Europe's debt crisis, should it worsen, could cut into recent gains in U.S. farm exports. The EU debt crisis is having broad impacts around the world with President Obama stating the U.S. economy is likely to continue to struggle until the EU recovers and is growing again. The impact is also being felt in China. A slowdown in Europe and China would be a double whammy for U.S. ag exports.
American Farm Bureau Federation Chief Economist Bob Young says there are serious and unknown risks from a collapse of the Euro Zone. He says that would be uncharted territory and that would make things pretty uncertain.
The U.S. exports some 25% of total production to Europe and about 8% of its ag products including soybeans and soy oils, corn, wheat, DDGs, ethanol and biodiesel. But Young says other markets could help compensate for losses in Europe.
"You do have the Chinese economy and the India economy and new trade agreements in South Korea," Young said. "Things of that nature should open us up an allow us to continue to have some pretty strong export markets."
Young discounts fears that China's losses to EU debt problems could curb Beijing's appetite for U.S. farm goods.
"The Chinese economy is still growing in the 8% to 9% range," Young said. "Sure you've got some individually tied that are certainly directly affected but overall the Chinese economy is very dynamic and very strong."
Young cautions against getting carried away with fear over Europe, giving odds of one in ten that the situation there will cause serious problems for the U.S. economy.
Still, Young says the EU debt crisis, as with the failure of the deficit reduction Super Committee, is one more question mark about government willingness to tackle huge debt and is something both Farm Bureau and the financial markets will be watching very closely in the days and weeks ahead.