Ag exports vital to U.S. economy

Ag exports vital to U.S. economy

U.S. ag exporters well-positioned to capture significant share of growing world market for ag products, but some challenges remain.

Ag exports vital to U.S. economy
AGRICULTURAL exports have been a bright spot in the current U.S. economy, but several policy changes could bolster the agriculture industry's ability to capitalize on future growth, according to a new report released by the congressional Joint Economic Committee (JEC).

A successful agriculture sector supports economic growth overall, as explained in the report, "The Economic Contribution of America's Farmers & the Importance of Agricultural Exports." It notes that the U.S. is the world's leading exporter of agricultural products, with a record $141.3 billion exported in 2012 and a $38.5 billion trade surplus for the year for the agriculture sector.

Agriculture accounts for 10% of all U.S. exports despite comprising less than 5% of gross domestic product.

Exporting is particularly important for agriculture since growth in demand for agricultural products in the coming decades is expected to come largely from developing countries, the report says.

"U.S. agriculture has been successful in exporting its products, even as other industries have struggled recently in the global market," JEC said.

Two decades ago, just 1% of U.S. agricultural export sales went to China. This total increased to 4% by 2002, but by 2012, China was the top destination for U.S. agricultural products, purchasing more than $25 billion in products that accounted for more than 18% of total sales (Figure).

The U.S. Meat Export Federation (USMEF) reported that in 2012, the China/Hong Kong region was the number-three market for U.S. pork exports, purchasing 431,145 metric tons (950 million lb.) valued at $886.2 million. China also has rapidly grown into one of the leading global markets for beef, but the country has remained closed to U.S. beef exports since the 2003 bovine spongiform encephalopathy finding in the U.S.

"This dramatic increase can be attributed to population and income growth in China and to its accession to the World Trade Organization in 2001," the report says.

USMEF added that U.S. beef, pork and lamb exports in 2012 amounted to more than 7.5 billion lb. of product valued at more than $11.8 billion. The export value per head processed equated to $55.87 for pork and $216.73 for beef.

The JEC report notes that while grain and feed exports declined last year, soybean exports soared, increasing by more than 35%. Global demand for soybeans, as well as soybean oil and soybean meal, is expected to continue to grow substantially in the coming years.

Several other categories of products posted gains of at least 50% over the 2009-12 period: dairy products, hides and skins, cotton and linters, tree nuts and preparations, sugar and tropical products and red meats.

 

Multiple benefits

According to a U.S. Department of Agriculture model, every $1 billion of agricultural exports supported 6,800 American jobs in 2011. Assuming that the number of jobs supported stayed within a range of the values estimated for 2010 and 2011, then U.S. agricultural exports supported nearly 1 million jobs in 2012, the report states.

Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) said, "Agriculture is a bright spot as our economy gets back on track and represents one of the few areas where we actually have a trade surplus, and as the report clearly shows, more exports mean more jobs here at home."

Businesses up and down the agricultural product supply chain have benefited in recent years as a result of the strong agricultural economy, the report adds. An increase in sales of organic, specialty and bio-based products, as well as a recent expansion of agritourism, has contributed to this success.

 

Challenges exist

Challenges remain that could keep the U.S. from taking advantage of future growth opportunities, the report states. These challenges include uncertainty about long-term farm policy, trade barriers imposed by foreign countries, issues facing small and beginning farmers, ranchers and processors, the deterioration of U.S. transportation infrastructure and uncertainty in the agricultural workforce resulting from unsettled immigration policy.

USMEF president and chief executive officer Philip Seng said enacting a long-term farm bill as well as provisions to reduce barriers to exports are "equally important for an area of the economy that produces a much-needed budget surplus and supports an estimated 1 million jobs across the country."

Infrastructure surveys show that the U.S. is falling behind on investing in and maintaining its transportation infrastructure compared to global competitors.

The JEC report cites an American Society of Civil Engineers estimate that the U.S. needs to spend $3.6 trillion to bring its infrastructure "into good repair" by 2020.

The Senate has already passed a waterway bill, and hopes are that the House will follow suit this October, which would be a step in the right direction.

Volume:85 Issue:41

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