Some hot numbers in cold times

As the world stumbles toward a summer of financial winter, one part of the American economy continues its merry, five-year waltz: U.S. ag exports are forecast to reach $134.5 billion in Fiscal Year 2012.

Estimate

That estimate, released by the U.S. Department of Agriculture May 31, is $3.5 billion higher than USDA’s February guess and only $3 billion under FY 2011’s record-smashing foreign ag sales.

More impressive than these two years of high altitude flying is the steep uptrend they cap. U.S. ag exports in FY 2007 were a then-fabulous $82.2 billion. This year’s number is a staggering $50 billion-and-change higher. What a run.

Ag imports

Lost in the thin air, however, are higher ag imports. While their rocket ride has been slower — U.S. ag imports are up $37 billion between 2007 and 2012 — they are climbing, too, and will total an estimated $107.5 billion by Sept. 30, the end of the government’s fiscal year.

Still, given the economic jitters rattling Asia, Europe and North America now, any growth in ag exports is a minor miracle and an estimated growth of 3.4 percent, USDA’s number for 2012, is major miracle.

Exports

As usual, the big boys of the American exporting past are the (forecasted) big boys of today’s export market: 1 billion bu. of wheat for $8.5 billion, 1.7 billion bu. of corn for $12.5 billion, 1.3 billion bu. of soybeans for $18.1 billion.

Also, 2012 livestock, poultry and dairy exports will total $29.6 billion and, nearly as large, are sales of fresh and processed fruits, vegetables and nuts; they are forecast to hit $28.5 billion.

Charting where American food goes should draw you an economic map of the world today, right? (Link to the USDA report at http://www.farmandfoodfile.com.) I mean China on top, maybe Japan next, then Europe.

No, nope and not even close.

Canada?

America’s number one food customer in 2012 will be Canada, at $20 billion in buys, then Mexico at $19 billion, then (finally) China at $18.5 billion.

Regionally, however, Asia easily tops the list; 43 percent of all American food exports headed west to the East in 2011 whereas our NAFTA partners gobbled up 26.4 percent. That won’t change this year.

By comparison, the European Union’s 27 members had a small U.S. shopping cart last year. Just 7.4 percent of all American ag exports — valued at $10.2 billion — went east to the West.

Suggestions

The striking difference between those numbers carries two potent suggestions. First, the EU’s economic stumbles have sent few ripples across America’s fruited plain and, in all likelihood, won’t unless their money flu infects our bigger, better customers.

Second, those bigger, better customers are far bigger and far better and so should be our worries because they buy groceries, literally, by the boatload.

For example, Japan, with $14 billion food purchases in 2011 and 2012, was and will remain a far bigger U.S ag export market than all of Europe combined. China, while dropping its estimated U.S. food buys to $18.5 billion in 2012 from $19.9 billion last year, is still your dream customer — a billion mouths, rising incomes, a growing economy and expanding Western tastes.

Like Europe now, however, China could falter in the coming two years. Strong evidence suggests that one-half of the nation’s foreign currency reserves are being used to prop up the economy; much of it to build infrastructure — airports, roads, bridges — that have little purpose other than to underwrite continued consumer spending.

Never ending roads

Moreover, China’s biggest problem, political reform, awaits. I’ve heard it explained this way: China and its chief regional competitor, India, are two powerful cars roaring down flat, perfect four-lane highways at 200 mph. The road for India, because of its functioning democracy, never ends. The road for China, however, turns into a dirt walking path.

When?

As soon as the economy stops growing and China can’t buy enough food — from you — to feed its people.

About the Author

Alan Guebert was raised on an 800-acre, 100-cow southern Illinois dairy farm. After graduation from the University of Illinois in 1980, he served as a writer and editor at Professional Farmers of America, Successful Farming magazine and Farm Journal magazine. His syndicated agricultural column, The Farm and Food File, began in June, 1993, and now appears weekly in more than 70 publications throughout the U.S. and Canada. He and spouse Catherine, a social worker, have two adult children. farmandfoodfile.com More Stories by Alan Guebert

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