A record year for exports supports farm sector prices

·3 min read
Pat Westhoff
Pat Westhoff

The value of U.S. agricultural exports set a new record in the fiscal year that ended on Sept. 30. Exports of $172 billion were up by 23 percent from last year, and by more than 10 percent from the previous record set in 2014, according to a recent U.S. Department of Agriculture report.

The growth in export sales is remarkable, especially given a wide range of obstacles. The pandemic caused a global recession and set off a series of disruptions in global supply chains that have made it hard to produce, process, transport and market food products. Trade disputes remain unresolved, and many countries want to reduce reliance on imported food.

Strong export sales support farm commodity prices. An index of prices paid to U.S. farmers increased by 32 percent between April 2020 and Sept. 2021.

The three commodities that account for most of Missouri’s farm cash receipts all saw record export sales in fiscal year (FY) 2021. Soybean, corn and beef exports increased sharply, with the value of corn exports more than doubling.

A wide variety of factors are behind the increase in exports, but one country played a dominant role, U.S. agricultural product exports to China almost doubled in value in FY 2021, and accounted for more than half of the overall increase in the value of U.S. agricultural exports. China bought more U.S. soybeans, corn, beef and pork, all at higher prices.

China’s increase in imports of U.S. farm products can be explained by three very different factors. First, African swine fever reduced pork production in China, resulting in increased demand for imported pork and other meats. Now that pork production is recovering in China, demand for corn, soybean meal and other livestock feeds is growing rapidly to feed more hogs.

Second, China’s economy began to recover in 2020, before those of other major countries. In response, China’s consumers have increased their demand for a wide variety of products, just as is occurring in the United States and other countries now.

Third, the “Phase one” trade deal between the United States and China may also have played a role. The agreement required changes in China’s trading practices that could help boost U.S. exports of beef and some other products.

It also set specific targets for China purchases of U.S. farm products and other goods. These targets have not been met, and it is not clear whether or how the targets might have affected China’s trade in farm goods.

As critical as China is to U.S. agricultural trade, other factors were also important. Unfavorable weather earlier this year reduced Brazil’s production and exports of corn, allowing the United States to capture a larger share of the global market. Canada and Mexico, our number two and number three agricultural export markets, also set record trade values in FY 2021.

Of course, trade is not a one-way street. The value of U.S. agricultural imports also set a record in FY 2021, rising by 14 percent from the previous year to $163 billion. Still, U.S. farm product exports continue to exceed imports, yielding a positive balance of agricultural trade. In contrast, the Census Bureau reports that the overall U.S. trade deficit in goods and services reached $835 billion in FY 2021.

Pat Westhoff is director of the Food and Agricultural Policy Research Institute at the University of Missouri and a professor of agricultural and applied economics. The opinions expressed here are his own and do not reflect official positions or endorsements of the University of Missouri.

This article originally appeared on Columbia Daily Tribune: A record year for exports supports farm sector prices

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