March 3, 2000

From plummeting commodity prices to the battle over genetically modified seed to concentration in buyers’ markets, farmers have faced significant demands for change, an Agriculture Department economist told farmers and ranchers attending the American Farm Bureau Federation annual meeting. "And I think it will continue for some time," USDA’s Keith Collins predicted.

Collins’ outlook for agriculture in the near-term calls for continued price declines for farm commodities and stagnation in export tonnage.

"Over the past 40 years, the volume of exports of all major commodities has gone up but the growth has been less than we thought it would be," said Collins. "The ‘bear’ commodities, in terms of exports, have been wheat, rice and cotton, while the ‘bulls’ have been feed grains, oil seeds, meats and horticultural products. I expect that to continue to be the case for a while," he said.

The world economic situation is one explanation for the slow growth in agricultural exports, Collins said. The world economy grew only 2.5 percent in 1999. "In 2000, we expect a 3 percent growth, which is getting back up to a positive level, but still not the 8 to 9 percent growth of previous years."

China is expected to be a net exporter of wheat grain next year, rather than a key buyer of U.S. grain, as predicted a few years ago. In Argentina and Brazil, continued adoption of technology and increased production of soybeans will keep a steady stream of South American commodities on the market, competing for export buyers.

But, Collins said he is optimistic for improved exports of U.S. farm commodities over the long-term.

In the meantime, farm programs will be vital to the profitability and sustainability of U.S. farmers, Collins said. "For 2000, we’re looking at a substantial drop in farm income, while production expenses continue to go up," Collins said. "The result will be a total farm income of a little less than $50 billion, which is a 20 percent drop from 1999, and that will cause some financial difficulty for many farmers."

Collins estimated that about 14 percent of U.S. farmers will experience serious debt problems in 2000.