January/February 2001
Economics Editor: Dennis
A. Shields
This issue was published in January 2001 by the Market and Trade
Economics Division.
Agricultural Outlook is published 10 times per year
by the Economic Research Service, U.S. Department of Agriculture.
The contents section at the bottom of this
page links to each article in Adobe Acrobat PDF format.
Next issue: The summary for the March 2001 issue is
released on February 20, 2001. The complete text-only version is
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In this
issue...
Slower Growth for U.S. Economy in 2001—U.S. economic
growth slowed markedly in the second half of 2000. From a breakneck
rate of 6 percent in the first half of 2000, forecast growth in
Gross Domestic Product (GDP) decreased significantly in the second
half of 2000, resulting in an average annual growth rate expected
at 5.2 percent. In 2001, GDP growth is expected to drop further,
averaging 3 percent, owing to continued tightness in labor markets,
a slowing of consumer income growth, and tightening credit that
will slow business investment. David
A. Torgerson (202) 694-5334.
WTO Negotiations: Potential Gains from Policy Reform—Global
trade negotiations on agriculture, which the World Trade Organization
opened in Geneva in March 2000, are expected to address three areas
of national agricultural policies related to market access limitations
(tariffs, tariff-rate quotas, and other trade barriers), domestic
support to agricultural producers, and export subsidies. Such policies
cause world agricultural prices to be about 12 percent below the
level they would otherwise be. Over the long term (about 15 years),
full elimination of agricultural price-distorting policies would
lead to an increase in world welfare, or consumer purchasing power,
of $56 billion annually, with nearly one-fourth accruing to the
U.S. Mary E. Burfisher
(202) 694-5235.
EU Enlargement: Negotiations Give Rise to New Issues—The
European Union (EU) continues active negotiations with 10 countries
of Central and Eastern Europe (CEE) for EU membership: Poland, Hungary,
Czech Republic, Slovenia, Estonia, Latvia, Lithuania, Slovakia,
Bulgaria, and Romania. Several recent developments could dramatically
alter the impact of accession on agriculture in Europe. Accession
will most likely be delayed from earlier expectations and include
a transition period. EU negotiators have also expressed reluctance
to grant CEE farmers the full range of Common Agricultural Policy
support immediately upon accession. And depreciation of the euro
means that higher prices anticipated by CEE producers may not materialize.
Nancy J. Cochrane (202)
694-5143.
Hired Farm Labor in the U.S. & Mexico—U.S. farmers
are holding their own in competing for workers and providing wage
increases that generally keep pace with the cost of living. However,
foreign-born workers--mostly from Mexico--make up an increasing
share of U.S. hired farm labor. The movement of Mexican workers
to U.S. farms largely reflects wage differentials between the U.S.
and Mexico, as well as differences in employment prospects. Availability
of hired farm labor in both countries is likely to influence production
and trade of labor-intensive commodities such as greenhouse and
nursery products and fruit and vegetables. Steven
Zahniser (202) 694-5230.
Cigarette Consumption Continues to Slip—Cigarette consumption
by U.S. smokers in 2000 is projected at about 430 billion cigarettes,
down from 435 billion in 1999. Behind the continuing drop in consumption
lie spiraling cigarette prices, greater awareness of health risks,
and continuing restrictions on smoking areas. Two years ago, manufacturers
boosted wholesale prices to cover expenses incurred from the 1998
tobacco agreement with state attorneys general. In 2000, a rise
of 10 cents per pack in the Federal excise tax pushed up cigarette
prices further. Thomas
Capehart, Jr. (202) 694-5311.
Surging Demand Pulls Dairy Industry in New Directions—Growth
in milk output is expected to ease slightly in 2001, which may allow
prices for milk and dairy products to recover in calendar 2001.
Since late 1999, very large supplies have put prices under pressure.
With the economy projected to expand in 2001, although more slowly,
consumer income and spending should continue to gain. Thus, demand
for dairy products--especially from restaurants or for ingredients
in prepared foods--is expected to stay strong. James
Miller (202) 694-5184.
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