FAPRI Report Projects Rebounding U.S. Meat Exports and More Soybean Concentration
John Beghin, FAPRI, (515) 294-5811; firstname.lastname@example.org
Jacinto Fabiosa, FAPRI, (515)-294-6183; email@example.com
Sandra Clarke, Center for Agricultural and Rural Development, (515) 294-6257; firstname.lastname@example.org
March 16, 2005
WASHINGTON -- Solid prices, stable economic growth globally, and a weak dollar in industrialized trading countries will keep U.S. agricultural exports strong for the next 10 years, according to the projections of the Food and Agricultural Policy Research Institute (FAPRI) presented to Congress this week. Sanitary and phytosanitary concerns, however, will continue to plague meat markets in the short term and will partially offset the growth in exports of coarse grains.
FAPRI, an economic research group with centers at Iowa State University and the University of Missouri-Columbia, prepares 10-year baseline projections intended for use by policymakers and other planners in the agricultural sector.
Other highlights from FAPRI's 2005 agricultural outlook:
In 2004, with strong grain and livestock prices, total U.S. agricultural exports recovered from earlier downturns and increased by nearly 5 percent in volume and nearly 11 percent in value. This year, export volumes increase by 2.5 percent but weaker wheat and oilseed prices and low meat exports bring the total value down by 4 percent. The value of U.S. exports increases 20 percent by 2014 with a long-term shift to high-value exports and a rebound in meat exports.
The loss of major meat export destinations after a U.S. case of bovine spongiform encephalopathy (BSE) was confirmed sent beef exports down by 83 percent and dropped the U.S. share of total meat trade to a record low. Despite the lost markets, the close of Canadian borders to meat and live animal trade has kept U.S. meat prices high.
Because the United States took quick measures to restore consumer confidence in the safety of U.S. beef, beef markets are expected to reopen beginning in 2005. FAPRI expects trade to reach pre-crisis levels after three years. Continuing strong growth in pork and poultry exports, coupled with the beef market reopening, enable the United States to regain its meat trade share at a level near that of the early 2000s.
Benefiting from trade shocks from BSE in beef and from avian flu in the broiler industry, world pork production and trade reach 110 and 4.24 million metric tons, respectively, by 2014/15. The European Union loses market share, going from 45 percent to 33 percent, because of higher feed costs, appreciating currency, and strict animal welfare and environmental regulations. All other major competing exporters, including Canada, the United States, and Brazil, gain market share.
The depreciation of the U.S. dollar against most other currencies in industrialized countries tapers off and ends by 2008. Australia, Canada, and the European Union recover from weather-related stresses and become strong competitors in crop markets. Further, the United States loses competitiveness relative to Latin American countries as the U.S. dollar appreciates against most Latin American currencies. The effects are especially acute in meat markets, since the Latin America region has benefited from the BSE crisis in North America.
Grain prices remain high, given strong import demand on world markets, especially in China (where wheat imports were 7 million metric tons in 2004). Wheat prices remain above $145 per metric ton. Corn prices steadily increase, from $95 to $114 per metric ton. The United States, Argentina, and Hungary are among the countries benefiting from strong world market conditions and increases in grain use. The U.S. corn market share increases from 64 to 73 percent over the projection period.
FAPRI foresees greater concentration in soybean production. Argentina, Brazil, and the United States increase their combined production share from 82 percent to 85 percent of world production. World soybean production reaches 273 million metric tons by 2014/15, an 18 percent increase from 2004/05. Brazil overtakes the United States as the largest soybean producer and exporter in the world, holding a 35 percent share of world production and a 51 percent share of world trade by the end of the period. U.S. production and trade shares drop to 30 and 28 percent, respectively. China, the world's largest importer of soybeans, expands its imports from 35 to 47 percent of total world imports by 2014/15, whereas imports of the EU-15 remain stable at around 16 million metric tons.
The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the Iowa State (http://www.fapri.iastate.edu) and University of Missouri (http://www.fapri.missouri.edu) FAPRI Web sites.