
online in 1999, about one-third reported purchasing livestock inputs, and a
quarter reported selling livestock.  Mitch Morehart (202) 694-5581;
morehart@ers.usda.gov

Hog Producers Plan Modest Expansion

Hog producers indicate intentions to begin rebuilding breeding herds,
according to USDA's June Hogs and Pigs report. But before expansion takes
hold, pork production will fall 2 percent in second-half 2000 from a year
earlier. With lower pork production in the near term and prospects for only
modest expansion next year, hog prices are expected up from last year's $34
per cwt to average in the mid-$40's in 2000 and 2001.  Leland Southard (202)
694-5187; southard@ers.usda.gov

U.S. Soybean Stocks to Build 

USDA forecasts a record U.S. soybean crop in 2000-nearly 3 billion
bushels-based on record-high acreage and relatively high yields.  Despite the
liberal supply expansion, U.S. soybean exports in 2000/01 are projected to
rise only slightly, primarily because of larger soybean harvests in China (a
major importer) and in Brazil and Argentina (major export competitors), as
well as shrinking imports by the European Union.  With U.S. soybean demand
expected to lag supply growth, ending stocks in 2000/01 are projected to
swell, and the U.S. farm price of soybeans is expected to average $3.90-$4.80
per bushel in 2000/01, a drop from $4.65 in 1999/2000. Thus marketing loan
benefits will continue to be important for soybean producers. Mark Ash (202)
694-5289; mash@ers.usda.gov

U.S. Sugar Policy: Sticky Issues

Rising domestic sugar production as well as prospects for higher imports are
testing the government's ability to prevent sugar prices from dipping below
support levels.  In June, USDA entered the sugar market for the first time
since 1986, purchasing 132,000 tons of refined sugar at a cost of $54
million.  With this move, USDA projected savings of as much as $6 million in
administrative costs that the government might otherwise incur from expected
sugar program loan forfeitures later in the fiscal year. With domestic sugar
production plus imports exceeding domestic consumption in the foreseeable
future, it will be difficult to keep prices above support levels without
reducing output through a domestic supply control program or incurring large
Treasury costs. On August 17, USDA announced a 2-week signup period for the
Sugar Payment-In-Kind (PIK) Program, which offers sugar beet producers the
option of diverting a portion of this year's crop from production in exchange
for government-held sugar.  Stephen Haley (202) 694-5247; shaley@ers.usda.gov

U.S.-Mexico Faces Border Bottlenecks 

The high volume of traffic at U.S.-Mexico border crossings reflects the
dynamic and fast-growing trade relationship between the U.S. and Mexico. But
rising agricultural and other trade between the U.S. and Mexico has led to
congestion and, in some instances, to costly delays at the border. A major
source of delay is a multi-step process for transferring cargo across the
border, because long-haul trucks destined for the interior of the U.S. or
Mexico are not allowed to travel beyond a border zone. A broad spectrum of
incremental measures-e.g., enhancement of physical facilities/infrastructure
at crossing points and use of new technologies for checking cargo-is
advancing the capacity and efficiency of the increasingly integrated
U.S.-Mexico transportation system. Freer truck access and the upgrading of
Mexico's rail system are key factors in future growth in U.S.-Mexico food and
agricultural trade.    William T. Coyle (202) 694-5216; wcoyle@ers.usda.gov

Confined Animal Production Poses Manure Management Problems

Livestock and poultry manure applied to farmland provide a valuable source of
organic nutrients, but nitrogen and phosphorus from manure in excess of the
farm's crop requirements can compromise water quality.  Many confined animal
operations are unable to utilize all manure nutrients produced on the
farm-i.e., apply the animal waste to crops on land under their control.  For
example, some locations in the Southeast, where poultry production is a
dominant ag industry, have high levels of excess nitrogen because poultry
manure has a high nitrogen content, and because land available for spreading
is limited.

For areas with excess manure, initiatives to encourage land application on
other farms or to provide incentives for alternative manure treatment
strategies may be necessary.  USDA's Environmental Quality Incentives Program
(EQIP) provides technical, educational, and financial assistance to farmers
and ranchers for adopting practices that protect or enhance environmental
quality.  Noel Gollehon (202) 694-5539; gollehon@ers.usda.gov

Environmental Regulation & Location of Hog Production 

Increasing concentration of hog production and manure waste in certain
geographic areas of the U.S. has heightened interest in the potential links
between stringency of environmental regulation and location of animal
production.  Policies regulating environmental pollution from confined animal
farming may vary geographically, partly because Federal water policy laws
allow states to have authority and flexibility to design and implement their
own environmental laws. 

Costs associated with environmental regulation compliance may be a
consideration in choosing a business location.  Producers may respond to
existing or impending costs of regulation by exiting the industry or changing
the scale and/or location of production.  Hog production has expanded in
recent years in areas in the South and in nontraditional areas of the West,
prompting speculation that large operations moved to those areas because of
possibly less stringent environmental regulations. John Sullivan (202)
694-5493; johnp@ers.usda.gov 

Approved by the World Agricultural Outlook Board. Full text of Agricultural
Outlook will be available 8/22 at
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2000/


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