On crop insurance…

“Crop insurance has become a much more important part of the farm program portfolio over the last several years. The value of crops insured has gone up dramatically.

“That has led to a lot of indemnities paid in years like 2011 when there were much greater losses than in previous years. We’ve now topped the $10 billion milestone for the 2011 crop.

“Looking forward, and assuming a range of average weather, we expect crop insurance to become as important – or, perhaps, even more important – than any single crop program. That includes direct payments.”

On livestock…

“There are a couple of interesting things going on.

“One big-picture thing to consider is U.S. meat consumption over the last several years. Since 2007, the amount of meat consumed by the average American has dropped by about 22 pounds. That’s a heck of a drop-off in a relatively short period of time.

“There are a lot of reasons for that. One of the most important ones is that we’ve not had the supplies available. Cattle herds have been reduced with the weather problems in Texas and elsewhere for the last couple of years. At the same time, there has been relatively strong export demand for beef and pork – more of the production we do have has been sent to foreign markets.

“The economic recession also slowed down demand for meat. Higher feed costs have also played a role in reining in supplies.

“We do think that if feed prices moderate from the high levels we’ve seen recently that may help keep the rate of growth of meat prices at the consumer level from being what they were at the recent past. That should allow a little expansion in meat consumption.

“If we’re wrong about that – if consumption if flat or continues to decline – it would be a big thing for the cattle, hog and poultry industries.

“Due to the sharp pull-back in cattle production there have been record-high cattle prices. We expect those prices to stay high for the next several years. It will take some time to rebuild herds and get supplies growing again leading to lower beef prices.”

On food price inflation…

“Last year, we had 3.7 percent food price inflation. We expect the 2012 rate to be similar.

“That is a bit misleading because the food price inflation is actually slowing. But we had a pretty high rate in the last part of 2011 and that pushes up the average annual rate for 2012.

“We do think that by 2013, if there are no surprises, we’ll see food price inflation back down to the overall inflation level for the U.S. economy – about 2 percent per year.”

On cotton…

“We’ve seen big price swings in world markets the last couple of years. It’s quite amazing how dramatic the changes have been.

“We do expect to see fewer planted acres in 2012. We noted that the National Cotton Council survey indicated there would be more than 13 million acres of total cotton planted. We’re only a bit under that figure – but not dramatically so.

“And our harvested acreage projections are very similar with the NCC at 10.75 million of upland cotton for 2012. If weather holds, that would yield roughly an 18-million-bale upland cotton crop.

“Unless we have a really strong recovery in demand, we’d be rebuilding stocks and probably means lower prices. So, our projected price for the 2012 marketing crop is about 75 cents per pound. That’s just below the recent USDA estimate.”

On rice…

“I should note these projections were put together back in January. I believe the situation for rice has grown more pessimistic in the last few weeks than for any other major commodity in the baseline. So the $14.48 average all-rice price we’re showing for 2011/12 is probably a bit more optimistic than it should be.”

On soybeans…

“Soybeans are an interesting story. There are multiple pressures.

“On one hand, there are stronger corn prices and we expect to see corn cut into soybean acreage in some of the major Corn Belt states.

“On the other hand, some parts of the country – notably, North Dakota – weather problems kept some crops from being planted. Those two factors may offset each other.

“The South American crop currently appears to be smaller than we anticipated. That’s resulted in a rally of soybean prices in the last few weeks. That is obviously a benefit to U.S. producers and could lead to more acres of soybeans being planted here.”

On dairy…

“There have been big swings in dairy prices since 2008.

“There was some recovery in the last couple of years but we expect to see somewhat lower prices in 2012.

“One positive thing for the dairy producers is we expect forage prices to come down assuming a more normal hay crop in 2012. That would benefit a lot of the folks who have been paying record-high prices for forage.

“However, there is concern that demand won’t be quite as strong as earlier estimates and could push prices lower. We do not expect, on average, for dairy producers to make great profits. But in any given year, there could be a very positive or very negative situation. That’s one of the many reasons why there’s been a push by Congress to try to make changes to dairy legislation that could smooth out some of those variations.”

Anything else?

“We did have record levels of net farm income in 2011. Even when correcting for inflation, last year’s farm income was the second-highest since 1970 by USDA’s reckoning. That’s a pretty amazing accomplishment.

“We do expect farm income to drop a little bit in 2012 – but only a very small amount.”