NOTE: AO has 10 issues in 2002.  Please note that reports are released in one 
month, BUT THE ISSUE DATE IS FOR THE FOLLOWING MONTH; e.g., the May 2002 issue 
is released in April.

AGRICULTURAL OUTLOOK -- SUMMARY    August 21, 2002
September 2002, ERS-AO-294
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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Pork Production Up, Farrowings Down

U.S. hog producers are expected to respond to higher feed costs by reducing the 
number of sows farrowing in 2003. Pigs per litter are expected to increase 
slightly, as less productive sows are eliminated from the breeding herd. USDA 
forecasts 2002 pork production at 19.8 billion pounds, and 2003 production at 
19.85 billion pounds. Both quantities exceed all previous U.S. production 
levels. Mildred Haley (202) 694-5176; mhaley@ers.usda.gov

Tree Nut Crops: Production Up, Prices Down

Strong demand for tree nuts, especially in export markets, has been driving up 
shipments this season. Supply is also strong, the result of large crops and 
large beginning stocks, and the net effect is lower grower prices. Overall 
revenue is expected to be high despite expected lower prices, because of the 
large volume of tree nut crops being moved. Susan L. Pollack (202) 694-5251; 
pollack@ers.usda.gov

U.S. Sugar Policy Under the 2002 Farm Act 

The 2002 Farm Act reauthorized the sugar price support loan program, and 
introduced measures to make the program work more effectively for producers. A 
key change in the 2002 Act requires that USDA operate the sugar loan program at 
no cost to the Federal government. To accomplish this, the Act includes measures 
to discourage forfeiture of sugar to the government by processors who offered it 
as collateral for nonrecourse loans under the sugar program. Among the Acts 
cost-reducing provisions is the authority for USDA to impose flexible marketing 
allotments for sugar (supply control). Stephen Haley (202) 694-5247;  
shaley@ers.usda.gov

Rising Prices & Strong Competition Confront U.S. Soybean Exports

The U.S. soybean crop for 2002 is forecast at 2,628 million bushels, well below 
last year's record 2,891 million. The forecast reflects both a decline in 
plantings and a slip in expected yield. Crop rotations, improved net returns for 
corn (with lower costs for nitrogen fertilizer), and economic and weather 
conditions in western states encouraged greater planting of corn and the lowest 
U.S. soybean area since 1998. Soybean yields were curbed by summer drought and 
high temperatures, and by an acreage shift from higher yielding to lower 
yielding states. Lower soybean supplies will promote a hard retreat in U.S. 
soybean exports. Higher U.S. prices will erode the ability to compete with 
likely aggressive export campaigns by Brazil and Argentina. Mark Ash (202) 694-
5289; mash@ers.usda.gov

Cabbage Heads Higher

The French word for cabbage is incorporated into a term of endearment: mon 
petit chou (my little cabbage). This vegetable has recently become a little 
more endearing to Americans, a turnaround from a steady decline in use between 
the 1920s and the 1990s as Americans looked elsewhere for variety and 
convenience in their food. In the past decade, fresh-cut products, new recipes, 
and a growing body of nutritional research have lent new support to cabbage 
demand. Total cabbage consumption rose to 10.3 pounds per person in the early 
2000s, but is still 57 percent below the 1920s. Gary Lucier (202) 694-5253; 
glucier@ers.usda.gov 

The Ongoing Reform of Land Tenure Policies in China

The combined forces of economic transition, rapid economic growth, and increased 
integration into the world economy are propelling substantial changes in rural 
China. How farmers respond to changing economic opportunities and challenges 
depends critically on the choices they are able to make about use of land and 
other resourceschoices that depend in turn on land tenure patterns. With 9 
percent of the worlds arable land and 40 percent of the worlds farmers, 
Chinas land is scarce relative to its labor. Control over land in China 
reflects a complex and changing distribution of authority among the national 
government, local governments, and households, with potential implications for 
efficiency, equity, and environmental quality. Bryan Lohmar (202) 694-5226; 
blohmar@ers.usda.gov

Changing EU Trade Arrangements with Developing Countries

The European Union (EU), more than other members of the World Trade Organization 
(WTO), has used exceptions to international trading rules to provide 
nonreciprocal trading preferences to selected developing countries. Some of 
these arrangements have been challenged under WTO procedures as discriminatory 
and not in compliance with trade rules. To achieve compatibility, the EU 
proposes to convert the arrangements into reciprocal free trade areas, which for 
developing countries could result in new trade competition and economic 
challenges, without clear advantages. The EU, on the other hand, would gain 
strong advantages for its agricultural and other exports to some developing 
countries at the expense of exports from the U.S. and other countries. Many 
elements of the EU's current and proposed free trade area arrangements remain 
controversial and untested in the WTO. Gene Hasha (202) 694-5168; 
ghasha@ers.usda.gov

Genetically Engineered Crops: U.S. Adoption & Impacts

Since the introduction of genetically engineered (GE) crops in 1996, U.S. 
farmers have rapidly adopted some varieties, notwithstanding conflicting claims 
about economic and environmental impacts and consumer acceptance. Soybeans and 
cotton with herbicide-tolerant traits have been the most widely and rapidly 
adopted GE crops in the U.S., followed by insect-resistant cotton and corn. 
Analyses by USDA's Economic Research Service and others indicate economic 
benefits to many farmers adopting first-generation GE crops. Not all benefits of 
GE crop adoption are reflected in standard measures of net returns. Jorge 
Fernandez-Cornejo (202) 694-5537; jorgef@ers.usda.gov

Does Off-Farm Work Hinder Smart Farming?

As off-farm income takes on greater importance to farm households, less time is 
available for farm management. Smart farming (e.g., soil testing, integrated 
pest management, and precision farming) typically substitutes management for 
capital, and management is time-intensive. The value of management time and 
effort does not typically enter into calculations of economic returns to 
alternative production technologies or farming systems. The result could be 
misleading in understanding the benefits of technology adoption, particularly if 
farm households, like most of their nonfarm counterparts, are willing to forfeit 
some financial return from farming to gain convenience. Katherine R. Smith (202) 
694-5500; ksmith@ers.usda.gov   
     
Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available August 22, 2002 at 
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2002/

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