Even without WTO free trade deal, U.S. ag export surplus evaporates


For nearly two years, U.S. farmers and ranchers watched as the second shoe grew bigger and bigger.
On Nov. 22, it officially dropped. According to USDA Economic Research Service estimates released that day, 2005 will be the first year in nearly 50 that America will not turn an agricultural trade surplus.
The dubious milestone was met with odd silence at USDA. Odd because throughout the fall presidential campaign, Secretary of Agriculture Ann Veneman talked herself hoarse each time some farm community in a swing state dedicated a new, USDA-sponsored street light.
Don’t kill the messenger. Now, as America is about to become a net food importer for the first time in generations, Veneman has no explanation of how Bush Administration economic and trade policies have taken American agriculture from a $13.6 billion trade surplus in 2001 to a flat line in four short years.
Who can blame her. Would you want to be the first secretary of the last 11 to report such death-in-the-family news?
The news is made worse by the speed in which ag imports overtook ag exports.
In August, ERS predicted a $2.5 billion ag trade surplus for 2005, the skinniest since 1972 but still a surplus.
The translation. Three months later, though, ERS lowered 2005 exports by $1.5 billion, raised imports by $1 billion (in a curious coincidence, both now are pegged at $56 billion) and the thin margin was gone.
In reporting the change, ERS chose language more suitable to politics than economics. Yes, 2005 ag imports will rise by $3.3 billion over 2004. “But, this 6 percent gain in import value,” it noted, “is less than half the 15 percent import pace in 2004 import value.”
Translation: While both of your shoes were on fire in 2004, only one will be on fire in 2005.
Faltering balance. Ironically, the very thing farmers have been told for years would be their savior, a cheaper dollar, is worsening the ag trade balance.
Despite the dollar now falling to new lows against most of the world’s major currencies, 2005 ag exports will be $6.3 billion less than in 2004.
Simultaneously, the fast-cracking dollar has not slowed more expensive imports. Indeed, says ERS, the 2005 “import volume (will be) unchanged,” but “their higher prices will continue to push the total U.S. import bill up.”
The beef on beef. The ERS report carried other surprising news. For example, beef imports “are forecast at $3.8 billion, up $300 million from 2004


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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