U.S. AGRICULTURAL TRADE UPDATE August 24, 1999 August 1999, ERS-FAU-32 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- U.S. AGRICULTURAL TRADE UPDATE is published monthly by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. Subscriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock # SUB-FAT-4030, $52/year. ERS-NASS accepts MasterCard and Visa. --------------------------------------------------------------------------- Summary--U.S. agricultural exports for the first three-fourths of fiscal 1999 show little change from May 1999. Cumulative 1999 exports of $37.5 billion are 12 percent below the first nine months of 1998, while the $28.7 billion of imports remain 1 percent above 1998. The October-June 1999 export surplus equalled $8.8 billion, but remains 38 percent less than in 1998, the same as in the change through May 1999. June 1999 exports and imports both rose over May 1999. June exports increased by 4 percent to $3.8 billion, twice the 2 percent month-to-month gain in imports to $3.3 billion. But June exports still lag far behind June 1998. Exports--At $13.8 billion, the cumulative value of bulk commodity exports is 16 percent less than the same period last year. Most of this decline is due to low prices for cotton, soybeans, and wheat. So far, cotton and soybeans have fallen substantially in both quantity and value. But, the quantity of wheat exported exceeds 1998. And, corn exports have increased in quantity and value from 1998. At $3.9 billion and 18.6 million tons, the value of U.S. soybean exports in the first nine months of 1999 is off 30 percent, while the quantity dropped 12 percent. Larger crops in Brazil and Argentina not only reduced prices and increased competition, but also reduced these countries' demand for U.S. soybean imports, which had been a factor last year. Cotton exports show similarly large declines. Cumulative 1999 cotton exports are off 48 percent in value to just $1.1 billion. Export quantity also dropped, to just 725,500 tons, a decline of 43 percent this year, mainly reflecting much smaller 1998 U.S. supplies. Exports of wheat, while off 6 percent in value to $2.6 billion, are up 11 percent in quantity to 20.4 million tons. Much of the gain in quantity occurred in May and June 1999, as exports rose with the shipment of aid to Russia. June 1999 exports equalled 2.5 million tons, exceeding the 2.3 million shipped in May, and well over the 1.8 million tons shipped in each month in May and June 1998. Corn has the rosiest export picture of the bulk commodities. U.S.-1999 exports equal $3.7 billion and 37.6 million tons, up 14 and 35 percent from the first three-fourths of 1998. The United States' success in 1999 corn shipments reflects a reduction in export competition from 1998. High-value product (HVP) exports are down 9 percent to $23.7 billion in 1999 compared with 1998. This decrease reflects reduced demand brought on by lower foreign income growth after last year's economic recessions. However, at $2.6 billion, June 1999 HVP exports show the first gain since March 1999, but are still lower than in 1998. The $3.3 billion of vegetable exports remain the only HVP showing gains in 1999, up just 1 percent. All other HVP exports are still off year-to-year, with the largest declines in hides and skins (-23%) and meat and poultry (-13%), two products, which are important exports to Asia. Imports--So far in 1999, imports are just barely above 1998, having crept up 1.2 percent in the year-to-date. Gains still are largely in competitive import products, such as vegetables and preparations (+6%), fruits and preparations (+29%), red meat and products (+13%), wine (+13%), malt beverages (+15%), and dairy products (+20%). Vegetables remain the largest import at $3.6 billion; fruits and red meats are second and third, at $2.3 billion each in the year-to-date. [Carol Whitton, CWhitton@econ.ag.gov or 202-694-5287] Import Share of U.S. Food Consumption Records Steady Gains --The import share of major foods has generally been on the rise over the past two decades. Foods with increasing import shares include fresh fruits and vegetables, vegetables for freezing, nuts and preparations, wheat, rice, fats and oils, honey and edible syrups, and fish and shellfish. However, import shares of other foods are flat or declining, including: beef, pork, poultry, dairy products and cheese, fruit juices, corn, and sugar. While exchange rates may raise or lower import shares in certain years, on average, long-term change in import shares responds more closely to growth in per capita income. Higher-value food items with relatively low domestic production are usually more responsive to income than to prices. In part, this reflects food's declining share in consumption as income levels rise. (See special article.) Next Update: September 24, 1999 Import Share of Food Consumption The import share of U.S. food consumption is the portion of food consumed domestically that is imported from foreign countries. Thus, the remaining portion of food consumed is produced in the United States. Over the past two decades, U.S. consumers have, on average, been increasing their dependence on imported foods as seen in the table on the next page. From relatively low levels in 1975 and 1980, import shares of most of the major food items that are largely produced in the United States have increased in the 1980s and 1990s. With the exception of food not normally produced domestically, the proportion of imports in food consumption over the long-run reflects supply factors as well as consumer demand. Import demand is determined by various factors, including relative prices, tastes, and income growth. As demand factors change, supply sources and consumer preferences shift accordingly. The continuous rise in import shares of fruits and vegetables is likely related to improved transportation and storage technology as well as consumers' interest in raising the nutrient content of their diets. Short-term, or year-to-year, changes in import shares are influenced by exchange rate movements, changes in trade policy, food safety concerns, weather effects, and other temporary developments. Structural effects on import shares include many long-term economic and non-economic determinants. The seasonal production of domestic fruits and vegetables, which are perishable, invite more imports during the off-seasons. The increasing diversity of the U.S. population correspondingly demands a greater variety of foods. Rising consumer income fuels the importation of high-value products, including fresh, exotic and specialty foods, and processed food. And open trade policies induce lower-cost producers in foreign countries to penetrate the large U.S. market. Data Description--Import share is total quantity imported divided by the quantity consumed. Thus, import share can rise if consumption falls relative to imports. Non-competitive imports (foods that have minimal U.S.-produced counterparts), like coffee, cocoa, and bananas were excluded from the table. Imports that are not directly consumed by humans, such as grains for feed, may overstate import share and were also excluded. The data sources are the U.S. Departments of Agriculture and Commerce. Animal Product Imports--The import share of red meat consumption rose to 7.1 percent in 1997 from 6.4 percent in 1996, as imports increased and per capita consumption continued to decline. Red meat imports from the European Union, Canada, and Mexico were significantly higher in 1997 than 1996 and 1995. Beef and lamb import shares increased, while pork remained flat. Among dairy products, cheese consumption inched up again in 1997, but imports fell. Thus, the import share of cheese declined. Horticultural Imports--As U.S. fresh fruit consumption continues to climb faster than domestic production, imports have risen. This is especially true for citrus fruits and melons. However, the import share of fruit juices fell to 28 percent in 1997 from 31 percent in 1996 as consumption rose and imports fell. Orange juice followed this pattern. Fruit juice imports from South America were down 8 percent in 1997 from 1996. Import share for nuts has been on a long-term steady rise as per capita imports increased along with consumer income. The value of imported nuts from Asia were sharply higher in 1997 after currency devaluations in the region. Per capita consumption of fresh vegetables continues to increase. Vegetable imports are rising at a faster pace than domestic vegetable production. Thus, the import share of fresh vegetables has risen over the past two decades. Despite a small decline in 1997, import shares of cucumbers, onions, potatoes, and tomatoes have been rising since 1975. The long-term trend for vegetables for freezing shows a steady increase, but vegetables for canning are up recently. Overall, vegetable imports from Canada and Europe expanded the most. Grain imports--Import shares of wheat and rice appear to be on a long-term upward trend, but not corn. Imports as well as consumption of wheat flour and rice have been expanding. While corn consumption per capita is also steadily up, imports fell sharply in 1997. Wheat imports from Canada jumped 78 percent and rice imports from Asia jumped 38 percent in 1997 from 1996. Robust U.S. economic growth and the strong dollar largely account for these gains. (Andy Jerardo, 202-694-5323, ajerardo@econ.ag.gov) END_OF_FILE