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Latest U.S.Farm Statistics --Trade Deficits & Low Prices for Family Farmers

November 30, 2004, Issue #382
Monitoring Corporate Agribusiness
>From a Public Interest Perspective

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NEIL KING JR., WALL STREET JOURNAL: The U.S. Department of Agriculture
predicted that imports of farm products next year would equal exports,
marking the first time since the late 1950s that the country failed to run
an annual agricultural surplus.

In a revised quarterly forecast, USDA predicted exports would total $56
billion next year, down from the record of $62.3 billion set in fiscal year
2004, which ended September 30. The department blamed the anticipated drop
in export sales on record crop production, which pushed down prices on
grains, oilseeds and cotton, as well as increased foreign competition.

But in a more ominous forecast for the overall U.S. trade deficit, USDA said
that imports next year would also tally $56 billion. That is up from $52.7
billion for the 2004 fiscal year, when the U.S. ran a $9.6 billion
agricultural trade surplus with the rest of the world. The U.S. has long
relied on global grain sales to maintain a wide surplus in farm trade, thus
helping to reduce the swelling trade deficit in manufactured goods. As
recently as 1996, the U.S. sold $27.3 billion more in farm products than it
imported, the largest annual surplus on record.

But as the manufacturing deficit continues to grow, it appears that the U.S.
may no longer be able to count on farm sales abroad to make up some of the
difference. The U.S. this summer began to run monthly deficits in
agricultural trade for the first time in decades, and USDA isn't predicting
any change in that picture.

Before yesterday's revised forecast, the government was projecting an
agricultural trade surplus next year of $2.5 billion.

The agency said the steep rise in agricultural imports was "the result of
higher prices of popular value-added products." Two-thirds of the increase
in farm imports since 2002, USDA said, came from seven categories of goods:
"essential oils" used in food- and agricultural-processing, snack foods,
wine and beer, red meats, processed fruits and vegetables, fresh vegetables
and miscellaneous grocery products.

The vast majority of those products --- around 75% --- came from the
European Union, Mexico, Canada, China, Indonesia, Brazil and Australia, the
USDA said. [ November 23, 2004 ]

ROBERT PORE, THE INDEPENDENT: At a time when farmers are harvesting record
crops and cashing in on government loan deficiency payments because of low
prices, the U.S. Department of Agriculture is forecasting that 2004 earnings
for U.S. farmers will exceed the record earnings of 2003.

The USDA said that the combination of a large harvest, average prices for
crops, and high prices for livestock and products has raised farm income to
record levels.

The USDA is estimating that the government will be paying out more than $5
billion in loan deficiency payments this year because of low commodity

But according to John Hansen, president of the Nebraska Farmers Union, those
net farm income figures don't accurately reflect the other side of the story
producers are going through, such as high energy costs, fertilizer costs and
other soaring input costs, and who's actually netting that supposed record
farm income.

He also said that the report could be used by members of Congress wanting to
cut agricultural programs to help reduce the growing deficit.

According to a report released this week by the USDA, farms contributed a
record $101.4 billion in added value to the U.S. economy, and net farm
income was a record $59.2 billion.

The report said that near-record livestock receipts combined with the
highest level of crop receipts in six years to generate a record $211.6
billion in total receipts.

The higher income figures reflect higher prices for soybeans, cotton, fruit
and vegetables, corn, livestock and milk and were the key reasons for the
$16.6 billion rise in receipts over 2002.

That increase should bode well for Nebraska producers who in 2003 saw a $1
billion increase in both crop and livestock receipts, compared to 2002.

Hansen said farmers in much of Nebraska are having a very good production
year, but prices for corn and soybeans, as well as other crops, are about
half as much as they were in the spring.

"We produce more crops, but we have half the value in the marketplace for
it," Hansen said.

Also, for producers in western Nebraska, they have suffered through their
fifth straight year of drought, which impacted their ability to produce
crops and raise livestock.

Hansen said the net farm income figures released by the USDA on Wednesday
don't accurately show what producers are actually netting.

"It is a reflection of agriculture's contribution to gross national product,
and there is a fundamental difference in what those two things measure,"
Hansen said.

He said in a normal year half of what the USDA releases as net farm income
is nothing more than "vertically integrated product produced by processing
companies that have never seen an outside market."

According to the USDA, 2004 net farm income is forecast to top 2003's total
by more than $14 billion.

The report said that the value of both crop and livestock production is
forecast to increase in 2004 for only the fourth time since 1990. The value
of crop production is forecast to top the previous record from 1996 by $3.1
billion, and the value of livestock production is forecast to exceed the
previous record from 2001 by $15.1 billion.

Hansen is also worried that President Bush's agricultural agenda for the
next four years will be focused on trade and said the elimination of price
supports for U.S. producers could have a dramatic impact on the viability of
family farm agriculture.

"Our trade policy is about the agribusiness processors using the power of
international trade agreements and public policy tools to loot not only
rural America, but family farm agriculture around the world," he said.

The scheme of multinational agribusiness processors, according to Hansen, is
that "they want to use the total amount of agricultural production in all
the major agricultural pools in the world against each other in order to
drag ag commodity prices down to the lowest cost of origin in the world,
which is not economically feasible or sustainable for all of the ag
producers in the world."[ November 29, 2004 ]