Farm and Food File Alan Guebert
When stumping for farm votes, any politician worth his snakeskin boots will say the word "exports" as he shakes your hand. If you fail to rise to the bait, the glad-hander quickly will add the phrase "free trade" to convince you he understands farmers.
What do these vote-seeking free trade apostles mean by free trade? Maybe they don't know that, inarguably, world commerce is enjoying the greatest, most-free free trade period since Marco Polo returned from China. Perhaps, against all evidence, they believe totally unrestrained trade will reverse last year's gluttonous $270 billion US trade deficit. It won't; the 2000 trade deficit is expected to easily top $300 billion.
The same it true for US agriculture: the more free world ag trade gets, the farther behind American farmers fall. And they will continue to lose steps to their global trade competitors, according to the US Dept. of Agriculture's Aug. 30 Ag Trade Outlook report. The report shows total US ag exports dropped like a wounded duck from $59.8 billion in Fiscal Year 1996 to $49.1 billion in 1999. In FY 2000, as if it has one quack left, farm exports are forecast to rise to $50.5 billion.
In real money terms, however, after inflation is bled off, the value of 2000 US ag exports will be nearly the same as 1999.
That's the good news. USDA's latest trade numbers contain much more bad news. For instance:
--Soybean exports will rise from 23 million metric tons (mmt) in 1999 to estimated 26.7 mmt in 2000 and a forecasted 27.5 mmt 2001, a 16% increase over the three years. Despite the bigger volume, the value of these exports will be perfectly flat: $8.7 billion each year.
--In 1999, the US exported 52 mmt of corn worth $5.04 billion. In 2000, corn exports will slump to 47 mmt worth $4.5 billion. Next year, corn exports are expected to rise 6.5 mmt to 53.5 mmt, its highest since 1994/95, while the value will rise a measly $100 million over FY 2000. In fact, US farmers will sell the world 1.5 mmt more corn for $440 million less in 2001 than in 1999.
--The brightest star in US ag exports, red meat, is far less bright than farmers are led to believe. Sure, beef, pork and variety meat exports will rise from $4.1 billion in 1999 to $5.1 billion by 2001. But bulging imports of red meat and live animals will rise even faster: from $4.5 billion in 1999 to $5.7 billion in 2001.
--2001 US dairy exports are estimated at $900 million, the same as 1999. Dairy imports over the same period, however, will rise 20%, from $1.5 billion to $1.8 billion. --Even as US ag exports dip $9 billion from 1996 to 2001, US ag imports continue to climb: from $32.6 billion in 1996 to a forecasted $39.5 billion in 2001. This near-$16 billion swing will cut the ag trade surplus from $27.2 billion to $12 billion over the five-year period.
Bottom line, according to USDA numbers? From 1999 to 2001, American farmers will sell 16% more soybeans for the same amount of money; they will sell 3% more corn for 9.5% less money; the $1 billion increase in red meat exports will be exceeded by a $1.3 billion increase in red meat (and red meat animal) imports; a 25% drop in domestic milk prices will spur US dairy imports to be twice as large as US dairy exports, and the US ag balance of trade will shrink 44% between 1996 and 2001.
In this increasingly free trade era, it is increasingly evident free trade robs Peter to pay Paul. As a friend cleverly notes, "In that kind of trade, you can always count on Paul's support."
Trouble is, according to the gospel of USDA, you're Peter.
(c) 2000 ag comm:
