AGRICULTURAL OUTLOOK--SUMMARY                                 February 20, 1997 
             Approved by the World Agricultural Outlook Board
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This SUMMARY is published monthly (except January) by the Economic Research
Service, U.S. Department of Agriculture, Washington, DC 20005-4788.  The
complete text of AGRICULTURAL OUTLOOK (AO-238) will be available 2-3 working
days following release of this summary.
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FRESH VEGETABLE PRICES FORECAST UP 6-7 PERCENT IN FIRST-HALF 1997

Florida Freeze Heats Up Vegetable Prices

Mother Nature delivered the latest in a series of setbacks for growers of
Florida winter vegetables, with a devastating freeze the mornings of January
18 and 19.  The freeze caused substantial damage to U.S. supplies of tender
warm-season winter vegetables (e.g., squash, snap beans, green peppers,
eggplant, and tomatoes).  Losses in Dade County alone were estimated close to
$100 million.  Florida accounts for about one-third of fresh-market supplies
of warm-season vegetables between late fall and early spring. 

The freeze impact on retail prices is likely to last until late April.  Before
the winter damage, USDA had forecast a 2- to 3-percent increase in consumer
prices for fresh vegetables in first-half 1997 compared with a year earlier. 
The revised forecast indicates a rise of 6-7 percent for that period.  The CPI
rise is moderated by stable prices for a number of fresh vegetables largely
unaffected by the freeze. [Gary Lucier (202) 219-0117 and John Love (202)
219-1268]

U.S. Sugar Consumption Continues to Grow

U.S. sugar consumption is forecast at 9.8 million short tons (raw value) in
1996/97, up from 9.6 million last year.  If the forecast is realized, sugar
consumption will have risen by about 1 million tons in 6 years, implying a per
capita increase of 2.5 pounds.  Continued growth in domestic sugar consumption
has become more important for domestic producers since passage of last year's
Farm Act, which suspended USDA's authority to restrict marketings of domestic
sugar when supplies were depressing prices.  With this policy lever removed,
and with changes to the price support loan program, prices could drop if
production outpaces consumption.  

U.S. sugar production for 1996/97 is projected at 7.29 million tons (raw
value) down about 80,000 tons from last year.  Beet sugar production is
projected to be 55 percent of the total, at 4 million tons, well below the
record 4.5 million tons 2 years earlier.  Overall, conditions in early 1997
indicate that total U.S. sugar beet acreage is likely to rise in 1997/98, with
prices at planting time higher than the previous year.  The Prospective
Plantings report, scheduled for release on March 31, will provide the first
USDA survey of sugar beet acreage for the 1997/98 crop.   [Ron Lord (202)
219-0888]

China: A Retreat From Ag Reforms?

While market forces have become increasingly important in China's economy, the
government since 1994 has intensified its role in the markets for several
basic agricultural commodities.  This policy reversal--which has boosted grain
production and reduced imports--was a response to higher inflation, concerns
for food self-sufficiency, and a decline in grain acreage.

The drive toward grain self-sufficiency undermines China's participation in
the Asia-Pacific Economic Cooperation and weakens its case to join the World
Trade Organization.  With the success of China's policy turn at boosting grain
production, world demand for these crops may dampen in the short run.  But
based on projected gains in population and grain demand for the next decade,
China's demand for grain will outpace production, requiring expanded imports. 
[Frederick W. Crook (202) 219-0002]

Incentives for Sustainable Agriculture 

The concept of sustainable agriculture integrates technologies and practices
that are as profitable as conventional farming methods but more
environmentally responsible.  The 1996 Farm Act created new programs (e.g.,
Environmental Quality Incentives Program) and extended existing ones (e.g.,
Conservation Reserve Program)--providing incentives to farmers to adopt
sustainable practices.  Several other policy options could also bolster
incentives.  For example, a more sustainable technology (e.g., integrated pest
management) might be adopted more quickly if farmers could purchase insurance
to offset any risks that accompany its application to particular sites.  Or,
farm credit policies could be restructured so that farmers could finance the
costs of switching to a new technology regime (e.g., precision agriculture).   
[Utpal Vasavada (202) 219-0773]

Egypt's Poultry Industry Drives Feed Imports

Egypt is the Middle East's fastest growing and largest market for U.S.
agricultural exports, with purchases of $1.5 billion in fiscal 1996, up from
$613 million in fiscal 1994.  The substantial increase is due partially to
higher international prices of wheat and feed grains, but also to increased
shipments of feed grains and oilseeds and products.  Egypt imports most feed
ingredients because land and water use constraints limit domestic production,
and import demand has grown as Egypt's poultry industry has expanded in the
1990's.  

Egypt's per capita poultry consumption (5.8 kilograms in 1996) has been
climbing steadily the past 5 years, driven by rising incomes, but is still
well below the high of 9.2 kilograms in 1985, before a government feed subsidy
program was removed.  Egypt's feed import requirements may decline on or
before 2000 when Egypt is expected to lift a ban on poultry imports--a
commitment under the country's acceptance into the World Trade Organization. 
The U.S. is likely to continue to supply much of Egypt's feed grain needs and
be in a good position to share in the poultry meat market when the ban is
lifted. [Fawzi A. Taha (202) 501-8451]

Food Aid Grain Needs Are Down

Sixty-five developing countries would need 9 million tons of grain food aid in
1996/97 to maintain per capita consumption at the previous 5-year average. 
But that figure is down 5 million tons from 1995/96 aggregate needs.  In a
study of 65 major food-aid recipient countries, USDA's Economic Research
Service also found that the "grain deficit" is down in all eight regions
covered by the study.

Favorable weather and expanded plantings allowed most low-income countries to
maintain recent consumption levels while reducing imports and avoiding the
high prices in international grain markets in 1996.  Concomitantly, several
donor countries have recently reduced their food aid commitments, due mostly
to tight budgets.  [May Mercado Peters (202) 219-0608 and Michael Trueblood
(202) 219-0652]

For further information call Randy Schnepf (202) 219-1281, Dennis Shields
(202) 219-0649, or Anne Effland (202) 501-8448. 

Printed copies of Agricultural Outlook will be available in about 2 weeks. 
The full text of the magazine will be available electronically in 3 working
days; for details, call (202)219-0515.  


   Table 1.  Key statistical indicators of the food and fiber sector

                                                                1996           
                                              --------------------------------
                                               I        II       III       IV 

  Prices received by farmers (1990-92=100)   108       112       117       111
    Livestock & products                      93        96       104       103
    Crops                                    124       133       131       118

  Prices paid by farmers, (1990-92=100)
    Production items                         113       115       116        --
    Commodities & services, interest,        113       115       115        --
     taxes, & wages

  Cash receipts ($ bil.) 1/                  194       210        --        --
    Livestock ($ bil.)                        85        90        --        --
    Crops ($ bil.)                           108       120        --        --

  Market basket (1982-84=100)
    Retail cost                              153       154       157        --
    Farm value                               106       109       114        --
    Spread                                   178       179       180        --
    Farm value/retail cost (%)                24        25        26        --

  Retail prices (1982-84=100)
    All food                                 151       152       154       156
      At home                                152       153       155       157
      Away from home                         151       152       153       155

  Agricultural exports ($ bil.) 2/          16.3      14.3      13.7      15.8
  Agricultural imports ($ bil.) 2/           8.2       8.6       7.2       8.2

  Commercial production
    Red meat (mil. lb.)                   10,855    10,896    10,687    10,693
    Poultry (mil. lb.)                     8,008     8,117     8,120     7,999
    Eggs (mil. doz.)                       1,571     1,563     1,594     1,632
    Milk (bil. lb.)                         39.1      39.7      37.8      37.9

  Consumption, per capita
    Red meat and poultry (lb.)              51.8      52.1      52.3      52.6

  Corn beginning stock (mil. bu.) 3/     1,557.8   6,105.8   3,799.5   1,717.9
  Corn use (mil. bu.) 3/                 2,829.6   2,311.2   2,086.7   1,294.8

  Prices 4/
    Choice steers--Neb. Direct ($/cwt)     63.06     60.26     67.13     70.39
    Barrows & gilts--IA, So. MN ($/cwt)    46.23     54.82     57.75     54.75
    Broilers--12-city (cts./lb.)            56.2      61.1      64.2      63.5
    Eggs--NY gr. A large (cts./doz.)        89.6      80.5      85.9      96.7
    Milk--all at plant ($/cwt)             13.83     14.27     15.80    15.07-
                                                                              
  Wheat--KC HRW ordinary ($/bu.)            5.57      6.58      5.02      4.75
  Corn--Chicago ($/bu.)                     3.79      4.81      4.11      2.77
  Soybeans--Chicago ($/bu.)                 7.27      7.89      7.97      7.01
  Cotton--Avg. spot 41-34 (cts./lb.)       81.50     82.71     76.08     71.44



                                            1988      1989      1990      1991
                                           
------------------------------------
  Farm real estate values 5/,6/
    Nominal ($ per acre)                     632       668       683       703
    Real (1982 $)                            530       539       528       521

  1/ Quarterly data seasonally adjusted at annual rates.  2/ Annual data based 
on Oct.-Sept. fiscal years ending with year indicated. 3/ Sept.-Nov. first 
quarter; Dec.-Feb. second quarter; Mar.-May third quarter; Jun.-Aug. fourth 
quarter; Sept.-Aug. annual.  Use includes exports & domestic disappearance.  
4/ Simple averages, Jan.-Dec.  5/ 1990-94 values as of January 1.  
1986-89 values as of February 1.  6/ The 1989-94 values are revised based on 
the 1992 Census of Agriculture.  
F = forecast, -- = not available.

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..........................................................continued (new page)


     1996                       1997              
-----------      -------------------------------
    Annual        I F      II F     III F  Annual F 

       112        --        --        --        --
        99        --        --        --        --
       127        --        --        --        --


        --        --        --        --        --
        --        --        --        --        --


        --        --        --        --        --
        --        --        --        --        --
        --        --        --        --        --


        --        --        --        --        --
        --        --        --        --        --
        --        --        --        --        --
        --        --        --        --        --


       153       157       157       157       158
       154       158       158       157       158
       153       156       157       158       157

      59.8        --        --        --      55.5
      32.4        --        --        --      34.0


    43,131    10,656    10,737    10,980    42,978
    32,245     8,325     8,610     8,630    34,140
     6,358     1,625     1,635     1,660     6,600
     154.4      38.6      40.3      38.3     155.4


     208.9      52.2      52.1      52.5     209.5

   1,557.8     425.9   6,905.5        --     425.9
   8,522.3   2,817.3        --        --   8,770.0


     65.21     64-66     63-67     64-70     65-69
     53.39     53-55     54-58     54-58     54-57
      61.2     58-60     58-62     60-64     58-62
      88.2     84-86     80-84     79-85     81-86
    14.74-    12.90-    13.05-    13.25-    13.35-
               13.20     13.65     14.15     14.05
      5.48        --        --        --        --
      3.87        --        --        --        --
        --        --        --        --        --
        --        --        --        --        --



      1992      1993      1994      1995      1996
--------------------------------------------------

       713       736       782       832       890
       507       511       529       550       574

