U.S. farm exports expected to reap record $101 billion
America’s booming farm sector is headed for another year of strong growth, with a weak dollar aiding exports and strong demand for fuel feeding the corn-based ethanol boom, top U.S. agriculture officials said Thursday.
Tempering the outlook for U.S. growers is rising competition from South American farmers and a rebound in world wheat production in Australia and Ukraine. Wheat prices, however, are expected to remain at record levels.
Farm exports are forecast to surge to a record $101 billion in the fiscal year ending Sept. 30, from the forecast of $91 billion made three months ago. Plantings of the eight major U.S. crops -- including corn, rice, wheat and cotton -- is projected to expand 6.8 million acres to 252.3 million acres.
“There can be little debate that 2007 was one of the most remarkable years agriculture has ever seen,” said Joseph Glauber, deputy chief economist at the Department of Agriculture. “As we look forward to 2008, the stage seems set for another year of prosperity and growth.”
Using the latest USDA data, the U.S. wheat harvest is projected to rise to 2.3 billion bushels from 2.1 billion bushels last year, while corn production could fall to 12.8 billion bushels from 13.1 billion bushels last year.
Despite rising criticism that ethanol production increases food prices, USDA officials expect heady times to continue for the alternative fuel, keeping corn prices high in the process.
Food prices are forecast to rise 3.5% this year, following a 4% increase in 2007. Retail food prices are expected to rise more rapidly through 2010 than the overall inflation rate. Usually, food price inflation is less than or equal to the U.S. inflation rate.
Ethanol use is projected to rise 28% and account for 31% of corn output. Corn is traditionally used as feed for cattle, hogs and poultry. Ethanol production capacity is projected to rise to 13.4 billion gallons annually during the next two years from about 7.3 billion gallons now, according to the USDA.
Responding to criticism that ethanol distorts world markets, the president of the Renewable Fuels Assn. said that although corn would remain as the foundation in making ethanol, new technologies were on the way.
“We realize there are limitations from what we can produce from grains,” said Bob Dinneen, adding that biofuel makers planned to expand output from nonfood sources such as switch grass and corn stalks and husks.