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           April 18, 2002
May 2002, ERS-AO-291
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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Farm Credit Use Expected to Expand Moderately in 2002

Farm lending, which has been growing since 1992, is expected to increase again 
in 2002. Last year, U.S. farmers held $192.8 billion in farm loans. For 2002, a 
rise of 1.9 percent to $196.5 billion is forecast, the smallest annual growth in 
a decade.  With limited or no gains in farm commodity prices expected this year 
following the relatively low levels of 2001, and uncertainties about future 
levels of direct government payments, farmers and lenders may be more cautious 
about adding debt.  Also moderating demand for credit are high levels of direct 
government payments to farmers in recent years, adequate levels of working 
capital, and sizable off-farm earnings.  Jerome Stam (202) 694-5365; 
jstam@ers.usda.gov

Interest Rates on Farm Loans Expected to Increase During 2002-03

Borrowers, including farm borrowers, are likely to encounter rising interest 
rates in 2002 and 2003 after enjoying declining rates since mid-2000.  The 
upward pressure comes from the economic rebound that began in late 2001, 
stronger business credit demand, tighter domestic monetary policy, and gradually 
accelerating economic growth.  Because agricultural credit is only a small 
proportion (0.7 percent in 2001) of total credit, interest rates on agricultural 
loans are determined primarily by factors outside agriculture in national and 
international credit markets.  Nevertheless, farm loan rates are expected to 
increase less than most interest rates because of a historic adjustment lag. 
Paul Sundell (202) 694-5333; psundell@ers.usda.gov

Soybean and Cotton Plantings to Decline in Favor of Corn in 2002

Planting intentions in 2002 for the eight major U.S. field crops amount to 248.3 
million acres, nearly identical to last years plantings despite widespread weak 
price signals. Corn planting intentions are up 4 percent from last year, partly 
due to reduced fertilizer costs for corn production and lower anticipated 
returns for competing crops, particularly cotton in the Delta.  Crop rotation 
considerations and uncertainty about the farm bill may also draw acreage from 
soybeans to corn, contributing to the slight intended reduction (for the second 
straight year) in overall soybean area. Wheat plantings continue to decline. 
William Lin 202-694-5303; wwlin@ers.usda.gov

Oats Market Strong in 2001/02

Oats, the least prominent of the feed grains, have been gaining attention as 
prices climb and buyers scramble to ensure supplies. In the U.S., improved 
genetics for crops other than oats, and planting flexibility under the 1996 Farm 
Act, have cut into oats production in favor of corn and soybeans. The U.S. 
currently imports about 30 percent of its total oats supply, primarily from 
Canada. While world stocks are projected to increase due to larger global 
production (increases in the former Soviet Union and Eastern Europe), stocks of 
high-quality milling oats are projected to decline significantly. Canadian oats 
stocks are projected at the lowest since 1995/96. The tight domestic supply of 
high-quality oats in 2001/02 has been caused by weather problems in the upper 
Midwest, and in the oats-growing regions of Canada, Sweden, and Finland. William 
Chambers (202) 694-5312; chambers@ers.usda.gov

Argentina's Economic Crisis: Can the Ag Sector Help?

A simple resolution to Argentinas severe economic crisis does not appear to be 
imminent.  Although devaluation of the Argentine peso could eventually lead to 
an export-led recovery, agricultural production and exports will likely be 
hindered by new export taxes, capital controls, higher input prices, and tight 
credit conditions.  To improve cash flow and reduce operating expenses, 
Argentine farmers may switch some corn production to a soybean-wheat double-
cropping rotation using fewer manufactured inputs. David Torgerson (202) 694-
5334; dtorg@ers.usda.gov

Could the NIS Region Become a Major Grain Exporter?

Western analysts have predicted that reform in the New Independent States (NIS) 
of the former Soviet Union could transform the region from a large grain 
importer (as during the Soviet period) into a major grain exporter.  The ability 
of the NIS region to become a major grain exporter depends mainly on whether or 
not it can produce grain at a relatively low cost compared with other major 
grain producers. Recent research by USDAs Economic Research Service indicates 
that relative production costs of outputs and inputs compared with other 
producing countries do not currently support large grain trade by the NIS?either 
imports or exports. William Liefert (202) 694-5156; Wliefert@ers.usda.gov

Farmland Protection Programs: What Does the Public Want? 

Public support has been growing for government farmland protection programs. 
Behind this support is the perception that farmland produces more for society 
than food and fiber, such as scenic views, environmental benefits, and 
maintaining an agrarian heritage.  Designing and implementing a farmland 
protection program that is cost-effective and that provides the greatest 
possible benefits requires an understanding of public preferences for particular 
rural amenities, as well as which of these amenities is best provided through 
farmland preservation. Dan Hellerstein (202) 694-5613; danielh@ers.usda.gov

China: En Route to a New Role in Global Agriculture

Beyond the headline-grabbing events that have recently captured the attention of 
market analysts and policymakers is a larger picture of China's evolving role in 
agricultural markets. As China grows, develops, and integrates with the world 
economy, it is likely to become an even larger and steadier customer for 
agricultural imports. At the same time, China could become a competitive 
exporter of fruits, vegetables, fish, meat, and poultry if its production were 
modernized, its marketing infrastructure improved, and food safety and animal 
health issues resolved. Fred Gale (202) 694-5215; fgale@ers.usda.gov

Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available April 19, 2002 at 
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2001/

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