AGRICULTURAL OUTLOOK--SUMMARY                                  March 19, 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-239) will be available 2-3 working
days following this release.
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U.S. FARM SECTOR TO ECHO STRONG GLOBAL DEMAND THRU 2005

U.S. Agricultural Outlook in 1997

The U.S. agricultural economy is in a relatively strong position following
record farm cash receipts of nearly $200 billion in 1996.  Positive
macroeconomic conditions continue to provide a supportive backdrop in 1997. 
The farm sector balance sheet is expected to improve again in 1997, as asset
values rise more than debt increases.  Total receipts are likely to decline
slightly from last year's record, and overall production expenses, while held
in check by lower feed costs, will rise modestly.  Consequently, net cash farm
income is forecast to decline to about halfway between the $57 billion of 1996
and the $49 billion of 1995. 

The pieces of several puzzles must come together before the final outcome will
be determined.  How low will wheat prices fall?  What mix of field crops will
farmers plant this spring?  What are the risks of the downhill phase of the
cattle cycle?  And is price volatility becoming more of an issue today? 
[Keith Collins, Chief Economist, USDA]

Fast Forward to 2005--Globally...

Robust growth in global import demand for agricultural products--driven by
strong economic growth in developing and transition economies, market-oriented
policy reforms, and rising per capita meat consumption in developing
countries--will be the major force in international commodity markets through
2005.  

In USDA's global baseline analysis, U.S. exports of high-value products,
including meats and horticultural products, will continue to show strong
growth, generally outpacing bulk exports and accounting for a growing share of
U.S. farm exports.  Strong U.S. export growth is also projected for bulk
commodities in these years, particularly feed grains and wheat, driven largely
by prospects for solid economic growth in developing countries.  International
bulk commodity supplies will tighten, slowing the long-term downward trend in
inflation-adjusted prices.  The extent to which global supplies will respond
in an environment of firmer prices is a key uncertainty in the outlook.
[Rip Landes (202) 501-8549]

...and Domestically

Since the U.S. is the world's leading grain exporter and a significant meat
exporter, it stands to benefit from projected gains in international grain
demand and higher commodity prices through 2005.  And greater market
orientation in the domestic agricultural sector under the new farm legislation
puts U.S. farmers in a favorable position to compete in the global
marketplace.  As a result, the positive international outlook is echoed, for
the most part, in the U.S. agricultural sector.

U.S. net farm income, in nominal terms, falls for 2 years from the high level
of 1996, then rises through 2005.  This implies a steady outlook for real farm
income--a definite change from recent trends.  The agricultural sector relies
increasingly on the marketplace for its income, as direct government payments
fall through 2002 and represent less than 3 percent of gross cash income
beyond 2000.  

USDA's baseline scenario builds on recent trends and policy actions.  A set of
clearly defined assumptions underlies the projections, although events might
occur that could greatly alter the actual outcome.  Four principal assumptions
interact to support the optimistic prospects: strong growth in demand;
continuation of current domestic policy; multilateral and unilateral trade
policy reform in other countries; and structural change in U.S. agriculture.
[Katherine R. Smith (202) 219-0700]

Food CPI to Climb 2.5-3 Percent

The Consumer Price Index (CPI) for food in 1997 is forecast to rise 2.5-3
percent, down from last year's 3.3-percent gain.  Overall inflation (as
measured by changes in the all-items CPI) is forecast to increase just over 3
percent.  This should keep a lid on costs of food production and marketing --
e.g.; labor, packaging, transportation, and advertising -- which account for 
about 75 percent of retail food costs.  The away-from-home CPI is forecast to
rise 2-3 percent in 1997, with the at-home component up 2.5-3.5 percent.
[Annette Clauson (202) 501-6552]

5th Year of Rising Farm Credit Use

Demand for farm credit is expected to increase again in 1997 after growing
since 1992.  Total farm business debt--real estate and nonreal estate loans--is
forecast to reach about $160 billion by the end of 1997, up about 2.7
percent from 1996 and the highest since 1985.  Continued economic growth,
relatively strong field crop prices, and increased farm incomes in 1996 are
behind much of this year's expected expansion.  [Jerome Stam (202) 219-0722]

Credit availability should be ample for agriculture and rural business
borrowers in 1997, while general interest rates may rise slightly by the
second half of 1997.  Commercial banks in the first quarter of 1997 have
continued to ease credit standards for business lending, including credit
standards for small firms.  Likewise, for the fourth quarter of 1996, roughly
half of rural banks heavily involved in agricultural lending had
loan-to-deposit ratios lower than desired.  The easing of credit standards and
the desire to expand business lending has led to a narrowing of business lending
spreads (the difference between the loan rate charged by the bank and the
bank's cost of funds) as well as greater availability of funds for business
lending. [Paul Sundell (202) 501-8446]

Exporters Target U.S. Asparagus Market

The U.S. is one of the world's largest producers and consumers of fresh
asparagus.  In the past, fresh asparagus was consumed in the U.S. only in the
first half of the year, when domestic product was available.  Thanks to
soaring imports (mostly from Mexico and Peru)--up 74 percent in the 1990's -- 
fresh asparagus is now available year-round.  But imports arrive not only
during the off-season.  They also come in during the U.S. season beginning in
January, reducing the early-season price premium.  Because the U.S. market is
mature and demand flat, the growth of fresh (and processed) asparagus imports
poses serious challenges to the U.S. industry. 

U.S. asparagus production has declined since 1989, due in part to some
California producers switching to more profitable annual crops.  U.S.
production is expected to increase  in 1997, however, and recent plantings in
California are maturing, further boosting supply in the next few years.  Under
these conditions, U.S. producers should expect downward pressure on prices.
[Linda Calvin (202) 501-8449]


Printed copies of Agricultural Outlook will be available in about 2 weeks. 
For further information call Randy Schnepf (202) 219-1281, Dennis Shields
(202) 219-0649, or Anne Effland (202) 501-8448.  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       160 
    Farm value                               106       109       114       114 
    Spread                                   178       179       180       184 
    Farm value/retail cost (%)                24        25        26        25 

  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      13.5      16.4 
  Agricultural imports ($ bil.) 2/           8.2       8.6       8.2       8.6 

  Commercial production
    Red meat (mil. lb.)                   10,855    10,896    10,687    10,693 
    Poultry (mil. lb.)                     8,008     8,117     8,120     8,028 
    Eggs (mil. doz.)                       1,571     1,563     1,594     1,632 
    Milk (bil. lb.)                         39.0      39.6      37.7      37.9 

  Consumption, per capita
    Red meat and poultry (lb.)              51.8      52.0      52.4      52.9 

  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.

.....................................................................continued






..........................................................continued (new page)
   
   1996                      1997               
---------      ---------------------------------
  Annual        I F      II F     III F Annual F

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


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


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


     156        --        --        --        --
     111        --        --        --        --
     180        --        --        --        --
      25        --        --        --        --


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

    59.8        --        --        --      56.5
    32.4        --        --        --      34.0


  43,131    10,425    10,787    10,980    42,797
  32,274     8,175     8,610     8,630    33,990
   6,358     1,620     1,630     1,660     6,590
   154.3      38.5      40.2      38.0     154.8


   209.2      51.0      53.0      53.0     210.2

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


   65.21     66-67     63-67     64-70     65-69
   53.39     51-52     55-57     54-58     53-56
    61.2     59-60     59-62     60-64     59-62
    88.2     85-86     80-84     79-85     81-86
   14.74    13.10-    13.15-    13.25-    13.45-
             13.30     13.65     14.05     14.05
    5.48        --        --        --        --
    3.87        --        --        --        --
    7.53        --        --        --        --
   77.93        --        --        --        --



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

     713       736       782       832       890
     507       511       529       550       574

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