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COLUMN: Export outlook dimming

Exports have been good business for American farmers - some years, as with the Russian grain sales and the cotton sales to China, or when El Niños or other weather adversities clobbered crops in South America or elsewhere, overseas sales were gold rush-good.

But those have been few and far between in recent years, and despite assurances that GATT, NAFTA, FTAA, and other trade pacts would generate more sales, there is a growing unease that the bloom may be off the rose for exports.

At this year’s USDA Ag Outlook Conference, the projections weren’t exactly brimming with optimism. A few quotes:

  • Wheat: “The U.S. will face increased competition from expanding production by the major foreign exporters.”
  • Corn: “U.S. exports will continue to face strong competition…with only a small increase…in 2002/03.”
  • Soybeans: “Opportunities for increased U.S. exports will be limited…as foreign import demand growth slows…”
  • Fruits/veggies: “U.S. fresh fruit and vegetable exports increased 16 percent worldwide from 1994-2000, while imports rose 95 percent during the same period.
  • Beef: “Exports in 2001 were down 9-10 percent and in 2002 are likely to continue to decline another 2-3 percent.”
  • Cotton: “USDA is forecasting…the largest (exports) in 75 years.”

A seeming bright spot. But other than clearing out a lot of surplus, there’s no real joy in making sales at Depression era prices that come chiefly on the backs of a decimated U.S. textile industry - mill use last year was down 4 million bales from the peak in 1997/98.

The USDA nonetheless continues its stance that, long term, the outlook for ag exports is bright and that globalization of trade is overall to our benefit, though we may have to sacrifice some sectors (i.e., textiles) to cheaper overseas competition.

“We have to continue to open new markets, and that means making sure that other countries live up to their trade obligations,” Secretary of Agriculture Anne Veneman said at the Outlook Conference. But she noted that in the last year “we’ve seen the European Union, Japan, and China announce certain policy initiatives that are wrong-headed, that would move free and open markets backward, and that would hurt U.S. farmers. We need to stand strong, and we need to make sure these countries keep trade open and that we eliminate unfair trade practices.”

That was before President Bush announced the imposition of punitive tariffs on imported steel, which got the European Union and other trading partners in high dudgeon and brought threats of retaliation against U.S. products.

Toss into all this the volatile Mid-East situation, with the potential for adverse effects worldwide, and the export outlook is anything but radiant.

There’s also the contention by a number of non-government analysts that the USDA’s export projections have, for many years, been over-optimistic, and that in reality corn and wheat exports have been in a 20-year downtrend, while the trendline for soybeans has been flat. The phase-out of ag subsidies in the muchly derided Freedom to Farm bill was, they say, sold to Congress in large part with inaccurate forecasts for exports.

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