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A New Year Prediction: Growth in Ag Exports Will Slow Down

A New Year Prediction: Growth in Ag Exports Will Slow Down
Overall export picture for U.S. farm goods should remain solid.

About 25% of the ag economy is driven by exports to other countries. The primary export partner over the past few years, when prices here for ag goods have boomed, has been China, both in grain and livestock exports.

The rate of growth to exports to China will slow down. That's the prediction of Mike Boehlje, Purdue University Extension ag economist. However, saying the rate of growth of exports will slow down and saying exports will collapse are two drastically different things.

Exports still at high level: It's unrealistic to think exports will grow as they have recently, but it is realistic to think they will plateau and hold at relatively high levels.

If the rate of growth slowed down,but exports of U.S. ag goods overseas still remain at a relatively high plateau compared to historical values, then exports will help bolster the ag economy. Perhaps they could lead to a soft landing in a time of lower commodity prices, instead of a crash landing.

Some ag economists have said that China's average rate of growth over the past several years, about 10%, will likely slow to more like 7 to 8%. Boehlje isn't quite as optimistic. He's working "what if" scenarios, working on equations if the rate of growth in the Chinese economy drops to 5% over the next several years. To the Chinese, a 5% increase in the economy annually at this point would likely be considered a recession.

Other countries overseas, including India and parts of Africa, may also import, but they also have seen their economies slow down. This may not help the ag export picture in the U.S. either.

The important point, though, is that as long as exports stay at a relatively high plateau, even if it's flat because other countries cut back since their rate of growth is slowing, exports can help provide a soft landing instead of a crash landing over the next few years in agriculture, Boehlje says. A dramatic turnaround and large decrease in U.S. ag exports would be troublesome to the ag economy.

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