Author: Luis Ribera

The U.S. has been the top corn exporter for a long time averaging around 45 percent of the world corn exports since 2000 with a high of 67 percent in 2005 (Figure 1).  The one exception since the turn of the century was in 2012; the most severe drought since the 1950s reduced corn production by over 13 percent in the largest producing states.  On the other hand, Brazil has increased its corn exports rapidly through the years securing the number two spot.  Brazil’s participation in the corn export market is quite remarkable. In 2000, corn exports from Brazil accounted for only 8.2 percent of the world total and reached its lowest volume of exports in 2004 with less than one percent. Brazil bounced back after claiming the top spot in 2012 and challenged the United States.  Currently, Brazil exports reached 47 million metric tons compared to 48.9 million metric tons for the United States, accounting for 26.4 and 27.4 percent of total world corn exports, respectively. 

The top world corn importers are EU, China, Mexico, Japan, and South Korea accounting for 47.2 percent (Figure 2).  Similar to Brazil in the exporting market, China’s rise as a major corn importer is remarkable.  China had nearly zero corn imports from 2000 to 2008, then gradually increased its share reaching around five percent in 2011, 2014, and 2019, and finally exploding as a top market for corn in 2020 and 2021.  Currently, China occupies the number two spot between the EU and Mexico.  U.S. corn exports to China earlier this month were around 70 percent shorter than at the same point in the previous two years.  On the other hand, Brazil corn shipments to China last month reached over one million metric tons and is on track to repeat the same amount this month.  Although Brazil exports to China seem to be coming at the expense of the United States, China’s continued purchases are a good sign for the world corn market.

Figure 1. Major World Exporters of Corn, MY 2012/13 – MY 2022/23

Figure 2. Major World Importers of Corn, MY 2012/13 – MY 2022/23

Author: Luis A. Ribera

Professor and Director

Center for North American Studies

Texas A&M University

---

Ribera, Luis. “Brazil Challenging U.S. Corn Export Top Spot.” Southern Ag Today 3(4.4). January 26, 2023. Permalink

Recently the importance of agricultural trade for the United States was discussed which accounts for over one-third of U.S. gross farm income.  However, the benefits of trade freedom or having less trade barriers go well beyond a specific industry or country as seen in the graph below.  Countries are divided into three trade freedom groups, lowest, middle, and highest.  The areas compared for each trade freedom group are higher average per capita national income, food security, political stability along with violence and terrorism, and the environment. Countries with more trade freedom have higher average per capita national income, $28,947, compared to $8,513 and $3,769 for the middle and lowest trade freedom groups, respectively.  Moreover, countries with higher trade freedom scored higher in terms of food security.  This is an interesting point as some people believe that in order to have food security most of the food must be produced domestically, which is not necessarily the case.  Countries should produce agricultural products in which they have comparative and competitive advantages and import the ones that they do not or cannot produce them year-round.

Countries with higher trade freedom experience more political stability and less violence and terrorism. Something very important for law-abiding citizens that just want a peaceful life for themselves and their families. Finally, countries with more trade freedom also have healthier environments and less polluted ecosystems.  As in the area of food security, trade freedom allows countries to be more efficient in the use of their resources by producing those products that they are competitive and import the rest.

Trade is very important to production agriculture in the United States. Over the last decade, 2011 to 2020, agricultural exports have accounted for over one-third of U.S. gross farm income, 33.7 percent (USDA ERS and FAS).  U.S. gross farm income ranged from $399.4 billion in 2016 to $470.3 billion in 2014 while U.S. agricultural exports ranged from $137.2 to $154.5 billion in 2015 and 2014 respectively. Total agricultural exports reached a record in 2021 at $177 billion, but gross farm income data for 2021 is not out yet.  Moreover, in terms of volume, U.S agriculture exports over 20 percent of its production.  However, for some commodities that number is considerably higher.  In 2021, 83.6 percent of the U.Ss cotton crop was exported as well as 64.8 percent of U.S. sorghum crop (Table 1).  Soybeans, Wheat, and Rice producers also depend on exports for close to half of their production.  Also, the top five crops in Table 1 are very important crops in the South.

Table 1. U.S. Agricultural Exports as Percentage of Production, 2021

Commodity	Percentage of Production Exported
Cotton	83.6%
Sorghum	64.8%
Soybeans	48.7%
Wheat	48.6%
Rice	43.5%
Pork	25.4%
Poultry	16.5%
Corn	16.2%
Beef	12.3%

U.S. consumers also benefit from agricultural trade as they have year-round supply of food products that either cannot be produced domestically or are highly seasonal such as fruits and vegetables.  Virtually all limes and bananas consumed in the U.S. are imported and over 95 percent of the coffee consumed is not produced domestically (Table 2).  Orange juice and tomatoes are produced in the U.S. commercially, however, U.S. consumers depend heavily on imports for year- round supply of these products.

Table 2. U.S. Agricultural Imports as a Share of Domestic Consumption, 2021

Commodity	Percentage of Consumer Expenditures
Limes	99.9%
Bananas	99.9%
Coffee	95.1%
Orange Juice	57.8%
Tomatoes	41.2%
Beef	12.5%
Pork	7.0%

Regardless of where the agricultural products are produced, domestically or overseas, all U.S. consumers benefit.  Table 3 shows the ranking of the top 10 countries in terms of lowest to highest percentage of disposable income spent on food at home and does not include eating out. U.S. consumers spend on average 7.1 percent of their disposable income on food which makes it the lowest out of 104 countries where data is available.

Table 3. Percent of Consumer Expenditures Spent on Food Consumed at Home, 2020.

	Country/Territory	Share of Consumer Expenditures
1	USA	7.1%
2	Singapore	7.9%
3	United Kingdom	9.4%
4	Austria	9.7%
5	Switzerland	10.2%
6	Ireland	10.3%
7	Canada	10.6%
8	Australia	10.8%
9	South Korea	11.6%
10	Germany	11.7%

Ribera, Luis. “Importance of Agricultural Trade for the U.S.“. Southern Ag Today 2(35.4). August 25, 2022. Permalink

The term inflation is commonly used to describe a general increase of prices.  However, back in the mid-1800s where the term started to emerge in the literature, it was not in reference to something that happens to prices, but as something that happens to a paper currency.  Back in those days “bank notes,” a private paper currency redeemable for a specific amount of metal, were becoming widely used. At times, banks did not have enough gold or silver to satisfy all of their claims, therefore, they “inflated” the number of bank notes in relation to the amount of metal they had.  Therefore, inflation was the fall in value of paper currency or money due to an excessive issuance of paper currency or money.  From March 2020 to February of 2022 the money supply in the US increased by 41.2 percent, or 20.6 percent per year, while average GDP growth over the same period of time was 3.7 percent (FRED, 2022).  As a reference point, money supply over the last decade had increased an average 8.2 percent per year.

On the other hand, rapid changes in commodity prices are very common in agriculture and usually is due to supply shifts.  Good weather, improved technology and political stability are some variables that shift supply to the right causing an increase in supply and a decrease in prices (Graph 1).  On the other hand, bad weather, increase in input prices and political instability or war are variables that shift supply to the left causing a decrease in supply and an increase in prices (Graph 2).  The Russia and Ukraine war has caused a supply shift to the left in many commodities such as wheat, corn, fertilizer, and oil, given that these two countries are major producers.  Therefore, as quantity supplied of those commodities decreased, prices increased.  However, these increased prices caused producers of those commodities around the world to react and produce more and now prices are on a downward trend.  Also, demand for those commodities decreased contributing to the decrease in prices.  These supply shifts happen very often in agricultural commodities without causing inflation to spike.  In fact, Asian economies are experiencing normal levels of inflation as seen in the chart by The Economist.

Dr. Milton Friedman, winner of the 1976 Nobel Prize in Economic Sciences, stated back in 1963 that “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”  Dr. Friedman was right then and still is now.

Bryan, Michael F., 1997. “On the Origin and Evolution of the Word Inflation,” Federal Reserve Bank of Cleveland, Economic Commentary, 10.15.1997.

Federal Reserve Economic Data.  https://fred.stlouisfed.org. Accessed July 23, 2022.

Ribera, Luis. “Difference Between Inflation and Changes in Commodity Prices“. Southern Ag Today 2(31.4). July 28, 2022. Permalink

U.S. agricultural exports are projected to reach a record of $183.5 billion in 2022, up $34.4 billion from 2020 and $6.5 higher than 2021. This increase is primarily driven by higher exports of most commodity groups with oilseeds and products leading the way (ERS-FAS/USDA).  Overall good commodity prices are the main reason for this record-setting value of exports with soybean exports reaching $31.3 billion. Overall grain and feed exports are projected to reach $42.9 billion led by higher wheat as well as feed and fodder forecasts.  Horticulture product exports reaching a record of $38.5 billion is partly driven by tree nut export projection while cotton reaching its second-highest level at $8 billion. Finally, livestock poultry and dairy exports are forecast at a record $39.2 billion, with gains in beef and dairy more than offsetting declines in pork.  Mexico is forecast to overtake Canada as the second-largest U.S. agricultural market with a projection of $27 billion, while Canada is projected at $26 billion.  China is expected to remain the largest market with a forecast of $36 billion.

 U.S. agricultural imports in 2022 are forecasted at $172.5 billion, up $25.8 billion from 2020 and $1.4 billion higher than 2021 due to expected increases in livestock and beef products, horticultural products and the new “Agricultural Products” definition and in this case distilled spirits. The U.S. agricultural trade surplus is expected to increase to $11 billion in 2022. Recent global events, mainly the Russia-Ukraine war could have significant impacts to these forecasts.

Ribera, Luis. “U.S. Agricultural Trade with Plenty of Uncertainties but Expected to Hit Record Numbers in 2022“. Southern Ag Today 2(13.4). March 24, 2022. Permalink