Contacts:
John Beghin, Food and Agricultural Policy Research Institute, (515) 294-5811
Frank Fuller, Food and Agricultural Policy Research Institute, (515) 294-0470
Sandra Clarke, Center for Agricultural and Rural Development (515) 294-6257

February 2, 2001

AMES, Iowa – For the first time since agricultural prices peaked in the mid 1990s, the value of U.S. agricultural exports is expected to increase this year. According to new analysis by the Food and Agricultural Policy Research Institute (FAPRI), a gradual recovery in agricultural prices from last year's 13-year lows drives the value of agricultural exports up by 3.6 percent in 2000/01, and both export volume and value will continue to rise 2 to 4 percent for the next decade."The overall outlook for U.S. agricultural trade is good," said John Beghin, professor of economics and FAPRI director at Iowa State University. "Rising food consumption around the globe, particularly in countries recovering from the Asian financial crisis, is increasing the demand for U.S. grain and livestock exports, but oversupply in key markets will keep prices from rebounding rapidly over the next three to five years."The FAPRI report, which provides an outlook for agricultural exports over the next decade, projects that the value of U.S. exports will increase more than 46 percent by 2010. A little more than half of the growth in value is explained by increases in the total volume of exports; the remainder is generated by strengthening prices. An 18.9 million metric ton rise in grain and feed exports, predominately corn exports, accounts for 27 percent of the total increase in export value.Expected increases in animal and animal product export value accounts for 30 percent of the total growth in the value of U.S. exports. Nearly 60 percent of the increase in animal product exports will come from beef and pork."If incomes in developing and transition economies rise annually by the 4-8 percent we have assumed in our baseline, world consumption of meat, poultry, and dairy products will rise rapidly," said Frank Fuller, FAPRI's technical director. "The U.S. is well positioned to capture the lion's share of the growth in import demand for feeds, particularly corn, that is expected as livestock production increases in developing countries."Indirect exports of corn-measured by the feed-grain equivalent of beef, pork, and poultry exports-are expected to exceed 7 million metric tons by 2010, an increase of 43 percent over 1999/00 levels. Together, direct and indirect exports of corn will increase by more than 25 million metric tons.U.S. exports of oilseeds and oilseed products will increase substantially, but strong competition from South American exporters will allow the United States to capture just 5 of the projected 20 million metric ton increase in soybean trade. Despite continued low prices, soybean area in Brazil will increase by 1 million hectares over the next five years. U.S. soybean oil exports will increase more than 300 thousand metric tons by 2010/11, raising the U.S. share of total soybean oil trade to 13 percent.With the weak value of the euro and gradually rising wheat prices, EU wheat exports will compete well against the United States in world markets. Last year the EU was able to export some wheat without subsidies, and FAPRI projects that implementation of the Berlin Accord will keep EU wheat prices below world prices for the next decade. U.S. wheat exports will rise 3.3 percent this year, but those gains will be lost over the next two years. On average, U.S. wheat exports are expected to grow 1.6 percent annually over the next decade.Rising cattle prices over the next three years will hamper growth in U.S. beef exports, but exports will rise more than 8 percent annually as price declines and slaughter picks up after 2004. The United States is expected to surpass Australia as the world's largest beef exporter in 2005 and become a net exporter of beef in 2006. The recent resurgence of bovine spongiform encephalopathy (BSE) or "mad cow " disease in Europe will dampen beef demand in Europe for the next three years, but international beef markets will not be disrupted.Hog prices recovered in 2000 to average $44.70 per hundredweight, but market hog inventories are expected to reach 55.4 million head this year, forcing hog prices back below $35 in 2002. Hog prices will rebound in 2003 and remain between $39 and $46 per hundredweight. With competitive prices, U.S. pork exports will rise an average of 6 percent annually over the next decade, exceeding 1 million metric tons in 2010.U.S. broiler prices will remain stable at around $0.57 per pound, and exports will increase to 2.78 million metric tons. The largest growth markets for poultry imports are Japan, China, Russia and Hong Kong. Brazil's currency depreciates against the U.S. dollar throughout the baseline, giving Brazilian poultry exporters a competitive edge and enabling them to increase their share of poultry trade from 18 to 26 percent.The price of nonfat dry milk powder (NFD) rose 44 percent on international markets in 2000. Although powder prices are expected to decline over the next two years, the strong demand for cheese and whole milk powder will keep NFD markets tight and prices above $1,700 per metric ton. Despite the strength in international powder prices and the elimination of the dairy support program in 2002, U.S. domestic NFD prices remain sufficiently high to constrain unsubsidized exports. International butter prices will recover to $1,579 in 2002 and rise 2.1 percent annually for the rest of the decade."Optimism in the outlook for U.S. agricultural exports comes from the stable macroeconomic outlook in emerging markets and the new market access opportunities derived from trade agreements," Beghin said. "There is still a lot of uncertainty in the evolution of agricultural export markets, particularly with respect to food safety issues, biotechnology, and ongoing trade negotiations in the World Trade Organization."FAPRI provides economic analysis for policymakers and other interested in the agricultural economy. Its core centers are at Iowa State University and the University of Missouri in Columbia. It has affiliates at Texas A&M University, the University of Arkansas, Arizona State, North Dakota State University and Kansas State University.More information is available at the FAPRI website.