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 February 20, 2002
March 2002, ERS-AO-289
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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Safety Nets: An Issue in International Agricultural Trade Liberalization

Global trade liberalization is expected to benefit many countries, including 
those developing countries that are net agricultural exporters and are able to 
respond to expanded market opportunities.  Other low-income countries, however, 
could experience greater food insecurity as trade liberalization leads to higher 
and perhaps more variable prices for some food commodities.  The international 
safety nets that presently exist, including food aid, are inadequate to 
stabilize food supplies for vulnerable countries.  New safety net proposals are 
being assessed that could help stabilize grain import prices or manage import 
costs.  Recent estimates of selected proposals suggest that the costs could be 
much less than those of current programs.  Improving international safety net 
programs may not only temper food security concerns, but also generate support 
among low-income countries for further trade liberalization. Michael Trueblood 
(202) 694-5169; trueb@ers.usda.gov

Food Aid: How Effective in Addressing Food Security? 

How effective have food aid programs been in addressing the needs of recipient 
countries?  What does this imply for future effectiveness?  Analysts at USDA's 
Economic Research Service (ERS) evaluated food security situations in 67 
developing countries by first projecting the gaps between estimated food 
consumption and several consumption targets through the next decade. The ERS 
food security assessment took into account each country's physical access to 
food (ability to produce and import) and economic access (ability to purchase). 
ERS then calculated the food gaps that would remain after food aid allocations, 
using the most recently available food aid data for the projections. Among the 
findings is that food aid is most effective in reducing the "distribution gap," 
which captures the impact of unequal purchasing power in the countries studied, 
and estimates the number of people consuming below consumption targets. Stacey 
Rosen (202) 694-5164; slrosen@ers.usda.gov

Peanut Farmers Incomes Lower Despite Rebounding Consumption

In the U.S., most peanuts are consumed either directly for food or indirectly as 
peanut products. Food use has rebounded from a decline in the early 1990s, and 
is forecast at record levels in 2001/02.  Even so, new challenges since the mid-
1990s have placed downward pressure on average farm prices and brought cash 
receipts in 1999 and 2000 to the lowest levels in almost two decades.  These 
challenges include increased access for peanut imports under trade agreements, 
strong competition in export markets (notably from China), and changes in 
domestic support policy under the 1996 Farm Act. The prospect of major changes 
to the peanut program under new farm bill proposals is also a source of 
uncertainty for peanut producers.  Erik Dohlman (202) 694-5308; 
edohlman@ers.usda.gov

Middle East/North Africa Region: A Major Market for U.S. Feeds

The 20 countries of the Middle East and North Africa region (MENA) provide a 
substantial market for U.S. coarse grains, oilseeds, and meals. Prospects are 
for this market to continue growing.  During the 1990s, the MENA region became 
increasingly dependent upon feed imports to support its expanding livestock and 
poultry production.  In 2000, MENA was the largest foreign market for U.S. 
barley and soybean meal and the second-largest market for U.S. corn.  Feed 
imports are expected to expand further in the future for most MENA countries 
because of population and income growth coupled with restrictions on imports of 
red meat and poultry. The U.S. will continue to be a major supplier, but will 
face price competition from other countries, notably Argentina and Brazil. Fawzi 
Taha (202) 694-5178; ftaha@ers.usda.gov

Farm Income, Finance, & Credit Outlook For 2002

The overall financial state of the U.S. agricultural sector is sound, as 
evidenced by continuing increases in asset values and equity levels. Net cash 
income before government payments is expected to increase for the third straight 
year and exceed $40 billion for the first time since 1998. The level of 
government payments will have a large impact on the economic outlook for 2002. 
The article includes an analysis of payment levels above those implied by 
current law, estimating their potential impact on 2002 farm income. Mitchell 
Morehart (202) 694-5581; morehart@ers.usda.gov 

Snap Beans: No Strings Attached
On any given day, about 2 percent of Americans consume fresh snap beans, 
popularly known as green beans or string beans. Per capita use of fresh-market 
snap beans has been on the rise over the past decade, reaching 2.1 pounds in 
2000.  Fresh-market production, which has risen during the 1990s, accounted for 
about 25 percent of the 2.1 billion pounds of snap beans produced in the U.S. 
during 1998-2000. Spurred by strong demand, particularly from the fresh market, 
total snap bean production in 1998-2000 was higher than in 1988-1990. Consumer 
interest in nutrition and healthy lifestyles should support further growth in 
fresh snap bean consumption. Gary Lucier (202) 694-5253; glucier@ers.usda.gov

Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available 2/21 at 
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2002/

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