The eight crops should run between 249 million and 250 million acres for the period through 2013, according to the Interagency Agricultural Projections Committee. That is significantly below the 260 million acres planted in 1996.
Corn, wheat, and soybeans will account for about 86 percent of the acreage, with a shift “somewhat more to corn and away from wheat and soybeans, reflecting underlying growth in demand shown in price signals and net returns.” Yield gains will also contribute to production increases, limiting the need for additional land in crops.
Domestic mill use of upland cotton is projected to continue falling sharply through 2006/07, with further gradual declines over the remainder of the period to 2013. However, upland cotton exports are expected to rise to about 13 million bales, as fiber is exported for processing in developing countries with lower labor costs.
After 2004, import quotas that have protected the U.S. textile industry will be completely eliminated. “Without the quotas originally instituted under the Multi-Fiber Arrangement, apparel imports will rise,” the analysts say, “and this will lower the apparel industry’s demand for fabric and yarn produced in the U.S.”
Some increase in U.S. yarn/fabric exports is likely as a result of tariff reductions in other countries, but this is not expected to offset the impact of reduced U.S. apparel production on domestic mill use.
After increasing somewhat through 2007/08, upland cotton exports are projected to remain relatively stable at about 13 million bales annually to 2003. Foreign competition will continue to strengthen “and keep U.S. cotton exports from expanding further.” With world cotton trade expanding throughout the period, the U.S. share of global cotton exports will decline to about 39 percent in 2013/14.
Steady growth in domestic food use of rice is projected for the baseline period, with U.S. exports increasing in 2004/05 and 2005/06, but “declining moderately” for the rest of the period.
The initial increase in exports is due to increasing production and total supplies more than offsetting rising domestic use, and a declining price difference between U.S. and foreign rice. Later in the period, continued expansion in domestic use of rice will push U.S. prices higher relative to Asian competitors, resulting in a longer term small downward trend in U.S. exports after 2005/06.
Wheat acreage will decline to 60 million acres for most of the period, as relatively weaker gains in demand are generally met through yield increases. Marketing loan benefits will augment market revenues for wheat through most of the period, keeping net returns relatively flat and holding land in wheat.
Domestic wheat demand is “relatively mature,” the report notes, and food use growth will be very slow, “reflecting consumer adjustment to diets that include fewer carbohydrates.” Feed use of wheat will rebound “to relatively high levels” through most of the period.
U.S. wheat exports are projected to decline through 2006/07 as production rebounds in the European Union, but as global income and population in developing countries grow, global wheat trade and U.S. exports are expected to increase. Competition, however, will hold the U.S. market share at about 23 percent.
Soybean plantings will rise initially in response to relatively high prices and net returns, the analysts say, but will then “decline somewhat before stabilizing in the second half of the projection period as yield gains are sufficient to meet growing domestic demand.” Too, higher prices and net returns for competing crops, particularly corn, will dampen gains in soybean acres.
U.S. soybean exports are expected to rebound in 2004/05, then gradually decline through 2013, largely due to strong competition from Brazil. “Consequently, the U.S. market share of global soybean trade will decline through the period.” Soybean meal and oil also face competition from South American producers, which will result in “moderate growth, but a declining U.S. share in those markets.”
Domestic corn use will be strong in the initial years and continue growing through 2013, and the global economic recovery will support long-run growth in U.S. corn exports.
Feed and residual use of corn is initially unchanged, with fewer cattle on feed and lower pork production offsetting increases in poultry output. Feed use will then rise through the remainder of the period as meat production increases.
Significant grown is expected for ethanol over the next several years as many states ban MTBE as a fuel oxygenate.
U.S. corn exports are expected to rise faster than global trade with the U.S., increasing its market share. Corn exports from Argentina will continue to grow, boosting that country’s global market share.