U.S. agriculture is riding high on the productivity of American farmers and a huge demand for their products in the global marketplace.
“U.S. exports are doing the best they’ve ever done. We are forecast to have a record year,” said Suzanne Heinen, acting director of the U.S. Department of Agriculture’s Foreign Agricultural Service.
The agency’s most recent forecast puts the U.S. on target for $135.5 billion in agriculture exports this year. That’s 17 percent higher than 2010, and it nearly doubles the value of agriculture exports in the past five years.
Heinen said the large volume commodities such as corn, wheat and soybeans are selling well in the world. The latest data show wheat is up a whopping 131 percent between the first quarter of 2010 and the same period this year. Coarse grains, which include corn, are up 33 percent, and soybeans are up 20 percent.
Exporters have been helped by a steep pullback in the value of the U.S. dollar against major world currencies. The Federal Reserve’s measure of the dollar’s value against a basket of currencies reached its lowest point ever the first week of May, and was some 21 percent behind the recent high point set in early 2009.
The dollar was recovering on global markets later in May, but it was still nearly 8 percent off its high against the euro, for instance, set on Jan. 7.
Although the U.S. agriculture sector has trade surpluses most years, the FAS is doing its part to encourage exports under the National Export Initiative, Heinen said. “We are doing our traditional activities, but we are also trying to encourage more small and medium-sized businesses to consider the export market,” she said. For other growers who are not exporting, “We need to help them understand how to go about exporting, and where the opportunities are.”
The country’s best customers are China, Canada and Mexico. Most fresh produce goes to Canada and Mexico. Apples are shipped all over the world.
Farms that produce specialty products such as almonds and raisins have traditionally relied on export sales, but Heinen said there are still opportunities in other specialties. Identity preserved grain products are in demand in Asia and Europe, and there is a growing market for organically grown produce.
Distillers dried grain is a shining example of innovation in exports, Heinen said. DDGs are a byproduct of ethanol production that has proved to be a high-value animal feed. Its success in the export market has been a pleasant surprise for the FAS.
“We’ve gone from virtually no markets in 2004 to a billion dollars in sales now,” Heinen said. “There’s still room for innovation and new products and new surprises for all of us.”
The product is growing especially important in China, where a growing middle class is consuming more meat, drawing the need for more livestock feed. The DDGs market has grown from almost nothing, and China’s imports of soy products, also important for livestock feed, have tripled in the past decade.
U.S. exports of DDGs to Southeast Asia grew 27 percent in the first quarter over the same period a year earlier, according to the U.S. Grains Council, the highest growth in the market.
The FAS agency’s high expectations for imports this year are based on the 2010 harvest. Flooding in the Midwest and South this year has raised fears some major export crops will not meet everyone’s expectations, or that the harvest will come up to the levels of previous years.
Still, the thousands of acres under water are a small fraction of the total amount of land in cultivation. “The U.S. export mix is huge,” FAS Economist Oliver Flake said. There may be bumper crops in other sectors that would mitigate losses in coarse grains, soybeans and cotton. “There may be a bad corn crop, but the shortage could lead to higher prices. It could be a wash.”
Free trade agreements with South Korea, Panama and Colombia are up for ratification in Congress, and, Heinen said, agriculture exports will benefit when they take effect.
“We see a very positive impact for agriculture. There is an immediate reduction in tariffs for a wide range of products,” Heinen said. “It will also put us on a better footing with some of our competitors who already have free trade agreements.”
The European Union just completed a free trade agreement with South Korea. The U.S. lost a share of its market in Colombia because of that country’s agreements with Canada and Mercosur, the alliance of Argentina, Brazil, Paraguay and Uruguay.
“We want them back,” Heinen said. “I think this will help us.”
Contact R.G. Edmonson at email@example.com.