U.S. Agricultural Trade Prospects

Butler/Cunningham ConferenceMontgomery, AL

November 8, 2004Carol Goodloe, USDA

Imports includes juices. Vegetable oils only for imports.

Importance of Trade to Agriculture

31.027.313.912.2Fruits, nuts

9.65.56.55.7Vegetables

15.517.424.025.4Oilseeds/prod

5.35.646.751.0Food grains

0014.47.4Poultry

9.57.38.64.1Red meat

20021991-9520021990-94

Import Share of Consumption

Export Share of SupplyCommodity

Shifting Composition of U.S. Exports

0

5

10

15

20

25

30

35

89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03

$U.S

. bill

ion

Bulk

Consumer/HVP

Intermediate

Shifting Destination of U.S. Exports

0

2

4

6

8

10

12

14

16

18

20

U.S

. bil

lion

1990 1995 2003

East Asia

NAFTA

EUChina

What’s Hot? What’s Not?

-4

0

4

8

12

16

Annual average export growth rate, 1979/81-2001/03

Crops: U.S. Share of World Exports

Decade Wheat Corn Rice Cotton Soybeans

1961-69 42.3 52.4 19.0 24.7 87.6

1970-79 43.2 67.8 21.5 19.7 87.8

1980-89 37.4 67.4 20.1 20.4 74.7

1990-99 30.1 67.2 13.8 25.0 62.8

2000-03 26.0 62.6 12.1 36.2 45.9

Meats: U.S. Share of World Exports

Period Broilers Beef Pork

1961-69 16.4 1.3 7.2

1970-79 12.4 1.6 9.6

1980-89 16.5 5.3 4.4

1990-99 40.0 11.6 12.5

2000-03 31.4 15.2 12.7

Export Competition Remains Strong

0

10

20

30

40

50

60

70

80

per

cen

t

Wheat Corn Rice Soybeans Cotton

U.S. share of world exports

2003/04

2013/14

Where Does Alabama Fit In?

Item Share of production

Share of exports

Broilers 12 9

Peanuts 11 11

Cotton 3 4

Imports Take Off

0

5

10

15

20

25

30

35

40

45

50

80 82 84 86 88 90 92 94 96 98 '00

'02

'04

$U.S

. b

illi

on

s

Competitive Non-competitive Fruits/veg/nuts Beer/wine

Reactions to Growing Imports

• Trade Adjustment Assistance for Farmers– 2002 Trade Act– Price & income triggers, increased imports– Shrimp, catfish qualified

• Increase in antidumping actions– Vietnamese catfish, Asian/South American shrimp– Among NAFTA partners: wheat, hogs, cattle,

corn, beef, rice, HFCS, tomatoes, apples

• Country of origin labeling – consumer right to know or protectionism?

Corn Use Is Shifting

0

1,000

2,000

3,000

4,000

5,000

6,000

Mil

lio

n b

us

he

ls

1990/91 1996/97 2002/03

FeedExportsFood/seedEthanolExported meat

U.S. Agricultural TradeSurplus Narrows

0

10

20

30

40

50

60

70

1970 1975 1980 1985 1990 1995 2000 2005

$U.S

. bill

ion

Exports

Imports

Brazil’s Main Claims Against U.S. Cotton Programs

• U.S. support to cotton exceeded 1992

• PFC, DP, MLA, CCP are support to cotton

• U.S. support “seriously prejudiced” Brazil by suppressing world prices

• Step 2 is illegal (domestic and export)

• Export credit guarantees are export subsidies and are illegal for cotton

Subsidies Suppress Prices

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1998 1999 2000 2001 2002

Mil

lio

n $

U.S

.

0

10

20

30

40

50

60

70

cen

ts p

er b

ush

el

LDP/MLG PFC/DP MLA/CCP Farm price

U.S. Cotton Exports GainUnfair Market Share

0

5

10

15

20

25

1990 1992 1994 1996 1998 2000 2002

mill

ion

480-

lb b

ales Foreign

U.S.

U.S. Rebuttal

• U.S. support (rate) did not exceed 1992• Effect of marketing loan program depends on

expected prices at planting• Decoupled payments don’t support cotton• Export credit programs were not export

subsidies under URAA• Step 2 is domestic support program• Other factors caused world prices to fall –

China’s stocks, exchange rates, U.S. mill use

U.S. Textile Imports Surge

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1960

1965

1970

1975

1980

1985

1990

1995

2000

million p

ounds

cott

on e

quiv

alen

t

ExportsImports

What the Panel Ruled

☻U.S. support exceeded 1992☻PFC/DPs aren’t green box (planting

restrictions)☻Price-based support suppressed prices ☻Step 2 is illegal (domestic and export)☻Export credits are export subsidies☺PFC/DP’s, crop insurance – no effect☺No threat, no unfair world market share

U.S. Agricultural Trade At a Crossroads?

• Feeling the pinch from imports – TAA for Farmers, AD actions, COOL

• WTO Dispute Settlement Panel -- Brazil challenge to U.S. cotton programs

• How will Doha Round play out? U.S. subsidies versus market access

• Next Farm Bill in 2007 – trade agreements, budget constraints