Agricultural Outlook Summary
October 2002 issue, AGO-295
September 23, 2002

Poor Weather Reduces 2002 U.S. Apple Crop 

This year's U.S. apple crop will be smaller for the third consecutive year due 
to adverse weather during the growing season.  Apple production in 2002 is 
forecast to decline to 9.2 billion pounds--the smallest crop since 1988.  With 
production down significantly in both the Eastern and Central states, even an 
increase in production in the Western region (with 60 percent of U.S. 
production) will not prevent overall declines. Agnes Perez (202) 694-5255 
acperez@ers.usda.gov

Organic Food Industry Taps Growing American Market 

American consumer interest in organically grown foods has opened new market 
opportunities for U.S. producers, leading to a transformation in the organic 
foods industry.  Once a niche product sold in a limited number of retail 
outlets, organic food is currently sold in a wide variety of venues, including 
farmers' markets, natural foods supermarkets, conventional supermarkets, and 
club stores.  Since the early 1990s, certified organic acreage in the U.S. has 
increased as producers strive to meet growing demand for organic food.  New 
national organic standards will facilitate the marketing of organic products as 
more U.S. growers move into organic production and more processors and 
distributors add organic selections to their product lines. Carolyn Dimitri 
(202) 694-5252 cdimitri@ers.usda.gov 

French Fries Driving Globalization of Frozen Potato Industry

Driven largely by the growing global popularity of Western-style cuisine, frozen 
french fries and other frozen potato products are generating billions of dollars 
in sales worldwide each year.  Global frozen potato production capacity is 
estimated to be at least 9.6 million metric tons a year.  Worldwide exports of 
frozen potato products in 2000 (over 90 percent of which is frozen french fries) 
were valued at $1.9 billion.  The rapid global expansion of quick-service (fast 
food) restaurants, is key to the tremendous growth in worldwide consumption and 
trade of frozen potato products. Charles Plummer (202) 694-5256 
cplummer@ers.usda.gov

U.S. Agricultural Exports to Rise $4 Billion in 2003
Sharply higher prices for grains and soybeans, reflecting drought-reduced U.S. 
production, are expected to boost the value of U.S. agricultural exports to 
$57.5 billion in fiscal year 2003, a 7.5-percent gain over 2002.  Bulk commodity 
exports are likely to lead the gains, although high-value product (HVP) exports 
also are expected to increase.  In contrast to the higher export value, bulk 
export volume will be down in 2002, mainly from lower soybean volume. Carol 
Whitton (202) 694-5287 cwhitton@ers.usda.gov


EU Revisits Agricultural Policy Reform with Bold New Proposals

The Commission of the European Union (EU) is proposing bold changes to its 
Common Agricultural Policy (CAP). The core proposal is a single annual whole-
farm payment, not requiring production by farmers, in contrast to the current 
payments that are linked to production of specific commodities. Farmers would 
have greater flexibility in choosing what to produce, and support for large 
farms would be cut for the first time. Greater emphasis would be placed on rural 
development, food safety, animal welfare, and environmental regulations. The 
proposals also have implications for WTO negotiations and EU enlargement. 
Nonetheless, for many commodities, traditional CAP price support and 
stabilization mechanisms would be maintained.   David Kelch (202) 694-5151 
dkelch@ers.usda.gov

Food Price Inflation to Slacken in 2002 & 2003

The U.S. Consumer Price Index (CPI) for all food is forecast to increase 2.1 
percent in 2002 and 2-2.5 percent in 2003, compared with a 3.1-percent increase 
in 2001.  In 2002, record beef, pork, and poultry supplies, along with dampening 
of consumer demand by the lackluster domestic economy, are holding down meat 
prices.  Smaller potato supplies pushed up the fresh vegetable CPI more than 7 
percent in 2002. But with adequate supplies of fresh fruits, dairy products, 
nonalcoholic beverages, and other processed foods, total food-at-home prices 
increased less than 2 percent. Annette L. Clauson (202) 694-5389 
aclauson@ers.usda.gov

Farm Numbers: Largest Growing Fastest

Declining farm numbers, increasing farm size, and concentration of production 
have captured the interest of the media, the general public, and lawmakers for 
decades. Average farm size has grown as farms consolidated. A smaller share of 
farms accounts for a growing proportion of agricultural production, but the 
proportion of very small farms is also growing. Acreage and sales-class data 
show a trend toward large farm operations with at least 500 acres or with annual 
sales of at least $250,000 in farm products. Robert A. Hoppe (202) 694-5572 
rhoppe@ers.usda.gov

A Role for Technology in 21st Century Global Agriculture

Technological advances have the potential to enhance agricultural productivity, 
incomes, and the quality of life in all countries.  However, some regions of the 
world have gained little from the discoveries and innovations made in 
agriculture and from global agricultural markets, partly because private 
research investment tends to be directed toward meeting the market demands of 
developed-country consumers rather than the needs of less developed countries.  
One way that the agricultural community and public sector could meet these needs 
is to strengthen the technological infrastructure in developing countries and 
facilitate the transfer of appropriate technologies. Margriet Caswell (202) 694-
5529 mcaswell@ers.usda.gov

NAFTA's Impacts on U.S. Agriculture: Trade & Beyond

NAFTA, the North American Free Trade Agreement, has generally benefited U.S. 
agriculture and related industries.  U.S. agricultural trade with Canada and 
Mexico more than doubled during the 1990s, a development to which NAFTA 
contributed. Most U.S. barriers to Canadian and Mexican exports were low prior 
to NAFTA, and dismantling of tariffs under the agreement is in general 
proceeding on schedule. Beyond direct trade impacts, the agreement has 
established rules and institutions that mitigate potential trade frictions, 
promote foreign direct investment, and facilitate public discourse about 
environmental issues. Steven Zahniser (202) 694-5230 zahniser@ers.usda.gov

Approved by the World Agricultural Outlook Board
Full text of Agricultural Outlook will be available September 24, 2002 at 
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/2002/



