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Turbulent Decade for Ag Exports Ends on a Downturn
by Ernest Carter
Everything’s relative, some
say. U.S. agricultural exports closed out the decade at $49
billion for fiscal 1999, a $9-billion gain since 1990. Had the
path been steadily upward, it would have been judged a rock-solid
performance.
Instead, exports exploded past $50 billion in mid-decade, climbing to $60 billion in 1996. Bulk commodity prices were high, consumer food exports were setting new records and optimism reigned.
But that was as good as the numbers would get. For the next 3 years, the momentum turned in another direction as commodity prices were steadily eroded by large global supplies, increasing competition, a strengthening U.S. dollar and weakened demand from a global financial crisis that began in Asia.
Of course, $49 billion is still ahead of any export levels achieved before the mid-1990s. But it is also the weakest performance since 1994, down 9% from 1998 and a full 18% below the 1996 record.
So far, the current year isn’t shaping up much better. Pressures from large supplies and subsequent low prices maintain their grip on farm commodity markets, even though most crisis-affected countries are back on the recovery path.
U.S. solid wood products and seafood products fared generally better than agricultural products in 1999 world markets. Wood product sales were down only about 1% from the previous year, while seafood netted a 19% increase in export value.
U.S. agricultural imports continued to grow last year, edging up to a new record of $37.5 billion. Despite the combination of lower exports and rising imports, agriculture posted its 40th straight annual trade surplus –albeit the lowest surplus since 1987–at $11.5 billion. The highest was $27.2 billion in 1996.
Following are some export highlights for major product categories and markets.
Bulk Agricultural Exports Off 11%
Bulk commodities took another plunge in
fiscal 1999 as sagging demand and large global production brought
some of the lowest prices in decades. While export volume rose
15% to 114 million tons, weak prices more than offset added
tonnage. Corn was an exception–a 38% increase in tonnage
lifted coarse grains to a 12% value gain. The major factor: less
competition from China and Argentina. For wheat, U.S. aid
donations helped prop up volume, but export value still dropped
4%. Soybean exports plummeted 23%, reflecting large global
supplies, weak demand and rock-bottom prices. Cotton fared worse,
with sharply reduced volume from the small U.S. crop, plus low
prices. Total U.S. bulk commodity exports were $10 billion below
fiscal 1996's $28.8 billion.
Exports of Intermediate Agricultural Products Down 12%
U.S. exports of intermediate agricultural
products dropped 12% in fiscal 1999 to the lowest since 1994.
Most product categories were down, with sharp declines for soy
meal, soy oil, hides and animal fats. For oilseed products, large
South American supplies, intense competition and lackluster
demand cut prices and volumes. Hides got a tanning as sluggish
Asian demand paired with a slowdown from Europe. Bright spots
were few. Wheat flour exports surged 52%, mainly from U.S.
donations to Bangladesh, Yemen and other destinations, as well as
$10 million in sales to Israel. Among the top four U.S. markets,
intermediate product sales fell 25% to the European Union (EU),
4% to Canada, 10% to Mexico, and 11% to Japan. The record high
remains at $12.2 billion in exports, set in 1997.
Consumer Food Exports Not Yet
Back on Track
U.S. exports of foods, beverages and other consumer-oriented agricultural products eased for a second year, following 12 record-setting years. The modest 4% drop left consumer food sales at $1 billion below 1997's all-time high–but still $8-$9 billion higher than when the decade began. The collapse in Russian buying gets the blame for the 26% falloff in poultry meat exports. On the plus side, juices and breakfast cereals set new records, with juices benefitting from strong Asian, European and NAFTA sales. For consumer foods overall, export records were set to Canada and Mexico, and to some smaller markets, including China. Fiscal 1999 marked the first time that consumer foods topped bulk commodities in export value. Consumer foods accounted for 40% of total U.S. agricultural exports, up from 24% in 1990.
Most Major Markets Caught in
Downtrend
Most major markets contributed to the 1999 downturn. U.S. agricultural exports to Japan fell for the third straight year, while both Canada and Mexico backed off from 1998 records and several years of growth. Weak prices and sales of bulk and semi-processed commodities were mainly responsible, as consumer food sales set new highs in Canada and Mexico. Financial crisis pushed Russia out of the top 10, with a 58% dive despite U.S. food aid. China and Hong Kong led a drop in U.S. exports to Asia’s Pacific Rim, but South Korea and Taiwan were notable exceptions. A recovering Korean economy helped turn 1998's 32% plunge in U.S. exports into a 9% rebound for fiscal 1999.
Wood Product Sales Remain in a
Slump
Fiscal 1999 marked the second straight year of weakness for exports of solid wood products. Robust domestic demand kept U.S. prices up, while housing starts in Japan remained slow. Export value dipped below $6 billion to the lowest in the 1990s–off 20% from 1997's $7.5 billion record high. Canada finally overtook Japan as our top market. Sales to Japan slumped another 4%, adding up to a 50% drop since 1996 (an unusually strong year in that market). Meanwhile, exports to Canada continued to grow, gaining 5% to a record $1.6 billion, with strong demand for U.S. hardwoods (often for re-export as furniture back to the states). Sales to the EU were off 11%, but sales were up 10% to Mexico and 38% to South Korea.
Seafood Exports Show Solid
Gains
After a 3-year decline, foreign sales of U.S. fishery products increased a solid 19% to $2.6 billion in fiscal 1999, recovering half the value lost since 1995. Although all major product categories registered increases, a recovery in salmon had the largest impact. U.S. salmon exports climbed 43%, mainly due to a larger Alaskan harvest. Japan, the dominant market for salmon, also accounted for most of the $102-million increase in U.S. fish egg exports. For crabs and crabmeat, record sales to China (up 316% to $20 million) and Canada were key factors. Fiscal 1992 remains the decade’s high point, when U.S. seafood product exports totaled $3.3 billion.
The author is a special assistant, Commodity and Marketing Programs, FAS. Tel. (202) 720-2922; E-mail: carterew@fas.usda.gov
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