Author: Andrew Muhammad

When considering U.S. agricultural exports, we often think about major bulk commodities like soybeans, corn, and cotton, as well as animal products such as beef, pork, poultry, and dairy. Rarely do we consider whiskey (which includes bourbon, whiskey, rye whiskey), despite distilled spirits being a major U.S. export, listed as an official agricultural category by both the U.S. Department of Agriculture (USDA) and the World Trade Organization (WTO), and despite the sectors use of corn, barley, and rye as primary inputs for production. In the recent Outlook for U.S. Agricultural Trade published by USDA, U.S. agricultural exports in fiscal year (FY) 2023 are projected to decrease to $181.0 billion, which is significantly lower than exports in FY 2022 ($196.4 billion), primarily driven by expected decreases in corn, wheat, beef, and poultry exports (USDA, ERS, 2023). In spite of this expected decline overall, U.S. whiskey exports should increase, as evidenced by exports as of April 2023.

Figure 1 shows U.S. whiskey exports in FY 2023 (as of April, October-April) versus FY 2022. Note that whiskey exports in FY 2023 are significantly higher both in terms of value and volume. As of this April, U.S. whiskey exports were valued at $1.1 billion, which is a 73% increase when compared to exports during the same period in FY2022 ($637 million). In terms of volume, exports during this period were 25% higher in FY 2023 (118 million proof liters) when compared to FY 2022 (94 million proof liters). Given the relatively lower increase in volume, the overall increase in due to higher prices. This could be due to inflation as well as increased sales of higher quality products. Note that the average unit value in FY 2022 (October – April) was $6.75 per liter, but this increased to $9.34 per liter in FY 2023. The overall increase is mostly driven by exports from Tennessee (up 125% increase). Tennessee accounted for over 70% of total U.S. exports this fiscal year. As far as destination markets, most of this increase was due to higher sales to the EU27, including a more than 400% increase in exports to the Netherlands. The U.S. also experienced significantly higher sales in Australia and the U.A.E. (USDA, FAS, 2023).

Figure 1. U.S. Whiskey Exports: 2022 and 2023 Year-to-Date (fiscal year – October-April)

References

U.S. Department of Agriculture (USDA, ERS). 2023. Outlook for U.S. Agricultural Trade. Economic Research Service, Washington, DC. https://www.ers.usda.gov/topics/international-markets-u-s-trade/u-s-agricultural-trade/outlook-for-u-s-agricultural-trade/

U.S. Department of Agriculture (USDA, FAS). 2023. Global Agricultural Trade System (GATS). Foreign Agricultural Service, Washington, DC.

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Muhammad, Andrew. “U.S. Whiskey Exports Remain Strong as Ag Exports are Expected to Decline Overall.” Southern Ag Today 3(26.4). June 29, 2023. Permalink

In 2022, U.S. consumers faced persistently high egg prices, where egg prices increased significantly more than food prices overall. According to the Bureau of Labor Statistics, the average retail price of eggs (grade A, not seasonally adjusted) reached a record high of $4.25/dozen in December 2022, up 138% from December 2021 ($1.79/dozen). The reasons given for this surge included supply-chain disruptions due to the COVID-19 pandemic, increased egg demand during the holiday season, and overall inflation, but most articles cited highly pathogenic avian influenza (i.e., bird flu) outbreaks and resulting bird loss as the primary cause. In a recent article in Choices (Muhammad et al., 2023), I proposed that higher production costs along with the negative consequences of bird flu sufficiently explained the rise in egg prices. The reason why I was not completely sold on bird flu as the sole or even primary cause is that the U.S. experienced similar and even larger losses in the egg laying population due to bird flu in 2015, yet egg prices did not increase as much as they did in 2022. To be certain, egg prices did increase in 2015, peaking at $2.97/dozen, but this increase was still significantly less than what was experienced last year. 

What many failed to discuss—including me—is the role that imports might have played in mitigating the effects of negative production shocks due to substantial declines in the U.S. egg-laying population. Figure 1 shows relative bird loss, expressed as a percent of the total table-egg laying population, and the quantity of in-shell egg imports (million dozen) from January 2010 to December 2022. The U.S. table egg laying population ranged from 283 million birds in 2010 to a high of 337 million birds in 2019, and monthly bird losses between 2% and 4% appear to be the price of doing business. In 2015, however, bird losses peaked at 11% due to bird flu. In the months that immediately followed, in-shell egg imports reached record levels, increasing to nearly 14 million dozen in October 2015, which is more than a 2,000% increase when compared to average monthly imports prior and in the months that followed (less than one million dozen on average). Imports did not significantly increase again until 2022 when bird losses peaked at around 9% in 2022 and exceeded 4% in the months that followed. Unlike 2015, however, the response in in-shelled egg imports was marginal by comparison, increasing to only 2 million dozen in late 2022. The reasons for the significantly larger import response in 2015 versus 2022 is a subject for another time. But what is clear is that the surge in imports in 2015 and the relatively modest import increase in 2020 could be a reason why egg prices increased more so in 2022.

Figure 1. Relative Bird Loss and In-Shelled Egg Imports in the United States: January 2010 – December 2022

For More Information:

Muhammad, Andrew, Charles Martinez, and Abdelaziz Lawani. 2023. “Why Are Eggs so Expensive? Understanding the Recent Spike in Egg Prices” Choices Quarter 2.  https://www.choicesmagazine.org/choices-magazine/submitted-articles/the-impacts-of-futures-markets-on-commodity-prices-instability/why-are-eggs-so-expensive-understanding-the-recent-spike-in-egg-prices

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Muhammad, Andrew. “Egg-spensive Business: Exploring the Spike in Egg Prices and the Impact of Imports.” Southern Ag Today 3(22.4). June 1, 2023. Permalink

Despite record beef exports in 2022 ($11.7 billion), there are signs of weakening beef trade for the U.S. in 2023. Note that total U.S. beef and beef product exports year-to-date (January-March) in 2023 were down in terms of value by 22% when compared to the same period in 2022, and down 8% in terms of volume. This overall decline was primarily driven by declines in sales to Asian markets, most notably the leading destinations for U.S. beef exports: Japan, South Korea, and China. In terms of value (volume), U.S. beef exports to Japan were down 20% (4%), South Korea 36% (15%), and China 21% (15%) (USDA, 2023). A noted reason for these declines is the relatively strong U.S. dollar, which has made beef exports relatively more expensive, and recent and anticipated declines in U.S. beef production.

In previous SAT articles, I highlighted the rise of China as a major buyer of U.S. beef and a major beef importing country overall. As mentioned in these articles, China emerged from relative obscurity and is now the third leading market for U.S. beef behind Japan and South Korea. In 2022, China imported $2.2 billion dollars of U.S. beef and beef products, with sales comparable to well established foreign markets: South Korea ($2.7 billion in 2022) and Japan ($2.3 billion in 2022). Unfortunately, the trade data for 2023 indicate that U.S. beef may be losing ground in the Chinese market. Figure 1 shows China’s beef imports from the U.S., as well as from all countries in 2022 and 2023 (January – March). Even as U.S. beef exports to China declined in the first quarter of 2023 from $382 million to $344 million (or 40 thousand to 38 thousand metric tons), China’s beef imports overall increased by more than $100 million and nearly 103 thousand metric tons. According to Trade Data Monitor® (2023), China imported 125% more beef from Brazil during this period (124 thousand metric tons in the first quarter of 2022 versus 280 thousand metric tons in 2023). Foreign demand for U.S. beef demand will remain a significant concern going forward as declining beef production could put even more pressure on U.S. beef prices. It appears that this is having and will continue to have a negative impact on U.S. beef exports overall and in China in particular.

Figure 1. China’s beef and beef product imports in 2022 and 2023: YTD (January – March)

References

USDA (2023). Global Agricultural Trade System. https://apps.fas.usda.gov/gats/default.aspx

Trade Data Monitor® (2023). https://www.tradedatamonitor.com/

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Muhammad, Andrew. “U.S. Beef Exports Down in 2023 (so far) – U.S. Beef is Losing Ground in China.” Southern Ag Today 3(20.4). May 18, 2023. Permalink

Woody biomass now accounts for a major share of renewable energy in the European Union (EU) and United Kingdom (UK) due to recent climate and renewable energy policies. Imports of wood pellets – often used in converted coal fueled power plants – in the EU and UK have reached record levels, with imports mostly coming from the southeastern region of the U.S. Consequently, wood pellets are now the leading forest-product export for the U.S., surpassing oak lumber, pine lumber, and other major exports (USDA, 2023). This article is not about the efficacy of European climate policy or the use of woody biomass in reducing carbon emissions. The overall goal of this article is to simply document the phenomenal rise in U.S. wood pellets exports over the last decade, mostly due to demand in the UK and EU, and the potential for increased exports in the future.

Since 2012, U.S. wood pellet exports have increased from $258 million to $1.5 billion, which is an increase of 498%. According to USDA (2023), Louisiana, Georgia, North Carolina, Virginia, and Florida have been leading states. Figure 1 shows U.S. wood pellet exports (in million metric tons [MT]) from 2012-2022 by destination (UK, EU, and Rest of World). Note that the UK has accounted for the major share of the overall rise in exports since 2012, while the EU has accounted for the major share of growth in more recent years (2021 and 2022). Since 2012, U.S. wood pellets exports have increased from 1.9 million MT (35% shipped to the UK and 57% shipped to the EU) to nearly 9.0 million MT by 2022 (59% shipped to the UK and 31% shipped to the EU). During this period, the UK accounted for as much as 90% of total U.S. exports (see 2016). The demand for wood pellets in Europe has significantly outpaced domestic production over the past ten years. This has resulted in increased imports from mainly the U.S., Russia, Belarus, and Ukraine. With the Russian invasion of Ukraine, wood pellet imports from Russia, Belarus, and Ukraine have been significantly impacted (Flach and Bolla, 2022), which likely explains the recent increase in U.S. exports to the EU and the increase in export prices from an average of $124/MT (2012-2020) to well over $150/MT in 2021 and 2022 (USDA, 2023).

Figure 1. U.S. wood pellet exports by destination: 2012-2022

References

USDA (2023) Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

Flach, B., and S. Bolla (2022) EU Wood Pellet Annual. Report Number: E42022-0049. USDA, Foreign Agricultural Service.

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Muhammad, Andrew. “U.S. Wood Pellets Exports Continue to Reach Record Levels.” Southern Ag Today 3(10.4). March 9, 2023. Permalink

The 2022 data on U.S. agricultural exports are now available and it looks like another record year. U.S. agricultural exports were $196 billion in 2022, up $20 billion (up 11%) when compared to the previous year. Note that 2021 was also a record year for U.S. agricultural exports ($177 billion). It appears that record sales were more so due to higher commodity prices and global inflation than an increase in real export sales. That is, the U.S. did not necessarily sell more soybeans, grains, meats, or other products to the world, we simply sold the same or even lower volumes at higher prices.

Figure 1 shows both the agricultural export value ($ billion) and volume (million metric tons [MT]), as well as the average export price or unit value ($/MT) for the U.S. Given the broad range of exported products, a total volume measure is clearly a representative equivalent. However, as long as the U.S. Department of Agriculture is consistent every year with how volumes are measured, comparisons over time can reveal what is driving recent export growth. In 2021, U.S. agricultural exports increased from $150 to $177 billion, which was an 18% increase. However, the export volume during this period increased by only 2%: 226 million MT in 2020 to 230 million MT in 2021. Given the larger increase in value, clearly, the record in 2021 was more so due to prices. However, albeit relatively smaller, the volume did increase. In 2022, however, the volume of U.S. agricultural exports (216 million MT) was down by 6%, despite the value being up by 11% to a record level. Note that the average export price or per-unit export value in 2022 ($906/MT) was up 18% when compared to the previous year ($768/MT). Thus, the most recent record is all due to higher prices.

In closing, record export sales in the last two years being more inflationary than representative of real export growth is not necessarily a bad thing and is in fact, quite laudable. Most important, higher values do suggest higher revenues for U.S. producers regardless of the quantities being sold. When taking a longer view, there is another positive takeaway. Note that export volumes significantly decreased with rising prices in past years (e.g., 2010 – 2013), resulting in negligible increases in export values. Whereas in the last two years, export volumes have remained relatively stable despite significantly higher prices.

Figure 1. U.S. Agricultural Exports (Volume, Value, and Unit Value): 2010-2022

References

US. Department of Agriculture. 2023. Global Agricultural Trade System (GATS). Foreign Agricultural Service, Washington, DC.

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Muhammad, Andrew. “U.S. Agricultural Exports Set Another Record in 2022, but Higher Prices Appear to be the Cause.” Southern Ag Today 3(6.4). February 9, 2023. Permalink