The value of U.S. farm exports should increase slightly to $36.5 billion this year but the volume of sales will fall about 8 percent lagely because of last summer's drought, the Agriculture Department reported Tuesday. Export values are predicted to grow by $1 billion in fiscal 1989, while volume will drop to 136 million metric tons, down from a six-year high of 147.5 million metric tons in the year ended Sept. 30, according to Richard W. Goldberg, acting undersecretary of agriculture for international affairs and commodity programs. Goldberg delivered what he described as a ``bright'' agricultural trade forecast at the opening session of USDA's Agricultural Outlook Conference, an annual event in which government analysts outline prospects for the coming year for farmers and agribusiness. ``Export volume is forecast smaller as the U.S. share of world trade shrinks for drought-affected products,'' Goldberg said. Overall, the United States is expected to account for 48 percent of world total grain trade in 1989, down from 50 percent. One of the hardest hit commodities is soybeans, with the U.S. share of world soybean trade forecast to drop to 35 percent in 1989 from 49 percent. Although the U.S. share of world wheat trade is expected to show a small gain in 1989, the volume of American wheat and flour exports is forecast to fall by about 3 percent while corn exports should grow by 2 percent, said James R. Donald, chairman of the World Agricultural Outlook Board. In general, farm prices are rising because of lower global grain stocks, mostly from the drought in North America, and Goldberg said world prices for wheat, corn and soybeans should be their highest since 1985. Goldberg said a $2.6 billion increase in the value of U.S. grain and feed exports will offset declines for cotton and oilseeds in 1989. ``For U.S. agriculture, the challenge in the coming year will be to sustain the momentum in overseas sales which has been regained over the past few years,'' Goldberg said. ``This will require more competitive prices, aggressive market development, persistent trade policy efforts and a market-oriented trade philosophy.'' Donald reported that U.S. farmers probably will receive less cash income but higher net income next year in the aftermath of the summer drought. Consumers are expected to pay 3 percent to 5 percent more for food in 1989, compared with about a 4 percent increase this year. Smaller crop supplies, firm demand and higher prices are shaping the global agricultural outlook for 1989, according to Donald. Expanded output appears likely in the second half of 1989, and he said continued large supplies of animal products probably will dampen livestock price increases. Still, American farmers can expect slightly higher receipts when they market their crops and livestock in 1989, Donald said. ``But they will be getting less in direct government payments and their production expenses will rise with expanded acreage and costlier production inputs,'' Donald said. Cash income therefore is likely to decline by about 10 percent from this year's record-tying estimated level of $56 billion to $58 billion, he said. In contrast, Donald said, net farm income is expected to about 20 percent above this year's estimated level of $38 billion to $40 billion. ``The 1989 outlook favors the food shopper, even though the drought trimmed potential meat output,'' Donald said. He said meat supplies would be the second largest ever, boosted by sizable pork supplies and even greater poultry supplies.
