Agricultural Review

Record Exports as US Ag Leaves the Export Market

Professor William C Bailey
Chair, School of Agriculture
Western Illinois University
Macomb, Illinois

It isn’t easy to say you are wrong. Trust me because I have a lot of experience. And it seems I may have gained some additional experience.  For the past 5 years, the difference between US agricultural exports and imports steadily narrowed. The reason for the shrinking gap was that agricultural imports were growing faster, a lot faster, than agricultural exports. Excuse me for using numbers, but they help make the case:  between 2002 and 2006, agricultural exports grew 30% while agricultural imports grew almost double that rate – 60%. For a country that prides itself on having the best agricultural industry in the world, the narrowing trade gap was surprising. What was going on?  Is US agriculture no longer as good as we thought?  Is the rest of the world catching up? 

After living overseas for a number of years, I know that many foreign farmers do not look at American farmers as being competitive.  American farmers are viewed, rightly or wrongly, as being heavily subsidized, protected and pampered.  Overseas competitors, frankly, do not think US agriculture is able to be competitive on the level playing field it had long sought through trade negotiations.  In view of the narrowing agricultural trade gap and the 60% growth in imports, I could not help but wonder if those overseas views were accurate – Maybe US farmers were losing their competitive edge.

Well, in light of the above perspectives, you can understand why a recent report from the US School of Agriculture caught my eye. Both US agricultural exports and imports are expected to reach record levels this year.  What is surprising, and causes me to think I may be wrong about US competitiveness, is that agricultural exports increased at a faster pace than imports.  The result is the US agricultural trade balance – for the first time in 5 years – is expected to widen rather than narrow.

While one swallow does not make a spring, the new forecasts seem to indicate American agriculture is still a very competitive participant in the global agricultural market.  For example, despite all of the excitement about ethanol, the value of corn exports will increase 30% from last year, with the value of soybean exports up 22% and beef exports up 36%.  Not bad.  While there are several possible reasons for the record level of exports – a weaker dollar that makes our exports cheaper and strong growth in the world economy that is driving up demand – perhaps there is another reason.  It could be that the agricultural trade gap reversal seen this year is a result of the continued ability of the American agricultural sector to meet customer requirements at a very good price.  Between you and I, that certainly seems an excellent way for American agriculture to remain competitive.