E.R.S. predicts drop in world ag output in FY '09

by Bryan Salvage
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WASHINGTON – The total world agricultural output is expected to fall in fiscal year 2009 between 1.5% and 1.8%, while the U.S. Gross Domestic Product is forecasted to decline 2.2% to 2.8%, according to U.S.D.A.’s Economic Research Service’s recently released annual FY 2009 Agricultural Trade Outlook.

Farmers can expect less credit and higher interest rates, the report states, although they will be subject to less credit rationing as seen throughout the United States. Economic growth is expected to decline due to reduced spending as a result of weak housing construction, higher long-term market interest rates, deteriorating household and business balance sheets, increased unemployment and decreased personal income.

The Western Hemisphere remains the top regional destination for U.S. agricultural exports, according to E.R.S. Such exports, however, are forecasted to decline to Europe, Africa and the Middle East. U.S. agricultural exports are projected at $98.5 billion in November 2009 but will decrease by $3 billion in February.

Grain and feed exports are expected to decrease due to a drop in export volume and unit values. Oilseeds and products will essentially remain unchanged because of a high demand from China and few supplies from South America.

The economic crisis is expected to result in a weaker demand for livestock, poultry and dairy and a slower growth in horticulture exports value.

The E.U.-27 supplies 21% of U.S. imports with Canada supplying 22% and Mexico contributing just over 15%. Beverages made up the largest agricultural import in 2008 at $10.4 billion followed by fruits at $9.8 billion.

Agricultural imports were expected to rise to $82.5 billion in February 2009 from $81 billion in November, a record high. Imports forecasted for livestock and horticulture are down, while sugar and tropical products, grains and grain products and vegetable oils and oilseeds are up.

Imported livestock were expected to decline by February due to fewer live cattle shipments from Canada, but imported beef is expected to rise in response to a higher demand since U.S. cow slaughter is low.

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