BY KARL BERGER
Special Correspondent,
WASHINGTON Despite all
the doom and gloom stories about
the financial health of American
agriculture in the last few years,
the nation’s fanners enjoyed a
record level of cash income in
1987 and should do so again in
1988, according to forecasters for
the U.S. Department of
Agriculture.
The upbeat tone of Outlook ’BB,
held Dec. 1-3 in Washington,
D.C., was set by Secretary of Agri
culture Richard Lyng’s keynote
address and repeated by virtually
every speaker. More than 500
USDA analysts, agribusiness fore
casters and university economists
met to discuss the outlook for com
modities from turkeys to timber
and issues from trade to Farm
Credit
In a half-hour speech devoted
mainly to the trade issue, Lyng
said the free-market policies of the
Reagan administration are begin
ning to pay dividends in the world
marketplace. From a low point in
1984-85, U.S. agricultural exports
have rebounded the past two mark
eting years, climbing 18 percent in
volume last year. Lyng said. They
are expected to increase again in
the marketing year that began
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Cooperative research farm trials with nearly
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early weaned pigs. Average daily feed
consumption was up 9.3%, and feed
Here’s USDA’s Farm Outlook For 1988
Sept 1; James Donald, a USDA
analyst predicted a 10-percent
increase in volume led by a 30-per
cent gain in wheat sales.
In addition, the U.S. is begin
ning to win support for its proposal
to eliminate agricultural subsidies
and world trade barriers in discus
sions on the GATT (General
Agreement on Tariffs and Trade),
according to Lyng and several
other speakers at the conference.
The secretary also credited the
1985 farm bill for its “fundamental
departure” from past government
policy. Allowing grain prices to
fall toward world market levels has
not only boosted exports, but the
domestic livestock industry as well
most of which experienced
record profits in 1987, according
to USDA. Together with the
generous amount of government
support payments to grain fanners,
this has produced a record $43-46
billion in cash income in 1987 and
should produce only slightly less
in 1988, Donald said.
USDA’s optimistic outlook
received little rebuttal from the
many non-department speakers at
the conference. Dean Kleckner, for
instance, the president of the
American Farm Bureau Federa
tion, urged a continuation of cur
rent policies.
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Indeed, about the only negative
notes dealt with the unlikelihood
of continuing the current level of
government support payments.
These amounted to $49 billion in
the last two fiscal years, Lyng said,
and represent “a mammoth trans
fer of wealth to the farm sector”
that USDA is under constant pres
sure to reduce. The budget-cutting
package currently under consider
ation is designed to save $9OO mil
lion in agricultural outlays in fiscal
1988, for instance.
The main savings would arise
from a two-percent reduction in
the target prices for farmers who
participate in the government’s
acreage reduction programs. (This
reduces the amount of the deficien
cy payments the government pro
vides.) Other savings would come
from decreasing the size of the
paid land diversion to be offered to
feedgrain producers, expanding
the so-called “50-92” provision in
the acreage reduction programs to
“0-92” and cutting costs in other
government programs, including
dairy.
The conference was conspicu
ous for its lack of comment on
dairy issues. Lyng, for instance,
did not discuss the dairy industry
in his address or in later remarks to
journalists. James Miller, the
efficiency improved by 14.9% in the first 14
days in the nursery.
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USDA economist who presented
the department’s dairy outlook,
was vague about future price pros
pects and did not predict the level
of Commodity Credit Corporation
purchases of surplus dairy stocks
in 1988.
The latter estimate assuming
Congress clears the way by
approving some kind of budget
package to replace the across-the
board cuts now in effect under the
Gramm-Rudman-Hollings law
will determine whether Lyng can
reduce the government’s support
price by 50 cents Jan. 1. An esti
mate above the 5-billion-pound
mark will trigger the cut
Most private economists now
agree the estimate will exceed the
trigger level. USDA’s official esti
mate is expected shortly.
However, the dairy price out
look also is clouded by the Nov. 20
implementation of across-the
board cuts. They include reduc
tions in the prices the CCC pays for
surplus butter, cheese and non-fat
dry milk that effectively reduce the
support price 94 cents.
Without being specific about
prices, Miller did predict a slight
rise in feed costs for dairymen and
the continuation of relatively high
prices for cull cows. He also pre
dicted a two-percent increase in
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commercial use of dairy products
in 1988, a lower gain than those
recorded in the past few years.
‘The three-year-old step-up in
promotion efforts may be losing
the ability to further accelerate
expansion,” Miller said.
The outlook for other livestock
producers generally calls for
tougher times in 1988 after a pro
fitable year in 1987. The prices of
most commodities will be lower as
production rises and costs will be
higher as grain prices increase,
according to several USDA
analysts.
Nationwide, pork production
should climb 11 percent, said eco
nomist Leland Southard. Prices
should stay in the $4O a hundred
weight range.
Broiler production should
increase five percent, according to
economist Jack Ross. Both prices
and costs are expected to average
43 cents a pound.
Ross said turkey production,
which rose 17 percent in 1987, will
gain another six percent next year.
Prices will stay below profitable
levels for much of the year.
‘The outlook for eggs is not
very high in ’88,” Ross added.
“We’re looking for returns not to
be very different than they were in
1987,” when they were close to
zero. As a result, the number of
major producers, now estimated at
1,800, should continue to decline.
The one exception to this down
beat scenario may involve cattle
men. Although the overall reduc
tion in cattle numbers appears to
have bottomed out, 1988 beef pro
duction should lag four percent
behind 1987’s total, according to
USDA analyst Ronald Gustafson.
Thus, prices should remain fairly
high; he predicted the low-s6os for
slaughter cattle and the mid-s7os
for feeder cattle. However, the
ample supplies of lower-priced
pork and poultry will keep a lid on
any increase.
“Returns to the beef sector over
the next couple of years will
increasingly be affected by large
supplies of competing meats at
even lower prices,” he said.
Mi; 717-3M.3M7 mr 717411 I It*
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