Exploring the 2016 balance of foreign trade we expect U.S. agricultural exports to be near $133 billion when the final tally is taken.
This figure is lower than the five most recent years due to sluggish world economic growth, a recently strong U.S. dollar, reduced exports of higher-value products, and generally falling prices for most farm commodities. On the other hand, we expect U.S. imports to continue at a roughly 2% annual rate. One reason for this rate of importation is the real exchange rate has made foreign goods cheaper in the U.S. domestic market. However, import gains were well below the 7% average for 2000-2015, reflecting slower growth in total global trade volume last year. Given the value of both farm exports and farm imports, the 2016 U.S. agricultural trade surplus is expected to be worth at least $24 billion.
Horticultural exports have shown the most growth, up about $266 million, with an increased share of total U.S. agricultural exports. In fact, horticultural products became the largest share of any group, surpassing livestock products, grains/feeds, and oilseed/products.
Over the past 10 years, U.S. agricultural exports to China have grown over 13% annually on average. However, it appears exports to China peaked in 2012 at $25.9 billion, and remained steady for 2 years before dropping by over $4 billion in 2015. Meanwhile, U.S. exports to Canada have been relatively stable. Most people do not realize Canada is the largest destination for U.S. agricultural products. The next largest markets are Mexico, the European Union, and Japan, all longstanding destinations for U.S. agricultural commodities.
On the importation side, Canada and Mexico remain the United States largest suppliers of agricultural products (projected at roughly $22.2 billion and $19.3 billion respectively for 2016), mostly consumer-oriented goods such as horticultural products, red meats, and snack foods. The European Union is a close third, accounting for $18.9 billion worth of U.S. agricultural imports, with horticultural products accounting for more than half the value. South America, led by Brazil, Chile, and Colombia, averaged $13.7 billion in U.S. imports over the past 3 years, consisting largely of horticultural, sugar, and tropical products in which it has a comparative or seasonal advantage.
From 2013 to 2015, East Asia and North America combined to account for about 62% of U.S. agricultural exports. East Asia, led by China, Japan, and South Korea, was the largest market, with a collective 34% share. The share of U.S. exports to Canada and Mexico has increased and accounted for 28% of world exports over the last 3 years. The European Union is the third largest regional destination, followed closely by Southeast Asia (led by the Philippines, Vietnam, and Indonesia). Meanwhile, South America is a shrinking market, with the noticeable exception of Colombia.
Exports account for a large share of the total volume of U.S. production for select agricultural products. For example, over 70% of the volume of U.S. production of tree nuts (largely almonds) and cotton are destined to be exported, as is more than 50% of U.S. rice and wheat production. Overall, the export share of U.S. agricultural production typically averages 20% based on volume.
U.S. consumers rely heavily on imports for certain products where demand far outweighs domestic production capacity. Over 95% of coffee/cocoa/spices and fish/shellfish products consumed in the United States are imported, as are about half of fresh fruits and fruit juices and almost a third of wine and sugar. Consumers demand fresh produce all year long and the seasonality of U.S. production makes accessing global supplies necessary to meet this demand. As high U.S. incomes drive consumption, the volume of U.S. agricultural imports has increased by 4% annually, on average, since 2000.
As we consider public policy that impacts global trading, let’s be certain to remember the quality of life enjoyed by most in the U.S. because of the positive foreign trade balance as well as the ever expanding array of available food choices for both ourselves and others across the world.
Information for this article is adapted from USDA, Economic Research Service, Foreign Trade publications.