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 -- SUMMARYOctober 22, 2001
November 2001, ERS-AO-286
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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Higher Cropland Values from Farm Program Payments: Who Gains?
Government commodity program payments are estimated to have added nearly $62 
billion to U.S. farmland values, as farmland value depends largely on 
expected future earnings, including program payments. From the perspective 
of many farm operators who own land, farmland value increases are favorable. 
Farmland value underlies the financial stability of many farm businesses, 
and farmland is often the principal source of collateral for farm loans. But 
for operators who pay more to buy land, appreciated values add to the fixed 
cost of production, largely related to higher financing costs and/or real 
estate taxes. Additionally, operators who lease farmland may pay higher 
rents that reflect their receipt of some of the government payments. The 
added farmland value is particularly high in the Heartland region, where 
farm commodity payments have added $40 billion to the market value of 
cropland, nearly two-thirds of the effect nationwide. Much of the added 
value nationally, over 60 percent, accrues to nonoperator landlords who 
lease out their land. Charles Barnard (202) 694-5602; cbarnard@ers.usda.gov

Water Supply in the APEC Region: Scarcity or Abundance?
Roughly 70 percent of the earths surface is covered by water, but less than 
1 percent of the earths water is fresh, and access to fresh water is 
critical to the food system. In the Asia-Pacific Economic Cooperation (APEC) 
region, projected population growth in its cities, particularly in China and 
developing economies, will put huge stress on the regions capacity to 
provide basic services, including water supply. Unless water control 
facilities are expanded and/or efficiencies in water use are achieved, there 
is potential for water shortages in Korea, Chinese Taipei, Japan, China, 
Mexico, and the U.S. Large investments in water infrastructure, dams, and 
diversion channels to expand the water supply are becoming increasingly 
unaffordable, both economically and environmentally. Where water is scarce, 
creation of market mechanisms will assure more efficient and sustainable use 
of water resources. Bill Coyle (202) 694-5216; wcoyle@ers.usda.gov

World Rice Glut Keeps Lid on U.S. Prices 
With record supplies at home and extremely low prices in the global market, 
the 2001/02 U.S. season-average farm price for rice is projected to be the 
lowest in 15 years. Nonetheless, U.S. rice exports are projected to increase 
just 3 percent in 2001/02, as large exportable supplies in major exporting 
countries and low international prices limit U.S. export gains. Slightly 
higher prices, plus expectations of substantial marketing loan payments, 
were behind this years expanded acreage. Long grain, which typically 
accounts for more than 70 percent of U.S. rice acreage, made up all of this 
years area expansion. Nathan Childs (202) 694-5292; nchilds@ers.usda.gov

Organophosphate Insecticides Being Scrutinized, Restricted
The U.S. Environmental Protection Agency (EPA) is reviewing the risks of 
organophosphate (OP) pesticides, which are widely used in agriculture.  So 
far, more of these have been identified with worker safety, ecosystem, and 
nonoccupational exposure risks than with dietary or drinking water risks.  
Most regulatory actions resulting from the initial assessment have affected 
OP use on fruits and vegetables.  Preliminary results of EPAs cumulative 
assessment, which examines the risks of OPs as a group, are to be released 
December 1 and may result in additional use restrictions. Craig Osteen (202) 
694-5547; costeen@ers.usda.gov

Farms, the Internet, & E-Commerce: Adoption & Implications
Internet use by U.S. farmers has grown rapidly, as advances in computer and 
other communication and information technology make the Internet more 
accessible.  Use of computers on farms has grown from 38 percent of all 
farms to 55 percent since 1997, while Internet use has grown from 13 percent 
of all farms to 43 percent. In 2000, 24 percent of farms used the Internet 
as a management tool in their farming operation, including $665 million in 
online buying and selling. Most farms appear to be using the Internet for 
only a portion of their overall farm business. Internet use by farm 
businesses seems to be equally attractive to those specializing in crop or 
in livestock production, and the extent of use by different types and sizes 
of farms is generally not far from the average for all farm Internet users. 
Jeff Hopkins (202) 694-5584; jhopkins@ers.usda.gov
 
Taiwans Trade Barriers to Recede with WTO Accession in Sight
Taiwan, under recently negotiated provisions of its pending membership in 
the World Trade Organization (WTO), has committed to market access terms 
with implications for agricultural trade, particularly for the U.S. Taiwan 
agreed to concessions and commitments equivalent to those made in the WTO 
Agreement on Agriculture by developed-country members. Taiwans agricultural 
tariffs will be reduced; the simple average rate across all tariff lines for 
agricultural products will fall from the current level of 20.02 percent to 
14.01 percent in 2002 and to 12.86 percent in 2004. Taiwan will also lift 
its ban on imports of rice and a range of other items. Sophia Huang (202) 
694-5225; sshuang@ers.usda.gov

U.S. Poultry Exports Maintain Star Billing
In 2001, broiler stocks tightened as production slowed and exports rose.  
Slow production growth thus far this year, in tandem with a strong export 
market, has lowered stocks and increased the prices of most broiler 
products.  Broiler parts have seen the strongest price growth, while prices 
of products such as breast meat have remained relatively steady. Turkey 
production over the first 8 months of 2001 was 2.4 percent higher than for 
the same period in 2000. Turkey exports have also increased this year. David 
Harvey (202) 694-5177; djharvey@ers.usda.gov


Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available 10/23 at 
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2001/

END_OF_FILE
