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Agriculture
A N E IG H T H D ISTRICT PERSPECTIVE
Winter 1984

USDA Analysts Expect Farm Income
To Increase
Forecasts of agricultural production, commodity prices
and farm income for 1984 were presented recently at the
U.S. Department of Agriculture’s 60th Annual Outlook
Conference. Generally, USDA analysts predicted in­
creases in net farm income based on expectations of in­
creased product marketings. Unresolved policy issues,
however, tempered the forecasts for many individual pro­
ducts. Crop forecasts, for example, were subject to much
uncertainty since it was not clear how production would
respond to the lingering effects of PIK, last summer’s
drought and relatively unattractive government incen­
tives to reduce planted acreage.

Retail Food Prices
The USDA expects the food component of the Con­
sumer Price Index (CPI) to increase between 4 and 7 per­
cent in 1984, more than double the 2.2 percent increase of
1983. As the data in table 1 on the second page indicate,
increases are expected to be nearly equal across major
food groups; only pork, dairy products and nonalcoholic
beverage prices are expected to rise at slower rates. Food
prices—red meat prices, in particular—could increase at a
slower rate if changes in the dairy program induce a
large-scale slaughter of older dairy cows. In the absence
of a sizable increase in dairy cow slaughter, however, in­
creasingly smaller supplies of beef and pork are expected
to cause 10 to 15 percent rises in
red meat prices during the last six
months of 1984.

realized through a greater volume of product marketings.
Crop marketings—corn and soybeans, in particular—are
expected to be primary contributors to increases in farm
income as production rebounds from the low levels of out­
put caused by PIK and the drought. A breakdown by ma­
jor expenditure and revenue categories is given in table 2.

Corn, Wheat and Soybeans
Barring a recurrence of last year’s drought, USDA
economists expect 1984 production figures for wheat,
corn and soybeans to be near record highs. Without
strong incentives from price support programs to reduce
corn production, a crop in excess of eight billion bushels
is expected this year. Incentives in the 1984 wheat pro­
gram to reduce wheat production also appear to be insuf­
ficient to cause any sizable reduction in planted acreage.
With a 4 to 8 percent increase in expected plantings over
the 62.5 million acre level of 1983, a 1984 harvest near
1982’s 2.8 billion bushels is likely. Soybean acreage is ex­
pected to range between 70 to 73 million acres in 1984
which, when combined with trend yields, would produce a
2.2 billion bushel crop. Harvests for these crops in the
predicted ranges would contribute to significant price
declines from current levels.

Beef and Pork

Financial Conditions
Net farm income for 1984 is ex­
pected to increase 10 to 15 per­
cent from the $24-$26 billion
range currently estimated for
1983. In contrast to the nearly
$19 billion received from price
support programs and direct in­
com e supplem ents in 1983,
however, the USDA expects
income gains for 1984 to be




THE
FEDERAL
RESERVE

0

RANK of

ST. m i l S

Two factors dominate the
outlook for meat prices in 1984.
First, last summer’s drought and
poor grazing conditions, which
raised feed costs by about 20 per­
cent, caused producers to market
animals that normally would
have been held longer; these in­
creased marketings in late 1983
portend smaller meat supplies
and higher meat prices in the se­
cond half of 1984. Second, if dairy
farmers are paid to reduce output,
many analysts believe that about
one million dairy cows may be

WINTER 1984

FEDERAL RESERVE BANK OF ST. LOUIS

slaughtered. A slaughter of this size could dampen in­
creases in red meat prices from their relatively low pre­
sent levels by circumventing the potential supply
reduction anticipated in the last half of 1984.

Hog prices, which averaged $49.55 per cwt. during
the first nine months of 1983, are expected to show in­
creases throughout 1984 to a range of $50 to $54 per
cwt. by the fourth quarter. Lower beef and pork pro­
duction and further increases in personal income were
cited as reasons for this 9 percent increase over 1983
hog prices. Most of the increase in retail pork prices is
expected to occur in the latter half of 1984 in response
to increasingly smaller market supplies. Retail pork
prices in the fourth quarter of 1984 are expected to be
13 to 15 percent higher than they were in the fourth
quarter of 1983. The smaller pork supplies for 1984 are
attributable to the approximately 20 percent increase
in feed costs caused by PIK and the drought.

The most likely price and production movements for
red meats described by USD A economists—without
considering the complicating effects of a large dairy
cow slaughter—include the following projections: Beef
production is expected to decline 3 to 4 percent in
1984. As the effects of the larger liquidation in late
1983 are reflected in smaller numbers of animals
available to market, fed steer prices are expected to
move from this winter’s $62 to $66 per hundredweight
(cwt.) range to the upper $60s by this fall. At retail,
this implies an increase in choice beef prices from
about $2.40 per pound to about $2.60 per pound.

—Michael T. Belongia

Table 1
Changes in Consumer Price Indexes (1982-84)
1982

Food Category

1984f

1983p

4 .0 %

2 .2 %

4 -7 %

F o o d a w a y fro m h o m e

5 .3

4 .4

4 -7

Food at hom e

3 .4

1.1

3 -6

4 .0

-0 .4

4 -7

A ll f o o d

M e a t , p o u ltr y a n d fis h
D a ir y p r o d u c t s

1 .4

1 .3

2 -5

F r u its a n d v e g e ta b le s

5 .5

0 .5

4 -7

C e r e a ls a n d b a k e ry p r o d u c ts

4 .5

3 .2

4 -7

N o n a lc o h o lic b e v e ra g e s

2 .8

1 .9

2 -5

p = prelim inary; f = fore cast.

SOURCE: USDA O utlook Conference Proceedings, November 2, 1983.

Table 2
Net Farm Income (1980-84, billions of dollars)
Item

1980

1981

1982

1983'

$ 1 4 0 .5

$ 1 4 2 .3

$ 1 4 4 .6

$ 1 4 2 -1 4 4

+

1 .3

1 .9

3 .5

8-

-

1984'
(c h a n g e )

C a s h r e c e ip ts
G o v e rn m e n t p a y m e n ts 1

10

In v e n to r y c h a n g e

-5 .3

7 .6

-1 .9

- 6 -

G ro s s fa rm

1 5 0 .1

1 6 7 .1

1 6 2 .2

1 6 0 -1 6 2

+

1 2 8 .6

1 3 7 .0

1 4 0 .1

1 3 5 -1 3 7

+

2 1 .5

3 0 .1

2 2 .1

24-

26

+

1 2 .0

1 5 .4

1 0 .7

11 -

12

+

in c o m e

P r o d u c tio n e x p e n s e s
N e t fa rm

in c o m e

R e a l n e t fa rm

in c o m e 2

- 8

+

f = forecast.
1 Includ es value o f PIK paym ents.
2 D eflated by th e GNP im p lic it defla tor, 1972 = 100.

SOURCE: USDA O utlook Conference Proceedings, November 2, 198.3.

Agriculture—An Eighth District Perspective is a quarterly summary of agricultural condi­
tions in the area served by the Federal Reserve Bank of St. Louis. Single subscriptions are
available free of charge by writing: Research and Public Information Department, Federal
Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166. Views expressed are not
necessarily official positions of the Federal Reserve System.

2




FEDERAL RESERVE BANK OF ST. LOUIS

WINTER 1984

EIGHTH DISTRICT AGRICULTURAL DATA

Prices and Costs1

Sept.
1983

Oct.
1983

Nov.
1983

Percent Change
Average Year-To-Date2 Same Period
for 1982
Year Ago
1983

C O N S U M E R P R IC E IN D E X (% c h a n g e )
N o n fo o d

0 .5 %

0 .4 %

Food

0 .2

0.4

0 .4 %
-0 .1

0 .3 %

3 .9 %

3 .6 %

0 .2

1.4

1.1

P R O D U C T IO N C O S T S F O R F A R M E R S (% c h a n g e )
A ll in p u ts

0 .3

-0 .3

0 .6

0 .4

3 .5

3 .5

F e r tiliz e r

0.0
0.0

-3 .2

0.0
0.0

-0 .3

-3 .6

-5 .5

A g ric u ltu r a l c h e m ic a ls
F u e ls a n d e n e r g y

-1 .7

0.0
0.0

-1 .2

0 .7

4 .2

4 .2

-0 .2

-2 .8

-4 .7

P R IC E S R E C E IV E D B Y F A R M E R S (% c h a n g e )
A ll p ro d u c ts

-2 .0

-1 .2

0 .8

0.0

6 .9

5.1

L iv e s to c k

-1 .2

-1 .7

0 .4

0 .4

-2 .5

-2 .9

C ro p s

-2 .6

-0 .8

1.2

-0 .5

1 8 .6

1 5 .5

$ 5 8 .3 1

$ 6 0 .2 0

$ 6 1 .2 0

$ 6 4 .8 2

-1 .8

-4 .2

$ 2 2 .9 6

$ 2 2 .2 7

$ 2 4 .7 2

$ 5 1 .1 4

-4 7 .9

-4 5 .8

3 4 .7

FEED ER CATTLE
W h o le s a le p ric e - K a n s a s C ity ($ /c w t.)
F E E D E R P IG S
W h o le s a le p ric e - S o . M is s o u ri ($ /h e a d )
B R O IL E R S
W h o le s a le p ric e -1 2 -c ity (c /lb .)

5 4 .5 1 c

5 0 .3 8 c

5 7 .6 1 c

4 6 .6 7 c

2 9 .2

64 .90C

6 6 .7 2 c

6 6 .4 1 c

6 0 .7 5 C

2 2 .5

TURKEYS
W h o le s a le p ric e - N e w Y o rk ,
8 -1 6 lb. y o u n g h e n s (C/lb.)

-1 .1

CORN
W h o le s a le p ric e - S t. L o u is ($ /b u .)

$ 3 .6 0

$ 3 .5 0

$ 3 .5 3

$ 2 .5 7

4 1 .8

4 5 .3

$ 8 .4 4

$ 8 .1 5

$ 8 .1 6

$ 5 .8 8

4 6 .8

5 0 .8

$ 3 .9 0

$ 3 .8 4

$ 3 .8 2

$ 4 .0 0

-4 .0

-1 .0

$ 1 8 .6 8

$ 1 8 .8 0

$ 1 8 .9 8

$ 1 7 .7 2

3 .2

8.1

1 6 .4

1 1 .4

SOYBEANS
W h o le s a le p ric e - N .C . Illin o is ($ /b u .)
W HEAT
W h o le s a le p ric e - N o . 1, h a rd w in te r K a n s a s C ity ($ /b u .)
L O N G -G R A IN R IC E
W h o le s a le p ric e - A r k a n s a s ($ /c w t.)
CO TTO N
W h o le s a le p ric e - a ll m a rk e ts (c /lb .)

U.S. Exports
C o rn (m il. b u.)
S o y b e a n s (m il. bu.)
W h e a t (m il. bu.)
R ic e (ro u g h e q u iv a le n t, m il. c w t)
C o tto n (th o u , b a le s )

6 3 .10C

6 4 .1 0 c

6 6 .7 0 c

5 5 .2 7 C

July
1983

Aug.
1983

Sept.
1983

Average
for 1982

Percent Change
Year-To-Date2 Same Period
Year Ago
1983

1 2 4 .6
5 1 .6
1 2 6 .0
4 .9
4 3 2 .0

12 1 .9
6 0 .2
9 7 .0
6 .7
4 0 3 .0

1 4 4 .3
5 3 .9
13 5 .8
8 .5
3 3 9 .0

1 6 1 .2
7 8 .0
130.1
6 .3
5 3 2 .7

-1 7 .4 %
-4 0 .2
5 1 .0
1 0 3 .7
-1 4 .2

$ 5 ,7 9 9

$6,141

$ 6 ,1 0 4

$ 6 ,1 8 7

- 1 9 .2

6 .5

1 ,1 3 5

1,0 09

1,1 5 2

1,281

-2 5 .5

6 .4

5 ,4 3 0

5 ,9 7 9

5 ,7 2 2

5 ,8 4 8

-2 .4

- 1.4

845

931

893

907

-1 .7

-4 .3

3 3 .5 %
-7 .1
1.0
8 0 .4
-8 .4

Receipts3
C R O P S (m illio n s o f d o lla rs )
U n ite d S ta te s
D is tr ic t (s e v e n -s ta te to ta l)
L IV E S T O C K (m illio n s o f d o lla rs )
U n ite d S ta te s
D is tr ic t (s e v e n -s ta te to ta l)




3

EIGHTH DISTRICT AGRICULTURAL DATA

Marketing Year
Crop Production4

1980/81

1981/82

1982/83

C O R N (O c to b e r 1 - S e p t e m b e r 30)
A c r e s p la n te d (m il. a c re s )
P r o d u c tio n (b il. b u .)
Y ie ld (b u . p e r a c re )
E n d in g s to c k s (b il. b u .)

8 4 .0

8 4 .2

8 1 .9

6 ,6 4 4 .8

8 ,2 0 1 .6

8 ,3 9 7 .3

9 1 .0

1 0 9 .8

1 1 4 .8

2 ,7 7 4 .2

3 ,9 0 4 .1

5 ,0 7 9 .8

S O Y B E A N S ( S e p te m b e r 1 • A u g u s t 31)
A c r e s p la n te d (m il. a c re s )
P ro d u c tio n (b il. bu.)
Y ie ld (b u . p e r a c re )
E n d in g s to c k s (b il. b u.)

7 0 .0

6 7 .8

7 2 .2

1 ,7 92.1

2 ,0 0 0 .2

2 ,2 7 7 .0

2 6 .4

30.1

3 2 .2

6 7 9 .4

6 5 2 .2

8 6 6 .9

W H E A T (J u n e 1 - M a y 3 1 )
A c r e s p la n te d (m il. a c re s )
P ro d u c tio n (b il. b u .)
Y ie ld (b u . p e r a c re )
E n d in g s to c k s (b il. b u.)

8 0 .6

8 8 .9

8 7 .3

2 ,3 7 4 .3

2 ,7 9 8 .7

2 ,8 0 8 .7

3 3 .4

3 4 .5

3 5 .6

9 8 8 .8

1 ,1 6 3 .9

1 ,5 4 1 .4

R IC E (A u g u s t 1 - J u ly 3 1 )
3 .4

3 .8

3 .3

1 4 6 .2

1 8 2 .7

1 5 4 .2

Y ie ld (c w t. p e r a c re )

44.1

4 8 .2

4 7 .4

E n d in g s to c k s (m il. c w t.)

1 6 .5

4 8 .9

6 8 .2

A c r e s p la n te d (m il. a c re s )

1 4 .5

1 4 .3

1 1 .3

P r o d u c tio n (m il. b a le s )

11.1

1 5 .6

1 2 .0

0 .8
2 .7

1.1

1.2

6 .6

8 .7

A c r e s p la n te d (m il. a c re s )
P ro d u c tio n (m il. c w t.)

C O T T O N (A u g u s t 1 - J u ly 3 1 )

Y ie ld (n e t b a le s p e r a c re )
E n d in g s to c k s (m il. b a le s )

1 The consumer price index and its components are seasonally adjusted. All other data are not seasonally adjusted.
2 Percent change from December 1982, based on the most recent month available.
3 Data for receipts are seasonally adjusted.
4 Annual data for crops are based on each crop’s marketing year. SOURCE: Crop Production, Statistical Reporting Service,
Crop Reporting Board, USDA.




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