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Ag Exports Remain Solid But Future Uncertain

Ag Exports Remain Solid But Future Uncertain
U.S. needs to find another buyer besides China for ag exports.

When Jason Henderson visited Morgan County recently, farmers had questions for the former vice-president of the Kansas City Federal Reserve Bank. He is now Director of Purdue University Extension.

One of the first questions dealt with ag exports. What is the picture for ag exports right now?

"Exports remain solid right now, but the future is somewhat uncertain," Henderson says. Overall, the export market for U.S. agricultural goods looks pretty strong. We're nearing all-time record highs on exports. But to be fair we must note that there are challenges ahead."

Begin export trail: These barges are on the Ohio River near the locks and dams at Louisville. The eventual destination is the Gulf of Mexico and transport of goods overseas.

China is the primary buyer of ag exports from the U.S. right now, he says. From 2006 to 2012, China was growing at about 10% per year. Now China is projected to still grow but at a slower pace. Economists peg China's growth for the next five years at 7.5%. That would slow down purchase of U.S. ag goods by China.

"What we're seeing right now is that ag exports are leveling off, but they're leveling off at a high level," Henderson says.  Exports aren't dropping, nor are they expected to drop. Instead, it is likely to be a flat line for exports into the future until some other event occurs.

What the U.S. needs now is for some other country to step up and begin buying ag goods for export to their country. This would replace the gap that China will be leaving by not continuing to grow ag exports in the near future. The question is, who might the country be that could step up and fill the void on the export scene?

There are potential candidates out there, Henderson says. Indiana is one of the prospects. There's also the chance that African countries could begin importing U.S. ag goods, bolstering U.S. ag exports. Or it might be some other third world country that can step to the plate.

The bottom line is that for now, exports are solid, but not likely to continue growing at the growth rate of the recent past, he concludes.

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