U.S. agriculture at the crossroads in 1999

Markets for U.S. farm products took a sudden, unexpected turn for the worse in 1998, as supply and demand factors combined to produce a plunge in crop prices. Most parts of the nation had very favorable growing conditions in 1998, resulting in an abundant harvest of the major crops, and pushing prices lower. Likewise, the supply of red meat products in the marketplace soared, as both beef and pork producers boosted production, with pork production hitting a record high. But as supply soared, demand weakened. In particular, the economic crisis in Asia led to a drop in ag exports to many Asian countries. And problems in Asia also contributed to a slowdown in world economic growth more generally, and thus global demand for U.S. farm products slumped.> Lamb reviews the year just past for U.S. agriculture and suggests that, after the gyrations of 1998, the year ahead is one of particular uncertainty. The outlook for farm income depends critically on the role the government will play in the farm sector. If the government grants farmers another round of additional government subsidies, then farm income will likely hold steady. If government subsidies retreat from the high levels of 1998, however, farm income could fall sharply in 1999.