For more than
40 years the UnitedStates has exported more agricultural products
than it has imported. That could change within a few years, according
to two Purdue University agricultural economists.
The gap between export and import values is narrowing, said Phil Paarlberg
and Phill Abbott, economists. They predict imports could overtake
exports by 2007, if current trends continue.
U.S agricultural exports are projected to climb by $500 million in
the coming fiscal year, which began in October, to $56.5 billion.
Imports are estimated to jump as much as $3.5 billion in 2003-04.
According to information from the USDA Economic Research Service,
U.S. agricultural exports were up 5 percent in 2003 to $51.8 billion;
however imports have risen 11 percent to $41.8 billion that same year
- a new record. And for the year to date, U.S. agricultural surplus
is down 19 percent, or $1.9 billion.
“What we’ve seen in the last several years is that agricultural
exports have been relatively flat in real dollars while imports have
been rising quite rapidly, even through our so called recession,”
Paarlberg said. “A couple of years back imports were $41 billion,
and this past year they were $45 billion. The last time we were a
net ag importer was in the 1950’s.”
Fiscal year 1958-59, to be exact. At that time Europe had completed
the rebuilding of its agricultural industry following World War II.
Demand for U.S. agricultural products stagnated. Recent slugishness
in U.S. ag export trade dates back to 1996. The rise in imports is
closely tied to diets and lifestyle changes, Paarl-berg said. Americans
are consuming more foods either that aren’t produced in the
U.S. or in insufficient volumes to meet consumer needs, he said.
“Take a pizza,” Paarlberg said. “If it’s got
black olives, where did they come from? They probably came from Morocco.
If it’s got sausage, that might be from a hog that came from
Canada. If you go to a Mexican restaurant and order guacamole, chances
are that came from outside the country because we don’t produce
that many avocados. We import simple things like baby back ribs. We
kill a hundred million hogs a year but we eat so many babyback ribs
that there’s a good chance those ribs came from Denmark.”
Many restaurants stopped serving ribs two years ago when an outbreak
of foot an mouth disease in Europe stemmed the flow of livestock imports
into the United States, Paarlberg said.
Europes refusal to accept genetically modified (GMO) grain has little
to do with the tightening ag trad balance, Abbot said. The United
States is a world leader in biotech crops, which are genetically modified
to resist insects and herbicides.
Instead of looking across the Atlantic Ocean, U.S. exporters should
be focusing their attention on the other side of the Pacific Ocean,
Abott said.
“We put too much emphasis on the European market,” he
said. “The markets that really matter to agriculture now are
in Asia. I think it’s a bigger concern what the chinese do with
GMOs than what the Europeans do. There’s a big uncertaintity
in how the Chinese are going to handle the trade agreements they’ve
made with us. Those agreements revolve around a lot of technical issues
in terms of inspections at the border and approvals, and whether they’re
temporary or permanent. We’re watching that play out right now.”
Abbot said it is a misconception that the rest of the world relies
on American farm products for survival.
“The thing we need to remember is that in the rest of the world
most countries are reasonably self-sufficient in agricultural commodities,”
he said. “They produce most of their own needs, and trade meets
a fairly small portion of those needs. Trade policy is important in
determining how much they let in at any given time.”
Agricultural exports will continue to be a major segment of U.S. trade,
even as import values grow, Abbot said.
“We need to understand that the products we’re importing
are different from the products that we’re exporting,”
he said. “There’s a danger in looking at agriculture as
an aggregate sector and not understanding that there’s a great
deal of diversity in that sector. Some parts of agriculture will always
be competitive with the rest of the world, and there are some things
that we’re better off getting from the rest of the world, and
we should import them.”
U.S. import/export trends actually prove how strong the nation’s
economy and agriculture are, Paarlberg said.
“Gains from trade occur on the import side.” he said.
“You export commodities in order to pay for the commodities
that you import...I think we get that confused all the time. We think
almost mercantilist - we need to sell, sell, sell. But why are you
selling? So that you can buy other goods from overseas.”
