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Texas Agriculture Archive

September 20, 2002

Farm income continues to drop

The Agriculture Department's late August projection of farm income for 2002 shows a continuation of the decline reported in the June projection, according to an analysis by AFBF Chief Economist Ross Korves.

Net cash income (cash income minus cash expenses) for calendar year 2002 is forecast to be $49 billion, down $2.1 billion from the June 2002 projections and down $10.7 billion from last year.

The USDA forecasts net farm income at $35.2 billion, down $5.3 billion from June and down $10.5 billion from last year. According to Korves, the biggest problems continue to be cash receipts for livestock and poultry, which are forecast to be down $9.4 billion from last year.

Crop cash receipts are expected to be up $2.4 billion from last year, partially because traditional farm program commodity prices are up due to the current drought. The rise in crop cash receipts is more than offset by a $4.5 billion decline in farm program direct payments due to lower loan deficiency payments and emergency assistance payments.

USDA predicts export surge

The U.S. Department of Agriculture has announced U.S. agricultural exports for fiscal year 2003 are forecast at $57.5 billion, a $4 billion increase over the expected $53.5 billion for fiscal 2002. Export sales at this level would be the highest since 1997, only $2.3 billion below the 1996 all-time record of $59.9 billion.

"This forecast for next year is very encouraging," said Agriculture Secretary Ann M. Veneman.

Veneman said that passage of Trade Promotion Authority for President Bush greatly facilitates the broad range of negotiations now underway to open markets internationally under the WTO, in this hemisphere in a Free Trade Area of the Americas and bilaterally with key countries.

The 7.5 percent increase in the forecast value for exports is a substantial gain over 2002 and is mainly due to higher prices for grains and oilseeds. Bulk commodity volume, however, is forecast to be down 4.6 million tons largely because of reduced soybean shipments coming off record export levels. For the major field crops—corn, rice and cotton—export volumes are expected to be higher. USDA also is forecasting modest increases in the value of livestock and poultry products of $500 million and a $300 million gain for horticulture.

The summary and full report of USDA's Outlook for U.S. Agricultural Exports may be accessed from the ERS web site http://www.ers.usda.gov.

New boxed beef report draws praise

A new report from the Agriculture Department is garnering praise from the nation's cattlemen.

Cattle industry experts say the new report should provide cattlemen a clearer picture of the total value of boxed beef. Release of the new data began last week and will reflect a more accurate producer-to-retail price spread than was previously reported.

Industry leaders believe the "National Comprehensive Boxed Beef Cutout Report" could provide an alternative pricing point that would serve as the basis for pricing formulas and grids. The report will provide a weighted average boxed beef price in addition to the Choice and Select cutout values.

The Agricultural Marketing Service (AMS) report covers almost all of the fed steer and heifer beef sales activity of the major packers, and will be in addition to the daily and weekly Choice and Select boxed beef cutout reports. The report resulted from information available through 1999 mandatory price reporting initiatives.

According to USDA, these new data should cover approximately 60-65 percent of total boxed beef. Not included will be information from smaller plants not covered by mandatory price reporting, some frozen exported product, beef from dairy steers and heifers, older product nearing sell-by date, inter-company transfers and boxes from cow and bull plants.

In addition, new import restrictions on U.S. rice, poultry and pork also may be considered.

"American farmers justifiably question the value of trade agreements when the additional exports those agreements are meant to generate simply trigger an import barrier," AFBF wrote.

"The U.S. government must work to ensure not only that trade agreements are fully implemented in accordance with their terms and prescribed timetables, but that such implementation is not rendered meaningless by the imposition of equally restrictive and unjustified import relief measures," AFBF said.

AFBF believes the passage of international trade agreements designed to reduce trade barriers and create fairer trade sets the stage to move American agriculture forward in the world marketplace.

Notable Quotables

"There is this lore throughout the conservation community that ranching is bad, period. I think that is demonstrably wrong. And a number of people are gathering data to demonstrate that."

—Dr. James H. Brown, a professor of biology at the University of New Mexico, in a New York Times story on the importance of cattle ranches in preserving habitat for many native species. In a number of recent studies, scientists have concluded that large, intact working cattle ranches could be the best way to preserve grasslands and the periodic fires that control brush and cactus.