Posted on Jan 4, 2024
Agricultural trade deficit could soon reach record highs. Is there cause for concern?
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For the third time in five years, agricultural trade in the United States will be at a deficit — meaning it imports more than it exports.
As of November 2023, the U.S. imported $20 billion more in agricultural products than it exported this year, which would set a record for biggest deficit in a calendar year in nearly a century if the trend continues through the last month of 2023.
For some farmers, the year’s big deficit is a sign that trade has taken a hit and that other countries may be outtrading the U.S. However, some economists argue there are logical explanations behind what has created such an eye-popping deficit — including rising imports, a strong American dollar and basic supply and demand.
“Trade deficits aren’t something we should be inherently worried about,” said Bill Ridley, a professor at the University of Illinois Urbana-Champaign, who studies international trade.
Over the past five years, agricultural exports have climbed from $141 billion in 2019 to nearly $196 billion in 2022, according to data from the U.S. Department of Agriculture. In both 2020 and 2021, agricultural trade was at a surplus, with exports exceeding imports.
As of November 2023, the U.S. imported $20 billion more in agricultural products than it exported this year, which would set a record for biggest deficit in a calendar year in nearly a century if the trend continues through the last month of 2023.
For some farmers, the year’s big deficit is a sign that trade has taken a hit and that other countries may be outtrading the U.S. However, some economists argue there are logical explanations behind what has created such an eye-popping deficit — including rising imports, a strong American dollar and basic supply and demand.
“Trade deficits aren’t something we should be inherently worried about,” said Bill Ridley, a professor at the University of Illinois Urbana-Champaign, who studies international trade.
Over the past five years, agricultural exports have climbed from $141 billion in 2019 to nearly $196 billion in 2022, according to data from the U.S. Department of Agriculture. In both 2020 and 2021, agricultural trade was at a surplus, with exports exceeding imports.
Agricultural trade deficit could soon reach record highs. Is there cause for concern?
Posted from stlpr.org
Farming
Agriculture
International Trade
Posted 5 mo ago
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PO1 William "Chip" Nagel
..."In Berg’s eyes, this is the global market meeting its demand. The market responded similarly in 2020 when demand for flour grew like crazy. Many people baked more while they worked from home during the COVID pandemic.
“Hopefully, we're growing global trade, and that's kind of part of the deal,” Berg said. “That's what we want.”
Economists expect that agriculture trade may eventually swing in the other direction and could be in surplus again. If and exactly when are harder questions to answer.
During the next fiscal year, USDA forecasters anticipate the deficit could widen. Exports are projected to total $169.5 billion. Imports will tally $200 billion — leaving the deficit standing around $30.5 billion.
For farmers, they say they will wait to see what happens. As always, they’ll need to be financially prepared for whatever weather they get or whatever the markets dictate.
“These forecasts and projections always change,” Berg said. “And that’s just something that we’re all a part of as producers. We need to keep our ducks in a row.”
..."In Berg’s eyes, this is the global market meeting its demand. The market responded similarly in 2020 when demand for flour grew like crazy. Many people baked more while they worked from home during the COVID pandemic.
“Hopefully, we're growing global trade, and that's kind of part of the deal,” Berg said. “That's what we want.”
Economists expect that agriculture trade may eventually swing in the other direction and could be in surplus again. If and exactly when are harder questions to answer.
During the next fiscal year, USDA forecasters anticipate the deficit could widen. Exports are projected to total $169.5 billion. Imports will tally $200 billion — leaving the deficit standing around $30.5 billion.
For farmers, they say they will wait to see what happens. As always, they’ll need to be financially prepared for whatever weather they get or whatever the markets dictate.
“These forecasts and projections always change,” Berg said. “And that’s just something that we’re all a part of as producers. We need to keep our ducks in a row.”
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