Category: Trade

The coronavirus pandemic had significant consequences for the U.S. economy, prompting the federal government to help households through stimulus payments. Coupled with deferred consumer spending, these payments created additional demand for durable goods, satisfied by a considerable expansion of imports from Asia. At the same time, U.S. ports suffer from infrastructure constraints, resulting in an unprecedented supply chain bottleneck in Fall 2021. In addition, because of increasing freight rates from Asia to the U.S., it became more lucrative for shipping companies to export empty containers instead of filling them with agricultural products. This development had adverse consequences for U.S. containerized agricultural exports from Southern ports.

Figure 1 shows estimated containerized agricultural export losses from May 2021 to January 2022 and across product groups for Southern ports. The counterfactual export losses for Southern ports were comparably low between June and August 2021, amounting to an average of $94 million per month. However, the adverse impact tripled to $343 million in September 2021, and the next three months saw a further increase in export losses. Although a slight decrease is observable in December 2021 and January 2022, the export losses remained elevated at $490 million per month.

The estimated export losses vary widely across agricultural product groups. Panel (B) shows that containerized cereals and dairy exports were above the counterfactual level, experiencing trade gains of $258 and $48 million, respectively. In contrast, meat products saw the most extensive exports losses, amounting to $640 million between May 2021 and January 2022. Containerized animal food exports trailed closely behind, experiencing export losses of about $400 million. Fat and oil products were also disrupted, recording a reduction in containerized trade by $310 million, followed by oilseeds ($282 million) and beverage products ($207 million). Comparatively, vegetables and fruit & nuts saw more minor trade destruction, down about $147 million in total.

Our counterfactual estimates show that Southern agricultural exporters faced considerable difficulties due to container shipping disruptions in 2021. Although U.S. policymakers spearheaded several initiatives to resolve port congestion and container shortages, our estimates show that these initiatives failed to ease supply chain disruptions in the short run. To reduce port congestion, the Biden administration decided in November 2021 to extend the operation hours of U.S. ports. In addition, the Bipartisan Infrastructure Deal was passed in the same month, promising to expand port infrastructure, which could benefit U.S. agricultural exporters, but these investments will take time to materialize.

Figure 1. Agricultural Export Losses for Southern ports between May 2021 and January 2022

(A) Containerized Agricultural Export Losses by Month

(B) Containerized Export Losses

Note. Estimates based on trade data and empirical approach by Steinbach (2022).

See: https://doi.org/10.1016/j.econlet.2022.110392

*Sandro Steinbach, Corresponding Author, Agricultural and Resource Economics, University of Connecticut, phone: 860-486-2836, email: sandro.steinbach@uconn.edu; Xiting Zhuang, Agricultural and Resource Economics, University of Connecticut, email: xiting.zhuang@uconn.edu. This work was supported by the National Institute of Food and Agriculture through the Agriculture and Food Research Initiative Award 2019-67023-29343. Any opinions, findings, conclusions, or recommendations expressed in this paper are those of the authors and do not necessarily reflect the views of the United States Department of Agriculture. We are thankful to seminar participants of the 2022 USDA ERS Brownbag Seminar for comments on an earlier version of this paper.

Steinbach, Sandro, and Xiting Zhuang. “Shipping Container Disruptions Cause Considerable Export Losses for Southern Ports.” Southern Ag Today 2(17.4). April 21, 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

The Russian invasion of Ukraine has impacted financial and energy markets, as well as agricultural markets, increasing price volatility for major commodities.  Russia and Ukraine are not major markets for US agricultural exports, ranking 56^th and 80^th, respectively.  Before 2014, when Russia invaded Crimea, US exports of agricultural products ranged between $1.2 to $1.7 billion annually.  Afterwards, US agricultural exports to Russia have been around $250 million annually, with animal products (e.g., beef, poultry) taking the largest hit (USDA, 2022).  Moreover, neither Russia nor Ukraine are major exporters of agricultural products to the US; the US ranks 55^th and 53^rd, respectively.  That said, both Russia and Ukraine are major players in the international wheat and corn markets.  In 2020, Russia was the largest wheat exporter reaching almost $8 billion, while Ukraine was fifth with almost $3.6 billion in wheat exports.  Moreover, Ukraine is the fourth largest corn exporter reaching almost $5 billion, while Russia is the 11^th with $400 million in 2020 (UN Comtrade, 2022).  Since Russia and Ukraine’s marketing year ends at the end of May, the impacts of the Russian invasion on their wheat and corn exports this marketing year could be minimal. On the other hand, it is unknown the extent of infrastructure damage for hauling and shipping, or the impact of shipping restrictions in the Black Sea that could slow down or increase the cost of trade.  Finally, Russia accounts for 14 percent of the world’s nitrogenous fertilizer exports and is the leading supplier of urea to the US. Additionally, Russia and Belarus accounts for about 20 percent of US potash imports (USDA, 2022). The sanctions again Russia and Belarus (for supporting the Russian invasion) could hurt US agricultural producers as they are already experiencing record high fertilizer prices.

UN Comtrade (2022). https://comtrade.un.org/
U.S. Department of Agriculture (USDA) (2022). Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx
 

Figure 1. Top Wheat Exporting Countries: 2020

Figure 2. Top Corn Exporting Countries: 2020

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Ribera, Luis, and Andrew Muhammad. “Trade Implications of Russia’s Invasion of Ukraine.” Southern Ag Today 2(11.4). March 10, 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