This is the final issue of Agricultural Outlook.  Beginning in February 2003, 
the Economic Research Service will publish a new magazine covering the full 
range of the agency's work. Watch the ERS website for details. 

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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.
	Approved by the World Agricultural Outlook Board 
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Yearend Review: U.S. Ag Markets Encountered Turbulence 

The tightest grain and oilseed supplies in several years are boosting prices and 
forcing adjustments for end-users this year. Drought in many regions of the 
country slashed crop and forage production, stressed cattle operations, and 
raised costs for livestock producers. With the crop supply situation essentially 
established, markets are focusing on how buyers will adjust and how producers 
will change 2003 plantings in response to higher prices. For the livestock 
sector, adjustments due to higher feed costs and tight forage supplies are 
resulting in abundant meat supplies as producers incline more toward marketing 
than building herds. Livestock prices are expected to rise in 2003 as total meat 
and poultry production declines for the first time in 21 years. Dennis Shields 
(202) 694-5193 dshields@ers.usda.gov

Tortoises Triumph: Gradual Changes Transform the Dairy Industry

Today's dairy industry is transformed from the one profiled in the inaugural 
issue of Agricultural Outlook (June 1975). Dairy operations are one-fifth the 
number, and some are much larger and more specialized. Cow numbers are down, but 
milk production per cow jumped 80 percent to increase total production by half. 
Cheese now accounts for half of total milk use, displacing beverage milk that 
dominated milk use in 1975. Some supply and demand forces driving the 
transformation operated gradually and continually and may continue to be major 
shapers of the dairy industry. Among these forces are economies of scale and 
specialization. James Miller (202) 694-5184 jjmiller@ers.usda.gov

Grape Expectations: Abundant Quantity, High Quality

U.S. consumers are finding an abundance of high-quality fresh-market grapes at 
slightly higher prices this year than a year ago. USDA forecasts the 2002 U.S. 
grape crop at 14.5 billion pounds, the third-largest crop ever. The crop is 11 
percent larger than a year ago but 5 percent smaller than the 2000 record. 
Despite increased production, grape prices received by growers in 2002 are up 
from last year due to a higher quality crop. While most grape and grape products 
produced in the U.S. are sold through domestic channels, foreign markets are 
increasingly important. U.S. export volumes of fresh grapes and raisins rank 
third in the world, with wine exports ranking sixth. Agnes Perez (202) 694-5255 
acperez@ers.usda.gov

Smaller 2002/03 Citrus Crop May Boost Grower Prices

The 2002/03 orange, grapefruit, tangerine, and Temple crops are expected to be 
smaller, while lemon and tangelo crops should be bigger. As a result of the 
expected smaller crop, growers are likely to receive higher prices for their 
product. Higher prices could, in turn, improve revenues for some of the citrus 
industries. Susan Pollack (202) 694-5251 pollack@ers.usda.gov

Holiday Sales Look Bright for Christmas Trees & Poinsettias

Christmas tree sales depend not only on consumer holiday budgets, but also on 
competition from artificial trees. In 1989, sales of real and artificial 
Christmas trees were equal, but by 2000 the share of real trees had fallen to 39 
percent. The 2002 holiday season's sales of real Christmas trees are expected to 
total at least 32 million. With estimated retail prices averaging $36 per tree, 
total retail sales should approach $1.2 billion, a rise of 9 percent. Poinsettia 
sales are expected to continue growing, up 2 percent to $260 million at 
wholesale. Alberto Jerardo (202) 694-5266 ajerardo@ers.usda.gov

Controversies in Livestock Pricing

Some livestock producers allege that aspects of the livestock pricing system 
contribute to declining prices. Vertical coordination, which includes contract 
arrangements between packers and producers, has been accompanied by declining 
use of spot markets (the auction markets and directly negotiated sales between 
producer and packer). The benefit of spot markets is the easy dissemination of 
price information, but vertical coordination also offers advantages--both for 
sellers and buyers. There are continuing controversies over the extent to which 
structural changes and pricing methods in the industry have affected producer 
prices. William Hahn (202) 694-5175 whahn@ers.usda.gov

Where's the Beef? Small Farms Produce Majority of Cattle

Small operations produce the majority of beef cattle in the U.S., and control 74 
percent of the land dedicated to beef cattle production. Three quarters of the 
nation's beef cattle spend at least part of life on a small farm (annual sales 
under $250,000). Small enterprises producing beef cattle in the U.S. can be 
divided roughly into two groups: full-time operations for which agricultural 
production is a significant source of income, and part-time operations for which 
it is not. These operations may differ-among themselves and with large 
operations-in areas like production, marketing, and land stewardship, with 
implications for farm policy. A. James Cash II (202) 694-5149 
ajcash@ers.usda.gov

Globalization of the Soft Drink Industry

The beverage industry is a bellwether for the food industry, where globalization 
has affected the structure. Soft drink companies produce for domestic and 
foreign markets, license their products, and invest in plants abroad. U.S. soft 
drink exports totaled $232 million in 2001. Names like Coca-Cola and Pepsi are 
recognized worldwide, and foreign brands are consumed in record amounts in the 
U.S. Major shifts in the business environment for these manufacturers include 
refocusing from national to international, expansion across product lines, and 
rising competition. Chris Bolling 
(202) 694-5322 hbolling@ers.usda.gov

Enhancing Food Safety in APEC Countries

Changing consumption patterns, lengthening of supply chains, and the rising 
share of perishable food products in trade are all generating concerns about 
food safety in the Asia Pacific Economic Cooperation (APEC) region. Recent 
outbreaks of foodborne illness in China (contamination by rat poison) and the 
U.S. (Listeria) have heightened that concern. Such incidents result in added 
health care costs to society, lost productivity, and changes in consumer 
behavior that can adversely affect a firm or an entire industry. APEC countries 
are increasingly implementing quality and risk management systems and training 
programs to make food supplies safer. William Coyle (202) 694-5216 
wcoyle@ers.usda.gov

Commodity Policies of the U.S., EU, & Japan-How Similar?

Commodity policies of the U.S., the European Union, and Japan address some of 
the same goals, but there have always been key differences in approach and in 
their policy instruments. In recent years, all three have made significant 
changes to their commodity policies. Efforts to encourage freer trade in 
agricultural commodities have led each of the three toward less trade-distorting 
programs. Although differences certainly remain, some of the factors influencing 
development of agricultural policy may be pushing their commodity policies in a 
similar direction. Anne Effland (202) 694-5319 aeffland@ers.usda.gov

Shaping the Global Market for High-Value Foods

The global market for high-value foods is subject to an ever-changing product 
mix demanded by wealthier and more selective consumers. But as developing 
countries' income and population levels grow, they account for a growing share 
of global food sales. In response, multinational food companies are rapidly 
restructuring their manufacturing and retail operations to better meet evolving 
world food demand. Global sales of high-value food products were estimated at 
US$4 trillion in 2000. Mark Gehlhar (202) 694-5273 mgehlhar@ers.usda.gov

What's at Stake in the Next Trade Round

As the next round of multilateral trade negotiations begins later this winter, 
attention is most frequently trained on commodity-by-commodity impacts of trade 
liberalization. But the most compelling economic story is the potential for 
trade liberalization to accelerate income growth in developing countries. It is 
income growth that increases demand for food and shifts demand to high-value 
products such as meat. Expansion of demand in developing countries would present 
a significant opportunity for U.S. producers who otherwise face a stable and 
mature domestic food market. Susan Offutt (202) 694-5000 soffutt@ers.usda.gov

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