USDA’s Agricultural Projection Through 2021
In the News
February 26, 2012
According to the USDA, prices for major crops are projected to decline in the short term as global production responds to recent high prices. However, long term growth is more favorable, thanks to a growing global demand for agricultural products, including the continued U.S. ethanol demand for corn and the EU biodiesel demand for vegetable oils.
The forecast for the corn supply may well have the most impact on our pocketbooks. The projection is 94 million acres of corn will be planted this spring – that is the most planted since 1944, and will put corn stocks next summer at double the amount this year. The supply (and price) of corn has a dramatic effect on just about all foodstuffs. USDA predicts that the price will drop to $5 per bushel versus this year's average bushel price of $6.20. The record high hit last summer at a fraction below $8 per bushel.
Corn is used for everything from livestock feed, sweeteners, packaging and of course, ethanol – and many blame the short supply over the past couple of years as fueling the dramatic increases we have all weathered. And while farm income reached a record high in 2011, largely due to higher commodity prices, the strengthening global food demand – and demand for biofuel – will likely keep net farm income at historically high levels through 2021, with a slight dip in prices in the short term.
That's the good news. Here's the bad.
USDA predicts that there will be a decline in broiler (poultry) supply this year – which certainly means prices will rise. Although they do suggest that after this year, supplies will grow. The supply of beef will also decline for the next two years, but in 2017 we should see a record level of supply (and prices will then fall, hopefully).
There is one other variable – just how much beef and poultry will we eat as prices rise? Between 2004 and 2007, our combined per capita consumption of these two foods peaked at just over 221 pounds. USDA predicts that in 2013 that number will fall to 198 pounds, and then begin to grow again. The total cattle inventory is predicted to expand to about 97 million by 2021. Hog prices, on the other hand, are predicted to remain relatively flat, and then eventually decline as red meat production rises.
As for the U.S. economy in particular, it is predicted to grow at an average rate of 2.5% over the next decade. This slower growth will reduce the U.S. share of global domestic product (GDP) by 2% (from 26% to 24%) by the year 2021. Unfortunately, that also means that employment gains may be slow as well.
In the aftermath of the global financial crisis and economic recession, U.S. and world economic growth should return to steady gains, and developing countries will become a larger part of the world economy. That means meat growth is expected worldwide, not just in the U.S., especially in many middle- and low-income countries. Per capita consumption for each major type of meat, including beef, pork and poultry, is projected to grow at a rate of more than 2% annually over the next decade.
Domestically, planted area for 8 major field crops in 2012 is projected to reach 251 million acres. Farm sales of horticultural crops are projected to grow by 1.5 percent annually over the next decade, reaching $69.2 billion in calendar year 2021, up from $59.6 billion in 2011.
The projections for the current report were prepared during October through December 2011 and are based on the assumption that there are no domestic or external shocks that would affect global agricultural markets. To read the full report, visit: http://www.ers.usda.gov/Publications/OCE121/OCE121.pdf.