February 23, 2000 -- Over the next 10 years net farm income will be down, particularly until after 2005, according to an analysis by the Food
and Agricultural Policy Research Institute (FAPRI). Farm income recovery starting in 2005 will be partially offset by rising production expenses, assuming no
government assistance packages in addition to 1999 emergency spending appropriations.

FAPRI makes an annual projection of United States and world agricultural production - and the resulting prices - for the U.S. Congress. That outlook provides a
baseline for analysis of proposed U.S. farm legislation.

Last year, Congress spent $19 billion in farm assistance. At current price projections, that could reach $24 billion this fiscal year. The increase would come
primarily from increased loan deficiency payments (LDPs) triggered by low soybean and cotton prices and the additional spending under the 1999
assistance package. Over the long term, starting 2003, government spending is projected below $7 billion annually.

Nevertheless, according to FAPRI economists, net farm income will hover around $40 billion per year for the next five years, down from $48.7 billion in 1999.
Lower crop prices, lower government payments and increasing expenses, particularly in higher oil costs, will lower farm income.

But there's good news for the livestock industry. FAPRI economists expressed their wonder at the U.S. consumers' continuing appetite for meat, particularly
poultry, and cheese.

Cattle herd liquidation. The beef cycle, now in liquidation phase of the U.S. cow herd, continues to tighten the supply on feeder calves and market cattle,
raising prices for the coming three years. Fed cattle, based on Nebraska markets, are expected to average $70 per hundredweight this year and reach $76 in 2003.

Likewise, stocker cattle on the Oklahoma City market are expected to average $90 per hundredweight in 2001 and continue upward to $94 in 2003. By that time,
the cow herd will have been rebuilt and prices will decline. Beef feeder profits are helped by lower feed prices.

FAPRI economists see a less extreme swing in numbers during the coming cattle cycle. In 1998, fed-cattle prices dropped to an average of $61.50 per
hundredweight and stocker cattle dropped to $78 per hundredweight.

Two hog cycles ahead. Hogs will sell better, but any improvement will look good, compared to the past two years, which proved devastating to hog
farmers, said Scott Brown, livestock
analyst with FAPRI.

Two hog cycles are projected in the coming decade, with the first rising from an average of $38 per hundredweight in 2000 and peaking at $43.50 in 2003.
Overall, FAPRI predicts hogs averaging $5 per hundredweight lower over the baseline period than for the previous decade.

In the recent hog cycle, prices went from a peak of $56.50 per hundredweight in 1996 to a yearly average of $35 in 1998. FAPRI economists see more modest
swings in pork prices in the coming cycle as the industry shifts to larger operations and more hogs grown on contract. However, weather shocks could cause
larger price swings than shown in the FAPRI baseline, Brown said.

Hog producers set a record in 1999 with 19.3 billion pounds of pork. That will decline slightly for two years, but then reach nearly 21 billion pounds by 2009.

"This level of production implies a need for additional pork processing capacity in the years ahead," Brown said. A major cause of the hog price collapse in late
1998 was lack of slaughter capacity.

Low hog prices the past two years followed record-breaking pork production. That growth will likely continue. That, in turn, provides a bright spot by increasing
demand for soybean meal and corn, helping prices for crops over the next decade.

Broiler exports will be up. In poultry, domestic consumption is projected to continue strong through the decade. Broilers are projected to increase 4.6
percent next year and continue at that rate through the decade. Broiler producers sold 29.4 billion pounds of chicken in 1999.

Broiler exports are anticipated to increase, accounting for 7 billion pounds out of a total 40 billion pounds produced in the United States by 2009.

As broiler production increases, prices are not expected rise above the 57 cents per pound projected for 2001. Turkey prices face a stable to downward trend,
staying in a 70- to 65-cent range for the decade.

Milk price will remain stable. In the dairy sector, prices for 2000 are expected to average $12.86 per hundredweight at the farm gate, down $2.50 from
1998. Milk production increased 3.4 percent last year and is projected to continue upward 1.2 percent per year through 2009. The milk price is expected to remain
stable at an average of $12.86 per hundredweight from 2000 to 2009.

Demand for soybean meal will rise. On the crop side FAPRI projects soybean prices about a dollar below the U.S. loan rate of $5.26 per bushel. This
follows record production in both United States and South America. In spite of low-price signals, soybean plantings are projected to expand again based largely
on the favorable U.S. government loan rate.

By the end of the decade, soybean prices are projected to average $5.60 per bushel. Strengthening the soybean outlook is increasing demand for soybean meal
used in livestock rations. The domestic crush continues upward as exports gain slowly over the decade. The economies of major importing countries are expected
to recover to historic growth levels after 2001.

Corn stocks will decline. In the corn market, large stocks both in the United States and the world keep pressure on prices. Corn stocks are expected to
decline by
200 million bushels this year, allowing prices to rise above an average of $2 per bushel in 2000 and continue to $2.50 by 2009.

Corn exports are projected to increase to more than two billion bushels in 2000. Continued corn exports depend heavily on trade with China.

Wheat export demand will recover. In wheat, world supplies have depressed prices, leading to lower plantings. Export demand is expected to recover
and continue upward. As a result, prices are projected to average $2.81 per bushel in 2000 and rise to above $3.50 per bushel average by end of the decade

Recently, domestic per capita consumption of wheat for food has been steady and demand for wheat in animal feed has been flat. Food demand is expected
to trend upward slowly during the decade.

Consumers will see food costs increase only 2 percent per year while the overall consumer price index (CPI) increases 2.5 percent per year. Last year
food prices rose 2.1 percent, led by dairy and fruit prices.

For more information, visit the FAPRI Web site.