WASHINGTON –In the first half of fiscal year 2008, U.S. agricultural imports are up nearly 12 percent in value and more than 5 percent in volume (metric tons only), indicating that import price inflation is about 6 percent.
Despite the sluggish U.S. economy and the continued weakness of the dollar, import volume is expected to remain around 5 percent since food demand is relatively inelastic in the short run.
Commodity and food prices are likely to be more stable over the spring and summer months as newly harvested crops supply the market, especially for fresh fruits and vegetables.
A $78.5 billion total import bill is forecast for 2008, $2 billion more than February’s forecast, and $8.5 billion higher than in 2007. Half this increase is due to grains, oilseeds, and products.
Price increase
Primary commodity prices, as measured by world food price inflation, have been on an upward trend since 2001, but have accelerated starting in 2007.
The global food price index of the International Monetary Fund in early 2008 has doubled from 2001 levels. The U.S. import price index for foods, feeds, and beverages in early 2008 has risen 50 percent from 2003.
With respect to U.S. farm commodities, prices received by farmers are also up by almost 50 percent since 2002.
Strong demand
For major farm commodity groups, demand is strongest for oilseeds, vegetable oils, and other oilseed products whose import volumes grew by 43, 27, and 25 percent, respectively.
Shipments of soybeans, flaxseed, and rapeseed registered double-digit import volume growth. This is due in part to lower U.S. oilseed output in 2007-2008.
Despite their significantly higher prices, import demand for vegetable oils is driven by tropical oils from southeast Asia.
Demand for coarse grains was very strong as well, particularly for barley, oats, corn, rye, and processed coarse grain products.
Livestock
Imports of livestock products are expected to be $300 million higher than the February forecast and $600 million more than in 2007.
The upward change in the forecast is attributed to higher than expected prices for dairy products other than cheese.
Like livestock and meats, import prices of dairy products saw double-digit increases, but unlike red meats’ lower volume thus far, import volume of dairy products expanded by 3 percent year-to-date.
The outlook for livestock and meats remains at $8.9 billion — a $200 million gain in cattle shipments is offset by a $200 million reduction in beef imports.
The gain for cattle is attributed to increased volume and higher average price per head. Beef import volume is reduced due to high U.S. cow slaughter and a weak U.S. dollar which raises the prices for imported beef.
The value of swine is reduced due to lower expected unit values.
Although imports of horticultural products in aggregate are slower, especially for beer, wine, fresh fruits, and processed vegetables, demand for fruit and vegetable juices is strong.
Fruits and vegetables
Similarly, demand for processed fruits and fresh vegetables remains relatively strong.
Imports have slowed largely for products whose prices have risen significantly, such as processed fruits, processed vegetables, beer and wine.
Although the forecast for total horticultural imports in 2008 is lowered by $200 million, the $34.8 billion projection still represents a $2.4 billion, or 7 percent, rise from 2007.
This gain is attributed to processed fruits, including juices (up $700 million), fresh vegetables (up $235 million), processed vegetables (up $250 million), fresh fruits (up $200 million), and essential oils (up $300 million).
Fifty-four percent of imported fresh fruits and 58 percent of fresh vegetables arrive during the first half of the year.
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