Charting U.S. agricultural exports: the long, hard road to a new record
U.S. agricultural exports this fiscal year are surging toward an impressive new record, likely to break the $50-billion milestone by a good margin. Favorable supply-demand developments in world markets are giving a big boost to opportunities created by trade policy successes, new trade agreements and sustained investments in product promotion. But it has been a long, arduous climb back up the growth chart.
The modern global era for U.S. agriculture began in the early 1970s, when the USSR suddenly entered the U.S. grain market. By 1975, the value of U.S. agricultural exports had risen to $21.8 billion, triple the 1970 level. Exports continued to grow (see chart 1), setting a new record every year through 1981, when value peaked at $43.8 billion, a doubling from 1975.
[Chart 1 ILLUSTRATION OMITTED]
No one expected the 1981 record to last for long, but last it did–right up to this year.
Between 1981 and 1986, U.S. exports took a sharp downward turn, plunging 40 percent to $26.3 billion because of a combination of factors, including high U.S. price supports, world recession, a strengthening dollar and trade-distorting policies abroad. By 1986, the U.S. was fighting back with new export programs and more competitive farm policies.
Even so, it took four years for exports to once again squeak past the $40-billion mark, and another four to reach $43.5 billion in 1994. It is only with this year’s stunning increase–likely to be the largest dollar gain in U.S. exports ever recorded in a single year–that the 1981 peak finally becomes a historical footnote.
While U.S. agricultural exports are now scoring broad-based gains in all three major product categories, past trends show widely divergent patterns (chart 2).
[Chart 2 ILLUSTRATION OMITTED]
Exports of bulk commodities (such as corn, wheat, soybeans and cotton) rose sharply in the 1970s, reaching a high of $30.5 billion in fiscal 1981. But it was this category that led the export crash after 1981, suffering a decline from which it has yet to fully recover. Although bulk exports will still fall short of their 1981 high, they have set the pace for this year’s strong value gains.
Intermediate products (feeds and fodder, animal hides, soybean meal and oil and other mainly semi-processed items) have fared somewhat better. Exports have slowly trended upward over the past two decades, from $3.4 billion in 1975 to a record $9.3 billion last year–with 1995 likely to be higher still.
Since the mid-1980s, the high-growth sector has been consumer-oriented products (fruits and vegetables, meats, tree nuts, snack foods and other products mainly for direct sale to consumers). In nine consecutive record years, U.S. consumer food exports more than tripled from $5 billion in 1986 to $16.2 billion in 1994. Another large increase will enter the books this year.
These varying trends have substantially altered the mix of U.S. agricultural exports (chart 3). In 1975, bulk commodities accounted for 75 percent of the total exports. High-value products–intermediate and consumer-oriented products combined–contributed only a 25-percent share.
[Chart 3 ILLUSTRATION OMITTED]
Over the years, high-value products have assumed a much more prominent role. This year, they are expected to make up around 55 percent of U.S. agricultural export value, with consumer foods alone accounting for a projected 35 percent.
Another important change is the major shift in the roles of various regional markets (chart 4). In 1975, Western Europe was the largest regional market, taking one-third of U.S. agricultural exports. Today, Asia’s Pacific Rim is No. 1 by far (over twice as large as Western Europe), led by Japan, South Korea, Taiwan and, most recently, the rapidly expanding China market.
[Chart 4 ILLUSTRATION OMITTED]
Closer to home, our two NAFTA partners, Canada and Mexico, now rival all of Western Europe. In 1994, North America ranked second to Asia’s Pac Rim, accounting for 22 percent of the total value of U.S. agricultural exports, up from 9 percent in 1975. This year’s percentage won’t be as high because export growth in North America has been tempered by Mexico’s recent economic downturn.
Although the former Soviet republics–primarily the Russian Federation–remain important trading partners, demand from this region no longer plays the pivotal role in the U.S. export picture that it did in many past years.
COPYRIGHT 1995 U.S. Department of Agriculture
COPYRIGHT 2004 Gale Group