The USDA's Office of the Chief Economist on Tuesday posted online the report of agricultural projections for the next 10 years. The report can be viewed at www.usda.gov/oce. The printed version will be available Feb. 21 at the USDA's Annual Agricultural Outlook Forum.
An Interagency Agricultural Projection Committee with representatives from several USDA agencies put the report together. According to committee chairman David Stallings the purpose for the report is to give USDA an idea of where farm program expenditures may go and also acts as a baseline by which changes in agricultural policy can be measured.
"We assume that current legislation remains unchanged, that there are no additional trade agreements, other countries programs remain the same and there are no shocks to the system," Stallings says.
Some of the key points that the report projects are reasonably strong world economic growth starting in 2009, and the dollar continuing to depreciate through 2011, which will increase demand for U.S. agricultural products. High petroleum and energy prices will make corn-based ethanol profitable, and there are a number of countries that are much more interested in producing biofuels.
"In essence what we see is this, we see continuing high farm income," Stallings says. "The long-term projections have a drop in farm income in 2009, but we do expect to see record farm incomes after about 2011."
Stallings says that high income will be driven by demand for U.S. agricultural products, energy, and rising exports. The expansion in corn-based ethanol affects almost everything, which is nothing new. Strong ethanol expansion is continued through 2009 and 2010.
"It is noteworthy that we do not include the assumptions in the energy act that was passed in December," Stallings says. "That was passed after we had completed the crop projections so that was not included. Even without that we do see a very rapid increase in ethanol production to about 14 billion gallons a year by 2017."
The report also projects soybean production falling as Brazil increases soy production, and meat production is slowing for the first half of projections on high feed costs and lower returns. However there will be strong domestic demand and by the turn of the decade higher returns are expected in that sector.
"This is a very strong outlook for U.S. agriculture and world agriculture in general," Stallings says. "We have demand coming from enough sources that unlike past periods of temporary prosperity we don't see any reason to see that in the future. We are going to continue to see the use of agricultural products in our energy sector, so I think this is an indication that we should be very optimistic about the state of our agriculture sector."