Journal Article

Will the wild ride for U.S. agriculture continue in 1997?

Abstract: U.S. agriculture formally entered a new era in April 1996 when a new seven-year farm bill was signed into law overturning 60 years of commodity programs. The new bill set agriculture on a new course where markets, not government programs, will determine agriculture's products and its bottom line. The new path was underscored by one of the wildest years in commodity markets in recent memory. Grain prices soared to new heights, while cattle prices sank to new lows. The market swings pointed to the variations in income that agriculture may experience under the new farm bill. Nevertheless, a new record for U.S. agricultural exports also suggested that the market trend for the industry is decidedly up.> For most of U.S. agriculture the year just past was a good one. Crop producers had a banner year, with high prices and the first year of transition payments under the new farm bill. In contrast, livestock growers had a difficult time due to high feed costs, with problems especially pronounced for cattle producers. In the end, the boost to crop producers prevailed, and U.S. farm income was up sharply, while increasing much less in the district due to the cattle situation.> Drabenstott reviews the year just past for U.S. agriculture and suggests the year ahead should be another good one, though probably not as good as 1996. A bigger than expected 1996 harvest will weigh on crop markets, keeping prices below 1996 levels. Still, the 1997 harvest will have a major bearing on prices since grain stocks remain low by historical standards. The lower crop prices will help fatten livestock profits, and the livestock industry could have its best year in the past four. Overall, farm income will probably decline in the nation but remain relatively strong. In the district, where cattle profits are particularly important, farm income will probably rise. With export markets staying strong and commodity markets more settled, agriculture will generally have smooth sailing in the new market era.

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Review

Publication Date: 1997

Issue: Q I

Pages: 63-78

Order Number: v. 82, no, 1