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TOP EVENTS IN AGRICULTURE IN 1999
Of the many significant developments in 1999, some had an immediate impact on the sector, while others will be slow to develop but will have long-lasting implications. If 10 people were assigned to make a top 10 list, we would probably get 10 different answers, but some of the events would probably be on everyone's list.

 

10 The Strong Economic Recovery in East Asia - The economic growth of the region was much stronger than expected and came sooner than expected. Despite the recovery, the impact on U.S. agriculture has been limited.

9 WTO Talks Explode - WTO talks were disrupted when ministers couldn't even agree on a set of objectives for the discussions. Longer-term, this could be an important event, although the effects of the round of talks wouldn't have had an impact before 2004.

8China-U.S. Agreement - Over the long term, this may turn out to be one of the biggest and most important events of 1999. No country has the potential to change the worldís food supply/demand balance like China. China has the worldís largest population and most rapidly growing economy.

7Growing Dissatisfaction With Farm Policy - This year there is growing concern that the current farm policy is not suited for today's farm problems. The ag industry is torn between the benefits of planting flexibility and returning decision making back to farmers and the problems of plunging farm prices for most commodities.

6Recovery in the Hog Sector - A year ago, hog prices were very poor. Production was high, and packers had more hogs than they could handle. Now, production is almost as high, but prices are bouncing along near break-even levels, which is more than double the levels recorded last year.

5Industry Consolidation - Biotechnology has fueled the mergers of many ag chemical companies and seed companies. Also, concentration in the hog industry continues. The multitude of mergers are having far-reaching implications throughout the agriculture industry.

4Boom in Meat Demand - Red meat production is up year-over-year, but both cattle and hog prices continue to be well above 1998 levels. This suggests an improvement in the demand for red meat. Many analysts have argued that red meat demand has been falling steadily since the 1970s. If this trend has changed, it could be a huge factor for livestock markets in the future.

3Drought of 1999 - Late-season dry weather curbed corn and soybean yields while wheat yields were the second highest on record. The question is: Has the drought ended? The fall was dry all across the country. Subsoil moisture is low, and La Nina strengthened in November. These incidents leave us with higher-than-normal odds of serious drought in 2000.

2Government Payments to Farmers - Government payments will total about $22 billion in 1999, the highest level ever. This will account for nearly one-third of total net cash farm income. Without the combination of loan deficiency payments, AMTA payments, disaster payments and emergency aid payments, the current farm crisis would be much worse than it currently is.

1Biotechnology Hits the Wall - Before 1999, opposition to biotech products was seen as an isolated problem, confined to some extremist environmental groups in Europe. However, now there is uncertainty about the future of these products. Opposition to biotech products exploded in 1999. Even in the United States, where opposition was minimal last January, there are calls for labeling food made with biotech products. AM

 

Rich Pottorff is chief economist with Doane Agricultural Services Co., St. Louis.


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