Agricultural Projections to 2016

The United States Department of Agriculture (USDA) recently published a report, “USDA Agricultural Projections to 2016” which cover agricultural commodities, agricultural trade, and aggregate indicators of the sector, such as farm income and food prices. The projections are a conditional scenario based on specific assumptions regarding the macroeconomy, agricultural and trade policies, the weather, and international developments.

In the United States increases in corn-based ethanol production will provide a major impetus for a strong net farm income projection. Increased demand for grain used to produce ethanol in the United States will raise the price of corn relative to prices for other grains and soybeans. In response, increased corn production and exports are assumed for countries such as Argentina, Bulgaria, Romania, Ukraine, Republic of South Africa, and Brazil. In addition, vegetable oil prices rise relative to prices for oilseeds and protein meals because of expanding biodiesel production in a number of countries.

Cotton consumption and textile production are projected to increase in countries where labor and other costs are low, such as China, India, and Pakistan. Although China’s cotton imports are expected to grow more slowly than the rapid gains since 2001, these increases account for the gains in global cotton trade in the projections. Improved Indian cotton crop yields, in part due to the adoption of Bt cotton, have raised India’s output in recent years. Rapid yield growth is projected to continue with the increase in cotton output being used for domestic textile production rather than for export.

Readers can access the full report at http://www.ers.usda.gov/publications/oce071/oce20071.pdf.