Author: Andrew Muhammad

Given the delay in how U.S. trade data are reported (two-month delay), the value of U.S. agricultural exports for fiscal year (FY) 2022 (October 2021 – September 2022) will not be available until November. However, the latest USDA trade outlook has projected that agricultural exports in FY 2022 will reach a record $196 billion. Which is a 14 percent increase when compared to the previous year (USDA, 2022a). With year-to-date (October 2021 – June 2022) exports at $152.5 billion (USDA, 2022b), it looks like U.S. agricultural exports for FY 2022 are on pace to reach or exceed the projected record. Although FY 2022 is projected to be a record year, the latest projections also indicate that U.S. agricultural exports in FY 2023 will be $193.5 billion, down $2.5 billion when compared to FY 2022 (See Figure 1). 

The reason for this projected decline is that the global economic outlook for 2023 is growing more uncertain. For instance, global GDP is projected to increase by 3.2 percent in 2022, a downward revision from the prior forecast of 3.6 percent, but is projected to increase by even less in 2023 (2.9 percent). The Russian invasion of Ukraine is still ongoing and continues to impose economic disruptions. The disruptions have thus far led to elevated energy prices that continue to disproportionately affect the European market. Supply chain complications have slowly abated, but spot shipping rates remain elevated compared to pre-pandemic levels. Finally, central banks around the world have begun monetary tightening cycles to combat rising inflation. While this tightening can counter inflation, it can also result in short-term barriers to economic growth and spending.

USDA is projecting lower exports of cotton, beef, and sorghum in FY 2023. But USDA is also projecting that these decreases will be partially offset by higher exports of soybeans and horticultural products. Cotton exports are projected to decrease by $1.8 billion due to drought-lowering export volumes. Beef exports are forecast down $1.1 billion due to tight U.S. supplies. Overall livestock, poultry, and dairy exports are projected at $41.1 billion, down $1.5 billion. Sorghum exports are forecast at $2.0 billion, down $700 million, on sharply lower supplies. Total grain and feed exports are forecast down $1.3 billion to $46.5 billion and wheat exports are forecast down $300 million, mostly due to an expected fall in prices. That said, soybean exports are forecast up $2.2 billion to a record $35.2 billion based on higher prices, and horticulture exports are projected to rise by $400 million to $39.5 billion as higher exports of fresh and processed fruits and vegetables more than offset a decline in tree nut exports. Exports to major destinations are essentially unchanged. U.S. agricultural exports to China are forecast at $36.0 billion, unchanged from FY 2022, and exports to Canada and Mexico are forecast at $28.5 billion each, also unchanged from FY 2022.

Figure 1. U.S. Agricultural Exports (Actual and Forecast): FY 2011 – FY 2023

Reference

U.S. Department of Agriculture (USDA). 2022a. Outlook for U.S. Agricultural Trade: August 2022. Situation and Outlook Report AES-121, Washington, D.C. https://www.ers.usda.gov/webdocs/outlooks/104622/aes-121.pdf?v=8728.2

U.S. Department of Agriculture (USDA). 2022b. Global Agricultural Trade System (GATS). Foreign Agricultural Service, Washington, D.C. https://apps.fas.usda.gov/GATS/default.aspx

Muhammad, Andrew. “USDA U.S. Agricultural Exports are Projected to Decrease $2.5 Billion in Fiscal Year 2023“. Southern Ag Today 2(37.4). September 8, 2022. Permalink

Last month (July 2022), the Foreign Agricultural Service of USDA led a trade mission to the Philippines that included representatives from nearly 30 agribusinesses and farm organizations and 10 state departments of agriculture. The primary purpose of the mission was to help expand agricultural trade, increase collaboration on key issues impacting agriculture in both countries, and strengthen Philippine food security. The trade mission highlights the importance of the Philippines for U.S. agriculture. In 2021, U.S. agricultural exports to the Philippines totaled $3.6 billion making it the 7^th largest foreign destination for U.S. agriculture. Most of these exports were from the Western United States ($2.5 billion in 2021) primarily comprised of wheat, dairy, and soybean meal. 

The Philippines is not as important for agricultural export sales in the U.S. South ($508 million in 2021) (See Table 1), ranking 31^st among destination markets for the region. However, for certain agricultural commodities, the Philippines is very important (USDA, 2022). The major agricultural exports to the Philippines originating from southern states are reported in Figure 1. In 2021, poultry and related products were the leading agricultural export at more than $140 million. This was a significant increase above 2020 during the height of the pandemic. The next leading exports, soybean meal and pork, were valued at $132 million and $59 million, respectively. For all these products, the Philippines was the 7^thlargest destination market for the U.S. South.

Table 1. U.S. agricultural exports to the Philippines, total and by region: 2018-2021

	2018	2019	2020	2021
	$ million	$ million	$ million	$ million
Total U.S.	$3,089.7	$3,004.2	$3,215.5	$3,554.3
U.S. Region
West	2,114.8	2,207.6	2,502.7	2,524.5
South	517.1	375.6	285.6	508.4
Midwest	385.8	351.5	357.2	437.7
Northwest	72.1	69.4	70.0	83.7

Figure 1. Top U.S. exports to the Philippines from the Southern U.S.

Although the Philippines is important for U.S. agricultural trade, there is no trade agreement between the two countries. While this trade mission was an important step in the right direction, MOUs and unofficial promises are not substitutes for official trade liberalization policy. The Philippines is a founding member of the Association of Southeast Asian Nations (ASEAN), which is a political and economic union of 10 member states in Southeast Asia that includes important U.S. trading partners like Vietnam, Indonesia, Singapore, and Thailand. Other than Singapore, the U.S. has no trade agreements with ASEAN countries. This is important because non-tariff barriers (NTM’s) in ASEAN have progressed slowly. NTMs on agri-food trade in ASEAN’s priority sectors rose from 434 measures in 2000 to 1,192 measures in 2010 and to 2,181 measures in 2019, with sanitary and phytosanitary (SPS) measures making up the largest component of NTMs, accounting for about half of total measures (Suvannaphakdy and Kevin, 2021). Officially addressing these NTM’s could increase U.S. and regional agricultural exports to ASEAN countries including the Philippines.

References

Suvannaphakdy, Sithanonxay and Neo Guo Wei Kevin. 2021. “Why ASEAN Needs to Reduce Its Non-Tariff Measures on Agri-Food Imports.” The Diplomat (July 02, 2021).

US. Department of Agriculture. 2022. Global Agricultural Trade System (GATS). Foreign Agricultural Service, Washington, DC.

---

Muhammad, Andrew. “How important is the Philippines for U.S Agricultural Trade?” Southern Ag Today 2(33.4). August 11, 2022. Permalink

In 2021, beef and beef products were the third highest exports for the U.S. ($10.6 bill.), behind soybeans ($27.4 bill.) and corn ($18.7 bill.) (USDA, 2022a). A key trading partner for the U.S. beef sector is Japan ($2.4 bill. in 2021), which was the leading foreign market for U.S. beef by volume. Through existing trade agreements (e.g., U.S.-Japan Trade Agreement [USJTA], Comprehensive and Progressive Agreement for Trans-Pacific Partnership [CPTPP]), the U.S. and major competitors like Australia face lower beef tariffs in Japan relative to the Most Favored Nation (MFN) rate of 38.5%. The tariff rate for the U.S. and Australian beef in Japan (excluding offal and processed products) is currently 24.1% and is continually declining to 9% by 2033. However, both USJTA and CPTPP allow the Japanese government to increase tariffs on beef products when imports from the U.S. or CPTPP countries exceed a certain volume during a specified period. This specified volume is often referred to as a safeguard. In general, safeguard measures are used to limit excessive import growth by allowing governments to increase tariffs on a product when imports exceed a certain level during a specified period.

U.S. beef faced a particularly restrictive safeguard in Japan of 242,000 metric tons (MT) when USJTA was enforced in 2020 and in 2021 (Japanese fiscal years: April-March). Japan’s beef safeguard for CPTPP countries was 625,400 MT during this period. The CPTPP safeguard was predominantly applied to Australian beef given Japan’s limited beef imports from other CPTPP countries, and unlike the U.S. safeguard, significantly higher than actual imports from all non-U.S. countries, let alone Australia (See Figure 1). This safeguard difference put U.S. beef at a significant disadvantage relative to Australian beef in the Japanese market because U.S. exports to Japan averaged more than 245,000 MT per year between 2017–2021. Thus, it was no surprise that the safeguard was triggered after the first year of USJTA’s enforcement, leading Japan to raise tariffs on U.S. beef to 38.5% for one month. Consequently, the U.S. government was able to negotiate a new three-trigger safeguard mechanism for U.S. beef in Japan this year. Moving forward, the Japanese government can increase tariffs on U.S. beef only if all the following occur: 1) Imports of U.S. beef exceed the USJTA beef safeguard; 2) The total volume of beef from the U.S. and original CPTPP countries exceed the CPTPP beef safeguard; and 3) imports of U.S. beef exceed imports from the previous year (USDA 2022b). The most important aspect of this change is that the U.S. and Australia are now essentially sharing the CPTPP safeguard. That is, even if Japan’s imports of U.S. beef increase and exceed the USJTA 2022 safeguard (246,900 MT), the Japanese government can raise tariffs on U.S. beef only if total beef imports from the U.S. and CPTPP countries exceed 637,200 MT (CPTPP safeguard for 2022), which is not likely to occur.

Figure 1. Japan’s Beef Imports (2017 –2021) and Respective CPTPP and USJTA Safeguard Triggers for 2022

References

Muhammad, A., Griffith, A., Martinez, C., and Thompson, J. (2021). Safeguard Measures and US Beef Exports to Japan. UT Extension Publication W1023. https://ageconsearch.umn.edu/record/313523

Trade Data Monitor® (2022). https://www.tradedatamonitor.com/

U.S. Department of Agriculture (USDA), Foreign Agricultural Service (2022a). Global Agricultural Trade System. https://apps.fas.usda.gov/gats/default.aspx

U.S. Department of Agriculture (USDA), Foreign Agricultural Service (2022b). U.S., Japan Reach Deal on Beef Tariff Safeguard. FAS Press Release. https://www.fas.usda.gov/newsroom/us-japan-reach-deal-beef-tariff-safeguard

---

Muhammad, Andrew, and Charley Martinez. “Understanding the New Safeguard Policy for U.S. Beef in Japan.” Southern Ag Today 2(27.4). June 30, 2022. Permalink

The Foreign Agricultural Service (FAS) of USDA sponsors international trade missions (to as many as six countries per year), opening doors for U.S. exporters and giving them the opportunity to forge relationships with potential customers, gather market intelligence, and generate sales in foreign markets. Since the pandemic, all trade missions have been canceled or postponed. Last week (February 15, 2022), FAS launched its first trade mission since November 2019 to the United Arab Emirates (U.A.E.). The delegation to the U.A.E. included nearly 40 representatives from agribusinesses, farm organizations, and state departments of agriculture interested in exploring export opportunities across the Middle East. Both the FAS Administrator, Daniel Whitley, and Secretary of Agriculture, Tom Vilsack were a part of the delegation kicking off the first USDA trade mission in over two years.

With annual agricultural exports averaging more than $1.2 billion during the last five years, the U.S. is the UAE’s fourth-largest supplier of food and farm products and is poised for further export growth according to USDA. How important is the U.A.E. to U.S. exports, particularly exports from the South? In 2021, agricultural exports from the Southern region to the U.A.E. were $357 million, which was an increase of nearly 50% when compared to the previous year (Table 1). Although this is relatively low when compared to countries like China (China purchased $15 billion in agricultural exports from the U.S. South in 2021), the U.A.E. was the South’s 41^st largest market out of more than 200 countries (USDA-FAS, 2022). Interestingly, the South’s leading agricultural export to the U.A.E. in 2021 was distilled spirits ($74 million), mostly due to exports of spirits from distilled grapes (e.g., brandy) from Texas and whiskey from Tennessee. Other leading exports in 2021 included poultry products ($47 million), soups and other prepared foods ($26 million), corn ($24 million), and dairy products ($ 24 million). See Figure 1 for the top-15 exports from the U.S. South to the U.A.E. 

U.S. Department of Agriculture, Foreign Agricultural Service (USDA-FAS) (2022). Global Agricultural Trade System. https://apps.fas.usda.gov/gats/default.aspx

Table 1. U.S. and Regional Agricultural Exports to the United Arab Emirates (U.A.E): 2019-2021

	2019	2020	2021	% Growth(2021-20)
	Export Value ($ million)
United States	$1,309	$970	$1,201	23.8%
Regions
Western	$707	$513	$564	9.9%
Southern	332	241	357	48.1%
Northeast	168	131	163	24.4%
Midwest	101	84	116	38.1%

Figure 1. Top-15 Exports from the Southern U.S. to the United Arab Emirates (U.A.E): 2021 

Muhammad, Andrew. “United Arab Emirates Shows Promise for U.S. Agricultural Exports According to USDA“. Southern Ag Today 2(9.4). February 24, 2022. Permalink

Last November, I wrote an article for Southern Ag Today about the spike in fertilizer prices. Since that time, import prices have continued to rise. As mentioned in the previous article, U.S. fertilizer imports have averaged nearly $6 billion over the last five years (around 25 million metric tons), accounting for a significant share of total U.S. fertilizer use (USDA-ERS, 2019). Additionally, the global fertilizer market had already been tightening before plants were forced to cut production given the rise in the cost of natural gas, a key feedstock (Larkin, 2021). Given the continued rise in U.S. fertilizer prices, a more detailed look at imports could help explain why the price of some fertilizers have increased more than others.

In 2020, the U.S. imported about $6.5 billion in fertilizer. That year, the top imports included potassium chloride ($2.7 billion), urea ($1.3 billion), monoammonium phosphate ($590 million), urea-ammonium ($400 million), and diammonium phosphate ($400 million). In January 2020, import prices ranged from as low as $130 per metric ton (MT) for urea-ammonium to about $267/MT for and diammonium phosphate. In 2021, diammonium phosphate increased to over $1000/MT and monoammonium phosphate increased to over $700/MT; urea increased to over $500/MT. Interestingly, the price of imported diammonium phosphate fell in November 2021 to $625/MT, which was a significant decline from the $1,008/MT high the previous month. Other trends, however, suggest that fertilizer import prices will continue to increase.

U.S. Fertilizer Import Prices Significantly Higher in 2021 Due to Global Supply and Demand Issues

References

Larkin, N. (October 15, 2021) Supply Lines Fertilizer Crisis Piles More Pressure on World’s Future Food Supply. Bloomberg. https://www.bloomberg.com/news/newsletters/2021-10-15/supply-chain-latest-warnings-mount-over-fertilizer-crisis

U.S. Department of Agriculture, Economic Research Service (USDA-ERS) (2019). Fertilizer Use and Price. https://www.ers.usda.gov/data-products/fertilizer-use-and-price.aspx  

U.S. Department of Agriculture, Foreign Agricultural Service (USDA-FAS) (2022). Global Agricultural Trade System. GATSFertilizer Use and Price. https://apps.fas.usda.gov/gats/default.aspx

---

Muhammad, Andrew. “U.S. Imports and the Continued Rise in Fertilizer Prices.” Southern Ag Today 2(5.4). January 27, 2022. Permalink