Two congressional committees this week took a look at prospects for the health of the U.S. agriculture economy; one looking at falling farm prices and the other asking how the Trump Administration will protect and enhance farm export prospects.
Livestock, meat forecasts
In testimony prepared for delivery this morning before the House Agriculture Committee, USDA Chief Economist Robert Johansson outlined a forecast for continued moderate feed costs, increased U.S. meat and poultry production and a continued need for strong exports even as the U.S. dollar remains strong and China’s economic growth slows.
“Given favorable global harvests and ample stocks, we expect crop prices to remain mostly flat into 2017/18,” he told the committee. Noting a projected record U.S. corn supply, he expects the season-average farm price for corn will decline by 10 cents per bushel to $3.30 per bushel.
Those cheaper feed costs have led to expanded livestock production. Johansson predicted record high total meat and poultry production in 2017 as beef, pork, broiler and turkey output all increase.
Prices for cattle and hogs are expected to fall from 2016, but current strong demand has tempered those price declines, he noted. Fed steer prices are expected to decline by $8.86 to $112 per hundredweight. Hog prices are forecast to fall by $2.66 to $43.50 per hundredweight. Broiler prices are expected to average 84.8 cents per pound, a slight increase from 2016.
Johansson said the agency’s 10-year forecasts show improvement in the global economy and trade environment is expected to continue as world GDP rises slowly until it plateaus at 3 percent. A key component of slow global growth is slowing economic growth in China. The latest IMF projections show Chinese growth at 6.5 percent and 6.0 percent in 2017 and 2018, respectively.
While that growth is still relatively high, China’s adjustment to a more consumer-oriented economy implies less rapid growth. Steady growth is expected in India, as well as the rest of South and Southeast Asia, despite medium-term concerns about debt levels, inflation and slowing demand from China. The Latin American region remains in recession, largely due to conditions in Venezuela and Brazil. Recent reforms in Argentina have improved its outlook in 2017 and policy shifts there are supportive of increased agricultural production and trade.
“Expanding export opportunities for U.S. farm products is critical for the agricultural economy,” said Johansson, noting a large portion of international trade in basic agricultural commodities is driven by increasing global meat consumption and feed demand resulting from increased livestock production.
Global meat consumption is expected to continue to grow over the next ten years. Meat consumption is projected to grow through 2026/27 at an annual rate of 2.6 percent for Sub-Saharan Africa, 2.3 percent for North Africa, 2.2 percent for Southeast Asia, and 2.1 percent for the Middle East.
By 2026/27, those four regions combined are expected to boost meat consumption by 8 million tons, which is 20 percent of the global growth in meat demand. Meat imports by these four regions increase by 2.7 million tons, accounting for about 34 percent of their increased meat consumption. The rest comes from increased domestic production. These four regions account for almost 52 percent of increased global meat imports through 2026/27.
Poultry trade expands the most among livestock products. Poultry exports by the major poultry exporting countries increase by almost 24 percent, reaching more than 14.0 million metric tons by 2026/27 and adding nearly 3 million metric tons over the projection period. Beef exports by the major beef-exporting countries expand by 18 percent, reaching almost 11 million metric tons and adding 1.7 million metric tons to trade by 2026. Major pork exporters expand trade by 11 percent, reaching more than 9 million metric tons by 2026.
Senate committee seeks assurances on trade
Also concerned about global trade, The Senate Finance Committee this week questioned Trump Administration trade advisors in closed-door meetings about how they would pursue increased agricultural trade in key markets such as Japan now that the United States has pulled out of the Trans-Pacific Partnership agreement.
“I think the message a lot of us conveyed is the sense of urgency,” Politico quoted Sen. John Thune (R-S.D.) as saying after the briefing. “If we’re not going to do a multilateral trade agreement with Asia then we’ve got to start getting bilaterals right away.”
Concerns voiced even before the election remain that by pulling out of the TPP, the United States is creating an opening for China to create trade agreements with countries that would have otherwise been trading with the United States.