U.S. on verge of becoming net agricultural importer
WEST LAFAYETTE, Ind. - For more than 40 years the United States has exported more agricultural products than it has imported. That could change within a few years, said two Purdue University agricultural
economists.
U.S. on verge of becoming net agricultural importer - WEST LAFAYETTE, Ind. - For more than 40 years the United States has exported more agricultural products than it has imported. That could change within a few years, said two Purdue University agricultural
economists.
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The gap between American export and import values is narrowing, said
economists Phil Paarlberg and Phil Abbott. They predict imports could
overtake exports by 2007, if current trends continue.
U.S. agricultural exports are projected to climb by $500 million in the
coming fiscal year, which begins in October, to $56.5 billion. Imports
are estimated to jump as much as $3.5 billion in 2003-04.
"What we've seen in the last several years is that agricultural exports
have been relatively flat in real dollars while imports have been
rising quite rapidly, even through our so-called recession," Paarlberg
said. "A couple of years back imports were $41 billion, and last year
they were $45 billion. We expect them in the coming year to climb to
$47 billion or $48 billion.
"The last time we were a net ag importer was in the 1950s."
Fiscal year 1958-59, to be exact. At that time Europe had completed the
rebuilding of its agricultural industry following World War II, and
demand for U.S. agricultural products stagnated.
The current sluggishness in the U.S. ag export trade dates back to 1996.
The rise in imports is closely tied to diet and lifestyle changes,
Paarlberg said. Americans are consuming more foods either that aren't
produced in the U.S. or produced in insufficient volumes to meet
consumer needs, he said.
"Take a pizza," Paarlberg said. "If it's got black olives, where did
they come from? They probably came from Morocco. If it's got sausage,
that might be from a hog that came from Canada.
"If you go to a Mexican restaurant and order guacamole, chances are
that came from outside the country because we don't produce that many
avocados. We import even simple things like babyback ribs. We kill 100
million hogs a year, but we eat so many babyback ribs that there's a
good chance those ribs came from Denmark."
Many restaurants stopped serving ribs two years ago when an outbreak of
foot-and-mouth disease in Europe stemmed the flow of livestock imports
into the U.S., Paarlberg said.
But Abbott said Europe's refusal to accept genetically modified (GMO)
grain has little to do with the tightening ag trade balance. The U.S.
is a world leader in biotech crops, which are genetically modified to
resist insects and herbicides.
Instead of looking across the Atlantic Ocean, U.S. exporters should be
focusing their attention on the other side of the Pacific Ocean, Abbott
said.
"We put too much emphasis on the European market," he said. "The
markets that really matter to agriculture now are in Asia. I think it's
a bigger concern what the Chinese do with GMOs than what the Europeans
do. There's a big uncertainty in how the Chinese are going to handle
the trade agreements they've made with us. Those agreements revolve
around a lot of technical issues in terms of inspections at the border
and approvals and whether the agreements are temporary or permanent.
We're watching that play out now."
Abbott said it is a misconception that the rest of the world relies on
American farm products for survival.
"The thing we need to remember is that in the rest of the world most
countries are reasonably self-sufficient in agricultural commodities,"
he said. "Other nations produce most of their own needs, and trade
meets a fairly small portion of those needs. Trade policy is important
in determining how much countries let in at any given time."
Agricultural exports will continue to be a major segment of U.S. trade,
even as import values grow, Abbott said.
"We need to understand that the products we're importing are different
from the products that we're exporting," he said. "There's a danger in
looking at agriculture as an aggregate sector and not understanding
that there's a great deal of diversity in that sector. Some parts of
agriculture will always be competitive with the rest of the world, and
there are some things that we're better off getting from the rest of
the world, and we should import them."
U.S. import-export trends actually prove how strong the nation's
economy and agriculture are, Paarlberg said.
"Gains from trade occur on the import side," he said. "You export
commodities in order to pay for the commodities that you import. The
benefit is on the consumption side, not the sale side.
"I think we get that confused all the time. We think mercantilist - we
need to sell, sell, sell. But why are you selling? So that you can buy
other goods from overseas."
Source: Purdue News Service - 22nd September 2003