
AGRICULTURAL OUTLOOK--SUMMARY                                  May 20, 1997
             Approved by the World Agricultural Outlook Board
============================================================================
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-241) will be available 2-3 working
days following release of this summary.
============================================================================

WILL A LARGER EU BENEFIT THE U.S.?

Ag Trade Prospects in an Enlarged EU

The prospective enlargement of the European Union (EU) into Central and
Eastern Europe (CEE) could add as many as 100 million new consumers to the EU
market and double the number of farmers, having potentially profound effects
on global and U.S. agricultural trade.  Ten CEE countries, including the
Baltic states, have applied for EU membership--Bulgaria, the Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. 

Initial USDA analysis indicates that accession to the EU and subsequent
implementation of EU agricultural policies will raise CEE agricultural
output, particularly in the livestock sector, increasing demand for
feedstuffs.  Preferential CEE trade agreements with the EU, in addition to
geographic ties, could limit U.S. trade potential in this growing market. 
But the expanding CEE feed market will create opportunities for additional
U.S. corn and oilseed exports, and the region will be a strong magnet for
U.S. investment in ag-related enterprises. 

Import Ban Lifted on Mexican Avocados

The partial lifting of a longstanding ban on avocado imports to the
continental U.S. from Mexico is viewed in some quarters as an early indicator
of the U.S. approach to new disciplines on sanitary and phytosanitary (SPS)
measures under recent trade agreements.  The decision followed comprehensive
study of the pest risks and reflects USDA's commitment to basing
phytosanitary policy on sound science, and to adopting risk-reducing measures
that are least trade restrictive. 

Revision of Q56, the Fruit and Vegetables Quarantine, will allow shipments of
avocados from certified groves in Mexico to be exported to 19 northeastern
states and the District of Columbia from November through February, beginning
in 1997.  The opening amounts to less than 5 percent of the current U.S.
avocado market.  The regulatory change will likely have a limited impact on
California avocado producers for several reasons.  Mexican avocados will be
competing with foreign as well as domestic sources of supply, and while
California is the second-largest supplier in the northeast market, about 80
to 90 percent of California's production is typically shipped to states
outside the designated area.  Moreover, the November-February period falls
outside the peak harvesting and shipping season for California Hass avocados.

Taiwan's Hog Disease: Ripple Effects

The recent outbreak of foot-and-mouth (FMD) disease in Taiwan has
precipitated bans on imports of Taiwanese pork by several FMD-free nations. 
The FMD crisis will also mean some reduction in U.S. corn exports as Taiwan's
pork production falls.  The U.S. supplies over 90 percent of the corn used as
feed by Taiwan's pork industry; 1995/96 U.S. corn exports to Taiwan reached
234 million bushels.  

Reductions in U.S. corn exports are expected to be partially offset by a rise
in domestic feed use as hog production expands, enhanced by increased export
opportunities.  In the wake of the FMD problem, U.S. pork exports are
expected to rise, especially to Japan, Taiwan's largest market.  Taiwan's
loss in exports to Japan is expected to be about 705 million pounds of pork,
and the U.S. is expected to capture nearly 40 percent of the gap.  Taiwan's
pork industry should re-emerge following the FMD crisis with larger, more
coordinated production and processing units, but the industry is not expected
to recover its full pre-FMD share of the Japanese market. 

Grape Consumption Continues Strong

The U.S. is the world's third-largest grape producer, accounting for 10
percent of global output.  Domestically, the U.S. grape industry for the last
10 years has logged the highest farm value of all harvested fruits, nuts, and
vegetables.  Following production declines in 1996, grape industry sources
from the three major producing states (California, New York, and Washington)
indicate their 1997 crops appear to be in good condition.

Fresh grape consumption has been trending upward in the U.S. since the
mid-1970's.  Grape juice consumption and demand for American wines have also
increased, although per capita growth in domestic wine consumption in the
1990's has been limited, as increased demand combined with unfavorable
weather to push wine supplies below average.  The U.S. remains a net importer
of grapes for all uses except raisins, but the export share of domestic grape
production has risen steadily from a 9-percent average in the 1970's to 12
percent in the 1980's and 17 percent in the 1990's, with last year's export
value reaching $209 million.  The recently signed grape export agreement with
China should support that trend. 

State Trading Enterprises & the WTO

Agricultural state trading enterprises (STE's) have been important players in
world trade for decades.  These entities (governmental or nongovernmental)
hold certain exclusive rights in the purchasing and/or marketing of specific
commodities, and thus have the potential to influence imports or exports. 
Over 30 member-countries have reported to the World Trade Organization (WTO)
the combined presence of nearly 100 STE's in their agricultural sectors, and
there is concern that some WTO member countries will use export-oriented
STE's to circumvent Uruguay Round commitments and engage in unfair trading
competition.  The lack of transparency which characterizes the operations of
STE's makes it difficult to determine whether they win sales because of true
competitive advantage or because of practices such as excessive price
cutting. 

Among current WTO member countries, four STE's dominate the list of STE
exporters when ranked by value of major agricultural commodities shipped--the
Canadian Wheat Board, the New Zealand Dairy Board, the Australian Wheat
Board, and the Queensland Sugar Corporation.  Also sparking interest in STE's
is the number of countries seeking accession to the WTO--e.g., China, Taiwan,
Russia, and Vietnam--which use these enterprises to implement agricultural
policies.


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


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

                                                           1996               
                                             ---------------------------------
                                              II       III        IV    Annual

  Prices received by farmers (1990-92=100)   113       118       111       112
    Livestock & products                      97       104       103        99
    Crops                                    133       131       118       127

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

  Cash receipts ($ bil.) 1/                  205       202        --        --
    Livestock ($ bil.)                        90        93        --        --
    Crops ($ bil.)                           115       109        --        --

  Market basket (1982-84=100)
    Retail cost                              154       157       160       156
    Farm value                               109       114       114       111
    Spread                                   179       180       184       180
    Farm value/retail cost (%)                25        26        25        25

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

  Agricultural exports ($ bil.) 2/          14.3      13.5      16.4      59.8
  Agricultural imports ($ bil.) 2/           8.6       8.2       8.6      32.4

  Commercial production
    Red meat (mil. lb.)                   10,897    10,688    10,694    43,135
    Poultry (mil. lb.)                     8,075     8,162     8,043    32,289
    Eggs (mil. doz.)                       1,563     1,594     1,632     6,358
    Milk (bil. lb.)                         39.6      37.7      37.9     154.3

  Consumption, per capita
    Red meat and poultry (lb.)              51.9      52.5      53.0     209.2

  Corn beginning stock (mil. bu.) 3/     6,105.8   3,799.5   1,717.9   1,557.8
  Corn use (mil. bu.) 3/                 2,311.2   2,086.7   1,294.8   8,522.3

  Prices 4/
    Choice steers--Neb. Direct ($/cwt)     60.26     67.13     70.39     65.21
    Barrows & gilts--IA, So. MN ($/cwt)    54.82     57.75     54.75     53.39
    Broilers--12-city (cts./lb.)            61.1      64.2      63.5      61.2
    Eggs--NY gr. A large (cts./doz.)        80.5      85.9      96.7      88.2
    Milk--all at plant ($/cwt)             14.27     15.80     15.07     14.74
                                                                              
  Wheat--KC HRW ordinary ($/bu.)            6.58      5.02      4.75      5.48
  Corn--Chicago ($/bu.)                     4.81      4.11      2.77      3.87
  Soybeans--Chicago ($/bu.)                 7.89      7.97      7.01      7.53
  Cotton--Avg. spot 41-34 (cts./lb.)       82.71     76.08     71.44     77.93



                                            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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                          1997                    
        ------------------------------------------
         I       II F     III F     IV F  Annual F

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        --        --        --        --        --
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        --        --        --        --        --
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       157       157       157       158       158
       158       158       158       158       158
       156       157       158       159       157

        --        --        --        --      56.5
        --        --        --        --      34.0


    10,457    10,710    10,905    10,755    42,827
     7,934     8,435     8,555     8,525    33,449
     1,587     1,605     1,660     1,680     6,532
      38.8      40.3      38.1      38.0     155.3


      50.0      51.9      52.6      52.8     207.3

     425.9   6,903.7   4,493.8        --     425.9
   2,819.1   2,412.3        --        --   8,820.0


     66.40     66-68     65-69     68-74     66-69
     51.06     56-58     59-63     56-60     56-58
      60.0     59-61     61-65     58-62     59-62
      84.9     76-78     80-84     82-88     80-84
     13.47    12.60-    12.70-    14.30-    13.25-
               12.90     13.30     15.20     13.75
      4.57        --        --        --        --
      2.86        --        --        --        --
      7.74        --        --        --        --
     70.73        --        --        --        --



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

       713       736       782       832       890
       507       511       529       550       574
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