agriculture exports
Current farm policy is based on an export-centric narrative
(March 26, 2010) - Every so often it is a good idea to do a reality check: is what we think to be true actually true or is it an unverified belief? After all, it is not uncommon for us mortals to have an expectation of "what should be" or "what we think to be the situation" that, when we look it up, turns out to not be true.
Of course, because of the nature of the issues, some things in life will always remain matters of belief. Religion and political philosophy come readily to mind in that regard. But there are other issues in which time can sort out substantiated from unsubstantiated beliefs. Consider exports.
In recent columns, we have been analyzing the performance of major-crop exports over the last thirty years. This thirty-year time period is of particular relevance because it coincides with a movement to, and dominance of, a farm policy direction based on an export-centric narrative.
What is this export-centric narrative? It consists of two elements. The first is that US export demand for crops can serve as a price shock absorber. In economist speak, that means that the price elasticity of US crop export demand is elastic or relatively elastic. That means that if the price of grains drop for whatever reason, the quantity exported will increase furiously compared to the degree of price decline.
World less dependent on US crop exports in 2009 than in 1980
(March 19, 2010) - In our last three columns we have looked at the production of corn, wheat, and soybeans and the exports of corn, wheat, and soybean complex. This column looks at the sum of the three crops to give a broader picture of agriculture and particularly of the crops that account for the utilization of the majority of the acres of US cropland.
Between 1980 and 2009, the world production of corn, wheat, and soybeans grew by 86 percent, increasing from 926 million metric tons to 1.73 billion metric tons (Fig. 1 solid red line). During that same period, the world population grew from 4.5 billion people to 6.8 billion, an increase of 51 percent. On average, the world production of the three crops grew at a rate 40 percent faster than population.
World exports of corn, wheat and soybean complex grew from 218 million metric tons to 362 million metric tons during the 30 year period beginning in 1980 (Fig. 1 dashed blue line), an increase of 66 percent as nations relied less and less on imports of these crops.
Figure 1. World Production of the total of corn, wheat and soybeans and exports of the total of corn, wheat, and soybean complex, 1980-2009. Data Source: USDA.
Future US soybean exports will be largely determined by China and Brazil
(March 12, 2010) - Telling the story of soybean exports over the last 30 years requires a little more work than for corn and wheat. The primary products of soybeans-soybean meal and soybean oil-play a much larger role in exports than do the corresponding products of corn and wheat. As a result, the United States Department of Agriculture (USDA) tracks production and utilization data for soybean meal and soybean oil separately from unprocessed beans.
To get a picture of the scope of world trade that results from the raising of soybeans, we have added the meal and oil numbers to those of unprocessed soybeans to create a variable known as soybean complex. This is particularly important because exporters and importers trade in various proportions of the three products. As a result, looking at soybeans alone gives an incomplete picture of the impact of trade on the producers of soybeans.
Since 1980 US wheat exports down by half while competitors’ exports double
(March 5, 2010) - We continue our look at agricultural exports. Last week corn exports were the focus; this week we look at wheat.
Historically, exports have dominated the US wheat market. For the 32 years from 1960 to 1992, US wheat exports exceeded domestic consumption in all but 7 years. But now it's the other way around.
From 1993 to 2009, domestic demand exceeded exports in 14 of those 16 years. This happened not because domestic wheat consumption has trended upward, but because US exports have declined over time. While US wheat exports have dropped markedly in terms of proportions of utilization and of production, those trends do not characterize the worldwide wheat market.
Since 1980, the percent of world wheat production entering the export/import market has been flat to down slightly (Fig. 1). During the 30-year period from 1980 to 2009, the production of wheat around the world grew by 52 percent while wheat exports grew by 36 percent.
Figure 1. World wheat exports as a percent of world wheat production, 1980-2009. Data source: USDA.