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US agriculture set for growth and stabilization next decade

This USDA outlook forecasts a gradual shift in crop acreage and prices, a surge in animal production and growth in the biofuels sector.

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A comprehensive report by the U.S. Department of Agriculture's (USDA) Interagency Agricultural Projections Committee has forecasted a future of modest growth and stabilization for the U.S. agriculture sector over the next decade, up to 2033. The projections, based on macroeconomic data finalized in August 2023, suggest a period of adjustment and recovery following the tumultuous years marked by the COVID-19 pandemic and geopolitical tensions, particularly Russia's war on Ukraine.

The report predicts a decline in total planted acres for the eight major field crops, falling from 252.6 million acres in 2024/25 to approximately 246.7 million acres by the end of the projection period. This reduction is primarily attributed to decreased corn and wheat acres. In contrast, upland cotton is the only crop expected to show an upward trend, with planted acres set to increase over the decade.

Prices for most crops are forecasted to stabilize after the initial years of the projection period. For example, corn prices are expected to drop from recent highs, starting at $4.50 per bushel in 2024/25 and leveling off at $4.30 per bushel thereafter. Soybean and wheat prices follow a similar pattern, indicating a return to more normal conditions after years of price volatility.

Animal product production, excluding turkey, is projected to reach record levels at various points during the decade. Beef, pork, chicken, milk, and egg production are all set to rise, with growth percentages in the double digits for most. This increase aligns with a global economic recovery and a reorientation towards more stable market conditions.

Challenges and opportunities

The agricultural sector continues to face challenges from inflation, severe weather events, supply chain disruptions, and high input costs. However, the USDA report suggests that these factors are likely to lessen over the projection period, paving the way for more stable growth and production levels.

U.S. agricultural trade is forecasted to see a decrease in total exports in 2024, mainly due to declines in commodities like corn, soybeans, and cotton. However, the trade deficit is expected to shrink as the decade progresses, supported by solid import demand and shifting global trade patterns.

Policy-wise, the report assumes the continuation of the 2018 Farm Bill and current trade tariff policies through the projection period. It also takes into account international policies and trade agreements in effect as of October 2023, providing a comprehensive outlook on the global agricultural landscape.

The report highlights the biofuels sector as a key area of growth, particularly for corn-based ethanol and soybean oil-based renewable diesel. Despite projected declines in overall U.S. gasoline consumption, the demand for biofuels and their feedstocks is expected to remain robust, driven by policy initiatives and technological developments.

Underpinning these agricultural projections is a broader macroeconomic outlook that anticipates modest economic growth in the near term, with global GDP growth projected to average 2.8 percent annually during 2024–33. This growth reflects a gradual recovery from the pandemic and subsequent economic disruptions.

Overall, the USDA's projections paint a picture of an agriculture sector on the path to recovery and stability. While challenges remain, the next decade is expected to bring a period of modest growth and adjustment, leading to a more stable and resilient U.S. agriculture sector.

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