Category: Trade

The recent (May 2024) trade outlook report published by the Economic Research Service and Foreign Agricultural Service – agencies of the U.S. Department of Agriculture (USDA) – is projecting the highest agricultural trade deficit on record for fiscal year (FY) 2024 (October – September). The FY2024 forecast have U.S. agricultural exports at $170.5 billion, unchanged from the February forecasts, but imports at $202.5 billion, up from the previous forecast of $201.0 billion. If these projections hold true, the resulting trade deficit would be a record $32 billion. To put this in context, U.S. agricultural exports have far exceeded imports in past years. It is only in recent years that U.S. agricultural trade became more balanced. FY2023 was the first year the U.S. experience a significant agricultural trade deficit ($16.7 billion), which is half the projected deficit for FY2024 (Kaufman et al., 2024). Given concerns about the rising trade deficit in U.S. agricultural trade, we plan to discuss this issue in a series of articles focused on explaining recent export declines, rising imports, and the status of U.S. agricultural trade based on the most recent data in 2024. In this article, we explore the export side of the rising trade deficit.

Figure 1 shows U.S. agricultural exports in quantity terms and the unit value (reflecting average prices) from 2010 – 2023. Note that exports, measured in million metric tons (MMT), reached a record high of 230 MMT in 2021. The unit-value in 2021 was $769/MT, resulting in a total value of $177 billion. While exports decreased the following year to around 216 MMT, prices increased significantly that year resulting in record exports in value terms ($196 billion in 2022). Prices, on average, remained relatively steady in 2023, but there was a significant volume decline in 2023 to 190 MMT. The figure shows that exports volume has been trending downward for the last three years. While U.S. agricultural export volumes decreased by 17.5% from 2021 to 2023, total export value only fell by 1.4% over the same period due to significant higher prices in 2022 and 2023 (USDA, 2024). 

What is the reason for the decline in exports since peaking in 2021? Table 1 shows the percentage change in U.S. agricultural export volumes between 2021 and 2023 by major destination country or region. China was our leading agricultural export market in 2021, accounting for 26.4% of the total export volume that year. The next highest country, Mexico, only accounted for 17.4%. During the period 2021-2023, U.S. agricultural exports to China decreased by 30.9%. Other noted declines include exports to Southeast Asia/ASEAN (‑14.2%), Japan (‑26.6%), South Korea (‑34.6%), Taiwan (‑17.9%), and Guatemala (‑22.2%).

As far as product, U.S. corn exports to China fell 70% in 2023 when compared to 2021, down from record export levels. Exports of other coarse grains were down 34% and wheat was down 57% during this period. U.S. ethanol exports to China were down nearly 100% in 2023 when compared to 2021 (USDA, 2024). Although exports were also down in other countries (e.g., U.S. corn exports down by 72% in South Korea), declining exports to China explain the major share of the overall decline in U.S. agricultural exports in recent years.

Figure 1. U.S. Agricultural Export Volume and Unit-Value: 2010-2023

Table 1. Percentage Change in U.S. Agricultural Export Volumes by Major Destination Market

	% Change  2021-2023
World Total	-17.5%
China	-30.9%
Mexico	1.0%
ASEAN	-14.2%
Japan	-26.6%
Canada	-6.3%
EU-27	25.0%
Colombia	0.1%
South Korea	-34.6%
Taiwan	-17.9%
Guatemala	-22.2%
Source: U.S. Department of Agriculture (USDA, 2024).

For more information

Kaufman, James, Hui Jiang, Bart Kenner, Angelica Williams, and Adam Gerval. (2024). Outlook for U.S. Agricultural Trade: May 2024. Report AES-128. U.S. Department of Agriculture. https://www.ers.usda.gov/publications/pub-details/?pubid=109252

U.S. Department of Agriculture (USDA). 2024. Global Agricultural Trade System (GATS). Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

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Muhammad, Andrew, and Md Deluair Hossen. “Understanding the Growing U.S. Agricultural Trade Deficit: The Fall in Exports.” Southern Ag Today 4(26.4). June 27, 2024. Permalink

In 2019, China became the largest beef importing country in the world ($8.2 billion). By 2022, China imported a record $18.0 billion in beef and beef products. To provide some background, China’s imports were negligible over a decade ago, less than $150 million in 2010 and 2011. The remarkable growth in China’s beef imports since that time has benefited major exporting countries, most notably Brazil. However, U.S. exporters have also benefited, particularly since China lifted its ban on U.S. beef due to BSE concerns in 2016. China is now the third leading market for U.S. beef exports (See previous SAT article in 2023).

Figure 1 shows China’s beef imports since 2010 in terms of quantity and value and by exporting country. Since 2010, China’s beef imports have increased from 33 million metric tons to 2.8 billion metric tons by 2023, which is an increase of 8,000%. As the figure shows, Brazil accounts for the largest share of total imports (1.2 billion metric tons). Since 2019, U.S. beef exports to China increased from 10 million metric tons ($85 million) to 192 million metric tons ($1.8 billion) by 2022.In late May, China lifted bans on Australian beef companies raising questions about the competitiveness of U.S. beef in China moving forward. Recall that these bans were imposed during a period of rising tensions when Australia’s former Prime Minister called for an investigation into the first outbreak of COVID-19 in central China. Tensions between Australia and China began to ease in 2022 with the election of the new Prime Minister (Hoyle, 2024). The ease in tensions and the lifting of ban on Australian companies have resulted in increased imports from Australia in recent years. But what does the data show for U.S. beef? In 2023, U.S. beef exports to China decline from 192 to 166 million metric tons, while imports from Australia increased from 185 to 228 million metric tons. That said, Uruguay (decrease of 84 million metric tons) and New Zealand (decrease of 10 million metric tons) also experienced declines in the Chinese beef market in 2023, even as beef imports from Argentina, Brazil, and the Rest of World increased. Year-to-date (January-April) imports in 2024 suggests a different story. As of April 2024, China’s beef imports are down 18% when compared to imports during the same period in 2023. Beef imports from Australia were down 26% as of April 2024. However, imports of U.S. beef were up 7% as of April of this year. Only time will tell if these trends continue throughout the year.

Figure 1. China’s Beef Imports by Major Exporting Country: 2010-2023

References

Hoyle, R. (2024). “China Lifts Ban on Most Australian Beef Exporters, Australian Officials Say” Wall Street Journal(May 29, 2024).

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

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Muhammad, Andrew. “China lifts ban on Australian beef: Is there cause for concern in the U.S.?” Southern Ag Today 4(24.4). June 13, 2024. Permalink

In recent years, fresh fruit and vegetable production in the United States has been on the decline, U.S. production has decreased by 10 and 23.1 percent respectively since 2000. With declining domestic production, imports of fresh fruits and vegetables have grown substantially with some products only being available in the United States due to imports. Since 2020, a larger share of the total supply of fresh fruit in the United States was imported than grown domestically and has increased from 36.6 percent in 2000 to 54.8 percent in 2022 (Figure 1). Vegetable imports in 2022 were 29.3 percent of the total supply up from 9.5% in 2000. The value of imported fresh fruits and vegetables for 2022 was $18.23 billion. After including exports, the total volume of fresh fruits and vegetables available in the United States was 94.65 billion pounds, or 283.63 pounds per capita.

The United States has gone from being a net exporter of fresh produce in 1980 with 3.25 billion pounds to a net importer starting in 1998 with 1.88 billion pounds (Figure 2). Net trade of fresh produce, excluding bananas, for the United States during 2022 totaled 24.4 billion pounds of trade deficit and has been over 10 billion pounds since 2013. The United States was a net exporter of fresh fruits, excluding bananas, from 1980 to 2002, since then the United States net imports have grown considerably. During 1980 the United States trade surplus of fresh fruits, excluding bananas, totaled 3.11 billion pounds of exports. In 2022, the trade deficit of fresh fruits, excluding bananas, totals 10.4 billion pounds of imports. As for fresh vegetables, the United States has not had exports exceed imports since 1992. During 2022, imports of fresh vegetables were 13.9 billion pounds higher than exports and continue to grow. 

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Young, Landyn, Luis Ribera. “U.S. Fresh Fruit and Vegetable Supply.” Southern Ag Today 4(22.4). May 30, 2024. Permalink

Japan is one of the largest beef importing countries in the world and stands out among major destinations for the U.S. In 2023, U.S. beef exports totaled $10 billion, with nearly $2 billion going to the Japanese market. This was only surpassed by exports to South Korea ($2.1 billion). However, Japan has been the leading U.S. market until recent years (USDA, 2024). It was not long ago when U.S. beef was outright banned in Japan due to BSE concerns (2004-2006) and was still somewhat restricted even after the ban was lifted (Muhammad et al., 2016). However, since then, the U.S. has been regaining market share and is once again the leading supplier of imported beef in Japan. This article focuses on the success of U.S. beef in Japan, highlighting the competition between the U.S. and Australia. Japanese beef imports have been relatively split between the U.S. and Australian beef – together, both account for around 80% of Japan’s total imports. Interestingly, the U.S. and Australia have similar but competing trade agreements with Japan: the U.S.-Japan Trade Agreement (USJTA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and face near identical reductions in beef tariffs since January 2020.

Annual quantity shares for beef exporting countries in Japan (e.g., Australia, U.S.) are reported in Figure 1. Import quantities have not significantly changed since 2000, and recent highs in export values (e.g., $4.9 billion in 2022) were mostly due to relatively higher prices (Trade Data Monitor®, 2024). Since quantities have been relatively unchanging, the change in shares reported in the figure reflects substitutions across countries. Prior to the BSE ban in 2004-2006, U.S. beef accounted for more than 50% of Japanese beef imports but decreased to almost 0% during the BSE ban period. Since 2006, however, the U.S. beef share has steadily increased to around 40% by 2017, peaking at 44% in 2020 when the USJTA entered into force, while the share for Australia decreased from more than 80% in 2006 to 41% by 2020. It is important to note that the declining share for Australia starting in 2018 was also due to increased exports from countries other than the U.S.

In terms of value, the U.S. currently exports significantly more to Japan than Australia. For instance, in 2022, when U.S. beef exports reached a record high of $2.3 billion, Australia exported only $1.6 billion. Noted reasons for higher U.S. values include the following: relatively higher prices for grain-fed U.S. beef; the fact that the U.S. mostly exports brisket, plate, chuck, and round, whereas Australia mostly exports chuck, round, loin, and other cuts; and the U.S. dominates the beef offal market in Japan where chilled offal (internal organs and cheek meet) and frozen beef tongue sell anywhere from 50% to 100% more than the traditional muscle cuts and beef product (Trade Data Monitor®, 2024).

Figure 1. Quantity shares of Japanese beef imports by exporting country: 2000–2023

References

Muhammad, A., K.E.R. Heerman, A. Melton, and J. Dyck. 2016. Tariff Reforms and the Competitiveness of U.S. Beef in Japan. LDPM-259-01. Economic Research Service, U.S. Department of Agriculture. https://www.ers.usda.gov/publications/pub-details/?pubid=37650

U.S. Department of Agriculture (USDA). 2024. Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

Trade Data Monitor (2024). https://www.tradedatamonitor.com/

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Muhammad, Andrew. “Unpacking the Success of U.S. Beef in Japan.” Southern Ag Today 4(20.4). May 16, 2024. Permalink

Agricultural trade has certainly been a major topic among farmers and farm organizations recently amidst declining U.S. ag exports, a new era of ag trade deficits, and disappointment over trade policy. Dating back to colonial days, trade has been a major part of the Southern agricultural economy. Historically, the Southern region has produced, marketed, and shipped various unique southern commodities such as tobacco, rice, cotton and sugar, along with grains, livestock products, fruits, and vegetables to markets around the globe.  

How important is agricultural trade to various southern states today?  In reality, individual state or regional trade data are difficult to measure since agricultural production, processing, and trade can occur in multiple states and/or regions. For example, a calf born and backgrounded in a southern state, might be finished at a feed lot in the midwest, and proccessed/packaged for export in another state or region.  Which state/region gets credit for this export?

USDA’s Foreign Agricultural Service (FAS) relies on data from Census where U.S. ag exports by state or region are based on the final origin of movement of the product to the export market. Given a large volume of U.S. grain shipped out of New Orleans, the FAS methodology results in Louisana being the nation’s largest ag exporting state, despite the vast majority of these grains being produced in other states. Thus, FAS export data will generally understate the relative importance of international markets for inland states. Over the past five years (2019-2023), the FAS database ranks the Southern region as the leading ag exporting region with 38% of the value of U.S. agricultural exports, followed by the Western region (31%), Midwestern region (25%) and the Northeastern region (5%).  According to the FAS database, five of the eight largest U.S. agricultual ports by volume are located in the Southern region which accounted for 60% of U.S. ag export volume over the past five years, with New Orleans being the largest ag port accounting for 36% of U.S. ag export volume and 18% of U.S. ag export value.

Alternatively, USDA’s Economic Research Service (ERS) measures trade data by state based on the state’s share of production value (cash receipts). Using the ERS methodology, within the southern region Texas recorded the largest value of agricultural exports over the past five years, averaging $6.9 billion of ag exports annually (ranks 6^th nationally), followed by North Carolina ($3.9 billion), Arkansas (3.5 billion), Florida ($3.4 billion), Georgia ($3.1 billion) and Kentucky ($2.7 billion). Regionally, the ERS database ranks the Midwestern region as the largest exporting region with 48.1% of U.S. ag exports over the past five years, compared to only 23.2% for the Southern region, reflecting a large percentage of the U.S. agriculture initially produced in the Midwest, but exported out of other regions. 

What about the relative importance of agricultural trade? Adopting the ERS methodolgy, ag exports represents about 1/3 of ag cash receipts in the Southern region. Using this metric, Table 1 illustrates that over the past five years of ERS export data,, Louisiana is the most ag trade-dependent Southern U.S. state with ag exports accounting for nearly one half of the state’s ag cash receipts, followed by Tennessee, Florida, Kentucky, and Mississippi rounding out the top five.

Table 1: Ag Export Trade Dependency

Southern U.S. State	Ag Exports as a Percent of Ag Cash Receipts  (2018-2022)*	U.S. Rank
1.   Louisiana	49.0%	5
2.  Tennessee	44.6%	11
3.   Florida	42.8%	14
4 .  Kentucky	42.2%	16
5.   Mississippi	38.2%	22
6.   Arkansas	35.5%	25
7.   South Carolina	35.4%	26
8.   Virginia	32.6%	30
9.   Georgia	32.6%	31
10. Maryland	32.4%	32
11. North Carolina	31.7%	34
12. Texas	29.6%	37
13. Oklahoma	27.3%	41
14. Alabama	24.5%	46

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Snell, Will. “Trade’s Importance to Southern Agriculture.” Southern Ag Today 4(18.4). May 2, 2024. Permalink