Farm Economy Follows Lead of U.S. Recovery, Says Annual FAPRI Baseline Report to Congress

The livestock sector can lead the agricultural economy to higher net farm income, assuming the farm economy benefits from a recovering general U.S. economy.

That analysis tops a 2010 baseline report prepared by the University of Missouri Food and Agricultural Policy Research Institute (FAPRI). The 66-page report was delivered to the U.S. Congress, Tuesday (Mar. 9). The 10-year baseline shows economic possibilities for livestock, crop and biofuels under certain assumptions.

…Crop prices in the FAPRI baseline remain near the 2009 level in 2010 and 2011. “Each crop has its own story, but in general we expect crop prices to remain well above the pre-2007 levels,” Westhoff said.

…Although corn prices are far below the 2008 peak they are supported by continued growth in corn demand. “If the economy recovers it will boost domestic and foreign demand for corn in feed rations and ethanol uses an increasing share of the U.S. corn crop,” Westhoff said. “Mandates encourage more ethanol use of corn until 2015. Additional growth depends on cornbased ethanol being competitive as a fuel, which depends in part on oil prices.”

…Continuation of biofuel tax credits is assumed in the baseline, not because of insights on legislative action, Westhoff said. For consistency of analysis FAPRI assumes most expiring laws continue.

Just in case biofuel credits are not extended, MU FAPRI ran their models without the tax benefit. Those results are presented in the back of the book. READ MORE and MORE (Natural Resources Defense Council) and MORE (Ethanol Producer Magazine) Download Report