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         September 20, 2001
October 2001, ERS-AO-285
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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Situation and Outlook Summary 
Agricultural Outlook


Sluggish U.S. & World Growth Mutually Reinforcing
Global economic growth this year will be the slowest since 1993, and any 
rebound during 2002 is expected to be modest.  The U.S. economy, the locomotive 
that pulled the world economy out of the 1997-98 financial crisis, is now 
stalled. Until recently, most analysts expected Europe to drive world growth, 
through rising imports from Asia and Latin America. But, given the effects of 
the U.S.  slowdown, Europe in 2001 is now expected to be a drag on global 
economic growth. Lacking a developed-country engine, world growth is expected to 
be slower than during 1998, the low point of the Asian financial crisis. David 
Torgerson (202) 694-5334; dtorg@ers.usda.gov

Food Price Inflation to Moderate in 2002
Consumers demand for beef, dairy products, and fresh fruits and vegetables 
coupled with reduced production of these food items have generated a larger 
increase in 2001 food prices than forecast earlier this year. Price increases in 
2002, for these items and for food in general, are forecast to be moderate as 
supplies recover. The consumer price index for all food is forecast to increase 
3.2 percent in 2001 and 2.5 to 3 percent in 2002.  Total sales of food to 
consumers rose 7.4 percent in 2000, the largest increase since 1990.  With 
slower economic growth in 2001 and perhaps in 2002, food sales are expected to 
return to the trend of 3- to 5-percent annual increases.  Annette L. Clauson 
(202)694-5389; aclauson@ers.usda.gov

U.S. Agricultural Exports Forecast to Rise in Fiscal 2002 
U.S. agricultural exports are projected to increase in value for the third 
consecutive year in fiscal 2002.  Much of the gain is expected to be from sales 
of the major bulk commodities corn, wheat, soybeans, and cotton.  Record 
exports of horticultural products, such as fruits and vegetables, also are 
projected.   Higher prices of wheat, corn, and soybeans would account for much 
of the gain in export value. Carol Whitton (202) 694-5287; cwhitton@ers.usda.gov

APECs Open Food System: Opportunities for U.S. Agriculture
In October, the Asia-Pacific Economic Cooperation (APEC) forum will hold 
its 13th Ministerial in Shanghai, China.  An initiative of rising significance 
on APECs agenda is the APEC Food System (AFS).  AFS focuses not only on the 
importance of trade liberalization to the regions food systems, but also on the 
need for rural development. The U.S. stake in this initiative is large because 
it could affect many significant U.S. markets.  In fiscal 2001, the APEC 
economies accounted for more than 60 percent of U.S. agricultural and food 
exports and 50 percent of imports. William Coyle (202) 694-5216;  
wcoyle@ers.usda.gov

Turkeys Financial Crisis: How Will It Shake Out?
Turkey joins Brazil and Argentina in a state of economic crisis at a time 
of global uncertainty. Because Turkey is a sizable market for certain U.S. 
agricultural goods, the ongoing financial crisis may affect U.S exports. In the 
short run, U.S. exports to Turkey should decline as the crisis shrinks demand, 
with the liras drastic fall making imports relatively more expensive.  Longrun 
impacts of Turkeys problems may be mixed, depending not only on whether its 
economy recovers, but also on whether needed structural reforms in agriculture 
are implemented. Stefan Osborne (202) 694-5154; sosborne@ers.usda.gov

Corn Market to Strengthen in 2001/02
Corn prices are expected to strengthen in 2001/02 as ending stocks decline 
to the lowest level since 1997/98. U.S. corn production in 2001 is expected to 
drop 7 percent, pulled down by lower acreage and yields. Meanwhile, domestic use 
is forecast to reach a record high, and exports are expected to rise 2 percent 
as global use expands. The average farm price is forecast at $1.95-$2.35 per 
bushel, up from $1.85 in 2000/01. Allen Baker (202) 694-5290; 
albaker@ers.usda.gov 

Production of Value-Added Crops: The Case of High-Oil Corn
U.S. corn producers have been relatively slow to devote significant acreage 
to the production of high-oil corn and other varieties with specialized traits 
that add value.  This reluctance contrasts with the relatively rapid adoption of 
corn hybrids with specialized input traits such as herbicide tolerance. 
Producers cite falling premiums for high-oil corn relative to conventional corn 
as a major discouraging factor, the result of low prices for substitute products 
in feed rations. Other factors that have impeded planting include risks related 
to price, yield, quality, and market forces. Jorge Fernandez-Cornejo (202) 694-
5537; jorgef@ers.usda.gov 

Tracking Wholesale Prices for Organic Produce
Organic agriculture is one of the fastest growing segments of the U.S. food 
sector. However, collection of data (e.g., on prices) for this component of U.S. 
agriculture has lagged the industrys growth. Market News, published by USDAs 
Agricultural Marketing Service, has occasionally included wholesale prices for 
organic produce in its daily wholesale fruit and vegetable reports, which cover 
terminal markets in 15 U.S. cities, including Atlanta, Dallas, and Seattle. 
Boston is the only city for which Market News consistently reports organic 
prices.  A more complete picture of industry price patterns will emerge if and 
when data become available for other terminal wholesale markets. Emy Sok (202) 
694-5257; esok@ers.usda.gov

Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available 9/21 at 
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2001/

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