NOTE: AO has 10 issues in 2001.  Please note that reports are released in one 
month, BUT THE ISSUE DATE IS FOR THE FOLLOWING MONTH; e.g., the May 2001 issue 
is released in April.

AGRICULTURAL OUTLOOK -- SUMMARY             December 19, 2001
January/February 2002, ERS-AO-288
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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How U.S. Farm Policy Meshes With World Trade Commitments
 
The U.S. and other countries made commitments in 1994 under the Uruguay Round 
Agreement on Agriculture (URAA) to reduce the total amount of trade-distorting 
domestic subsidies provided to producers, to reduce export subsidies, and to 
increase import access to domestic markets. Thus far, the U.S. has been able to 
comply with its URAA commitments and still provide significant income support 
to producers. But surges in direct payments to producers after 1997 in response 
to low market prices have caused domestic subsidy levels to approach the U.S. 
ceiling commitment. U.S. support is expected to remain below its ceiling under 
current farm programs, but increases in support under new programs, if not 
carefully crafted to utilize exemptions, could present a problem for compliance 
with the URAA commitments. 
Frederick J. Nelson (202) 694-5326;  fjnelson@ers.usda.gov
 
Public-Sector Plant Breeding In a Privatizing World
Since 1970, the balance between public and private plant breeding activity in 
industrialized countries has shifted from the public to the private sector. 
Traditionally, the private sector has relied on public-sector research results. 
Today this is no longer the case. Presently the public sector instead may 
utilize private-sector research results in some areas of biotechnology. Funding 
mechanisms, as well as institutional cooperation and competition in plant 
breeding, are often quite complex. This has led to considerable discussion of 
the appropriate roles for public- and private-sector activity. However, it is 
clear that public-sector plant breeding will yield the largest social returns 
if it continues to focus on research directed at carefully identified problem 
areas, with clear public goods components. Paul W. Heisey (202) 693-5526; 
Pheisey@ers.usda.gov 
 
Slow World Growth & U.S. Recession Leave Mixed Picture for Farm & Rural Economy
 
By November 2001 it was official. The U.S. economy was in recession-and had 
been since March. The recession ended a decade-long expansion, the most durable 
on record. World economic growth--both in 2001 and 2002--is expected to be 
sluggish, posting the lowest back-to-back growth rates since the world debt 
crisis of 1981-82. David Torgerson (202) 694-5334; dtorg@ers.usda.gov 
 
Traceability for Food Marketing & Safety: What's the Next Step?
 
Traceability systems are recordkeeping systems that are primarily used to help 
keep foods with different attributes separate from one another. When 
information about a particular attribute of a food product is systematically 
recorded from creation through marketing, traceability for that attribute is 
established. Food suppliers and government have several motives for documenting 
the flow of food and food products through production and distribution 
channels--and a number of reasons for differentiating types of foods by 
characteristics and source. However, the area where traceability seems to be 
getting the most attention lately--government-mandated tracking of genetically 
engineered crops and food--is not among the practical or efficient uses of 
traceability. Recently, the European Union (EU) proposed government-mandated 
traceability for genetically engineered crops and foods to help distinguish 
them from their conventional counterparts. Elise Golan (202) 694-5424; 
egolan@ers.usda.gov 
 
Pressures for Change in the Eastern Europe's Livestock Sectors
 
Twelve years after the fall of Communism in Central and Eastern Europe (CEE), 
the meat and dairy processing sectors of the CEE countries are undergoing a 
rapid process of concentration and modernization. The process is most evident 
in Poland and Hungary, but similar trends can be observed in all the CEE 
countries. This restructuring has been accelerated by the pending CEE accession 
to the European Union (EU), both because of pressure to meet EU sanitary 
standards and because of assistance provided by the EU to the food processing 
industry. Nancy Cochrane (202) 694-5143; cochrane@ers.usda.gov
 
Tobacco Industry Continues Long-Term Downsizing
 
A recent dramatic shift from auctioning to contract selling in the tobacco 
market is changing the character of the industry. By contracting directly with 
leaf producers, cigarette manufacturers have more influence over which 
qualities of leaf are available. In addition, already-existing restrictions on 
smoking areas and advertising and the growing consciousness of the health risks 
of smoking are having a long-term effect on the industry. Thomas Capehart (202) 
694-5311; thomasc@ers.usda.gov

U.S. Sheep Industry Continues to Consolidate
The U.S. sheep industry continues a long decline marked by shrinkage in 
inventories, prices, and revenues. The industry also bears the brunt of 
heightened concerns about sheep-borne animal diseases, as well as recent 
removal of a tariff-rate quota (TRQ) on imported lamb meat from Australia 
and New Zealand. And while 5 years have passed since the 3-year phaseout 
of the National Wool Act, the industry still feels the loss of the Act's 
price support programs. However, there are several positive currents: 
domestic lamb and mutton consumption has held fairly steady for the past 
decade, while production in major lamb exporting countries is on the 
decline. Keithly Jones (202) 694-5172; kjones@ers.usda.gov
 
END_OF_FILE
