Record corn crop, higher exports expected
U.S. corn area in 2016-17 is estimated at 94.1 million acres, of which 86.6 million likely will be harvested for grain, up 5.9 million from last year.
With a national average yield forecast of 168 bushels, corn production this year would reach 14.5 billion bushels, 939 million bushels above last year’s harvest and 324 million more than the record 2014-15 crop.
The larger supply is expected to have a dampening effect on prices, making U.S. corn more competitive in the global market and boosting exports to 2.1 billion bushels in 2016-17, up from 1.9 million from the 2015-16 crop and the highest since 2007-08 when it reached 2.4 billion.
Use for ethanol as well as other food, seed and industrial uses is expected to increase only modestly (less than 1 percent) to 6.7 million bushels, reflecting the maturity of those markets. Feed and residual use (a category that mainly includes livestock feed as well as other uses unaccounted for) is expected to consume 5.5 billion bushels, up 300 million from the 2015-16 crop.
With projected supply expected to exceed total use of the 2016-17 crop, ending stocks are forecast to grow to 2.1 billion bushels, up from the 1.7 billion bushels expected to be on hand at the end of the 2015-16 crop year.
USDA to help fund bio-based product development
The U.S. Department of Agriculture is seeking applications for funding to help support the development of advanced biofuels, renewable chemicals and bio-based products.
"The bio-economy is a catalyst for economic development in rural America, creating new jobs and providing new markets for farmers and ranchers," said Agriculture Secretary Tom Vilsack. "Investing in the businesses and technologies that support the production of biofuels and bio-based products is not only good for farm incomes but the whole economy benefits from a more balanced, diversified and consumer-friendly energy portfolio, less dependence on foreign oil and reduced carbon emissions."
Funding is being provided through the Biorefinery, Renewable Chemical and Bio-based Product Manufacturing Assistance Program, formerly known as the Biorefinery Assistance Program. Congress established the program in 2008 to encourage the development of biofuels using renewable feedstocks. The 2014 Farm Bill expanded the program to include renewable chemicals and bio-based product manufacturing. The program now provides loan guarantees of up to $250 million to develop, construct and retrofit commercial-scale biorefineries and to develop renewable chemicals and bio-based product manufacturing facilities.
For this announcement, USDA will seek applications in two cycles. Applications for the first funding cycle are due Oct. 3. Applications for the second cycle are due April 3, 2017. For more information, see page 48,377 of the July 25, 2016, Federal Register. Application materials can be found on USDA’s Rural Development website.
Eligible borrowers include individuals, corporations, federally recognized tribes, units of state or local government, farm cooperatives and co-op organizations, associations of agricultural producers, national laboratories, institutions of higher education, rural electric cooperatives, public power entities – or a consortium of any of these borrower types. Entities that receive program financing must provide at least 20 percent of the funding for eligible project costs.
Changes in farm real estate values vary widely
Changes in inflation-adjusted average farm real estate values (the value of farmland and buildings) have varied widely across the nation, with some states showing an increase of 25 percent or more while other states have posted declines.
The value of farm real estate is expected to vary over time to reflect changes in expectations for income streams from future use – including both agriculture and non-agricultural uses.
From 2010-15, the largest state percentage increases in farm real estate values occurred in the Northern Plains and Midwest regions, presumably based on expectations of high farm-based earnings.
In contrast, while farmland values in the Northeast are typically among the highest in the country, this is largely due to urban proximity rather than agricultural returns, and declines in farm real estate values generally reflect regional impacts from the downturn in the residential housing market.
Consumer demand boosts organic food sales
U.S. organic food sales were an estimated $37 billion in 2015, according to the latest data from Nutrition Business Journal.
Organic food products are still gaining ground in conventional supermarkets as well as natural foods markets, and organic sales accounted for about 5 percent of total U.S. food sales in 2015, according to industry estimates. Although the annual growth rate for organic food sales fell from the double-digit range in 2009-10 as the U.S. economy slowed, growth rates since 2011 have rebounded to 10-12 percent, and are more than double the annual growth rate forecast for all food sales.
Fresh fruits and vegetables are the top-selling organic category, followed by dairy products. Organic farmers often earn substantial price premiums for their products.
Higher world, U.S. cotton production predicted
The 2016 U.S. cotton crop is expected to reach 15.8 million bales (1 bale = 480 pounds), 23 percent larger than the 2015 crop, reflecting a 17-percent increase in acreage, lower abandonment and higher yields compared with last year.
Globally, cotton production is projected to reach 102.5 million bales in 2016, up 5 percent from last year. Global cotton production is concentrated among a small number of countries, with India and China accounting for nearly half the world production and the top five producers expected to supply 77 percent of the world’s cotton this year.
Production in most countries is expected to increase at least modestly this year, with the exception of China, where production is expected to fall 4.5 percent to 21.4 million bales as acreage there falls to historically low levels. Given the large increase in U.S. production, the U.S. share of global supply is expected to increase from 13.2 percent in 2015 to 15.4 percent in 2016, compared to a 27-percent share supplied by India and 21 percent by China.
Rejections of imported food products on the rise
The U.S. Food and Drug Administration oversees the safety of most food sold in the United States. Part of this includes inspecting imported foods at the border or port of entry for evidence of adulteration or misbranding.
A recent Economic Research Service study examined patterns in FDA import refusals and compared results with an earlier study of data from 1998-2004. In both time periods, the top three products in terms of refusals were fishery/seafood products, vegetables/vegetable products and fruit/fruit products.
The countries with the most food shipments refused by FDA were Mexico, India and China.
In fishery and seafood products, the most common adulteration violations were for filth (visually apparent nonfood material), the presence of salmonella bacteria and veterinary drug residues. In spices, flavors and salts, a category in which the number of violations almost doubled from the earlier study to the recent one, the most common violation also was for salmonella.
Salmonella is a genus of bacteria that can cause typhoid fever and other digestive illnesses.
FDA uses risk-based criteria to determine which shipments are inspected because it does not have the resources to check all inbound goods.
World food insecurity likely to decline in next decade
The latest International Food Security Assessment suggests food security will improve over the next 10 years for the 76 low- and middle-income countries examined by USDA’s ERS.
The improvement is driven by expectations of falling food prices and rising incomes across most of these countries. The share of the total population within these 76 countries that is food insecure is projected to fall from 17 percent in 2016 to 6 percent in 2026.
The report estimates per capita food consumption and evaluates that against a nutritional target of 2,100 calories per person per day to determine whether population groups should be considered food secure.
At the regional level, the greatest improvement in food security between 2016 and 2026 is projected for Asia, where the share of population that is food insecure falls from 13.2 to 2.4 percent.
The share of population that is food insecure in the Latin America and the Caribbean region is projected to fall from 14.6 percent in 2016 to 6.4 percent in 2026.
Sub-Saharan Africa is the most food-insecure region in the world and, like the other regions, its food-security situation is projected to improve over the decade, but at a slower rate. The share of the region’s population that is food insecure is projected to fall from 29 to 15 percent.