New year to bring little recovery in farm prices


— With the nation's farm economy the way it is, Scott and Kim DesEnfants count themselves among the lucky. Beef prices have risen so much that the Wyoming cattle ranchers plan to pay off much of the $80,000 debt they've accumulated the past few years.

''There's some hope again. A year ago I wasn't sure we were going to still be on the ranch,'' said Mrs. DesEnfants. But, she added, ''We hate to see everybody suffering, agriculture as a whole has taken such a hit.''

The cattle business has been one of the few bright spots in the agricultural economy in 1999, and economists say that isn't likely to change in 2000.

The Agriculture Department predicts that net farm income will drop $7.6 billion next year to $40.4 billion unless Congress steps in with another multibillion-dollar bailout, a move that's highly likely in an election year.

Farm income reached $48 billion this year only because of a record $22.7 billion in crop subsidies and other direct government payments, according to a year-end analysis by USDA's Economic Research Service.

Prices for most crops plummeted in 1998, because of heavy worldwide production and the severe financial problems in Russia and Asia, and they continued to decline this year as surpluses of grain and other commodities have grown. Economists don't see prices recovering before 2001 at the earliest.

''There's not a whole lot of upside potential, basically because of large supplies,'' said Mike Kaus, an agricultural economist at Iowa State University.

Crop sales dropped from $102.2 billion last year to $95.7 billion in 1999. Receipts from cattle, hogs and poultry edged up from $94.5 billion to $95 billion, driven largely by the rise in beef prices.

Cattle are currently selling for 67 to 69 cents per pound, up from 61 cents a year ago, and USDA expects the price to reach 73 cents by next spring. Hog prices are also up this year after diving sharply at the end of 1998, but they are still running only at about the cost of production.

Because of the low prices that producers are getting for most other commodities, one in four agricultural operations probably won't cover its cash expenses next year, USDA says in its 2000 forecast.

Parts of the South and Southeast will be hit especially hard next year ''by dramatic declines in prices for rice and tobacco as well as continued low prices for corn and soybeans,'' the agency said. The northern Plains, meanwhile, is expected to see a rise in farm income because of the higher prices for cattle and the relatively low prices for feed.

That forecast could go out the window if there are widespread crop failures, either in the U.S. or elsewhere in the world, that drive commodity prices up. ''As always, weather next year will be critical. At some point, the stretch of good weather will end, crop output should drop, and prices rise,'' the USDA economists say.

The forecast beyond 2000 isn't much brighter. Commodity prices may increase only moderately over the next several years because of increasing production in Brazil, Argentina and other major U.S. competitors, according to the Food and Agricultural Policy Research Institute, a consortium of universities.

FAPRI economists are estimating that that the price of corn, which peaked at $3.24 a bushel three years ago and is now down to about $1.80 a bushel, won't get back to $2 before 2001 and then rising slowly to $2.30 by 2006 or 2007.

The price of wheat, which peaked at $4.30 three years ago, is expected to creep back to $3 over the next two years and edge toward $3.50 by the end of the decade. The price of soybeans, which has dropped from a high of $7.35, isn't expected to reach $5 before 2003 or 2004.

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