3/6/97

Contacts:
Darnell B. Smith, FAPRI Managing Director, (515) 294-2390
Samarendu Mohanty, FAPRI Analysis Coordinator, (515) 294-6296
Frank Fuller, FAPRI Livestock Analyst, (515) 294-0470
Susan Anderson, Agriculture Information, (515) 294-0705

RAPID GROWTH SEEN IN U.S. AGRICULTURAL EXPORTS

AMES, Iowa --The value of U.S. exports will increase by more than 37 percent in the next 10 years, and both bulk and high-value product exports are expected to reach record levels due to extraordinary world food demand.

These and other projections are contained in a recent analysis by FAPRI (Food and Agricultural Policy Research Institute) at Iowa State University. It shows the value of U.S. agricultural exports will increase from $58 billion in 1996 to more than $80 billion in 2006. "The U.S. is in an excellent position to capitalize on this situation, especially in meats and feed grains," says Darnell Smith, FAPRI managing director.

Details from the FAPRI analysis were presented March 6 to members of the House and Senate Agriculture Committees in Washington, D.C. USDA personnel and representatives of farm and commodity organizations were also briefed.

Direct feed-grain exports, led by corn, are projected to increase 30 million metric tons and surpass 80 million metric tons by 2006. "The growth in feed grain demand is primarily because of increases in world meat consumption," -says Samarendu Mohanty, FAPRI analysis coordinator. "The U. S. continues to indirectly export corn in the form of meat. Together, direct and indirect exports of corn are expected to increase by 42 million metric tons."

"The U.S. will become the world's largest pork exporter by 1999, surpassing the European Union," says Frank Fuller, FAPRI livestock analyst. "And by 2006, in addition to continued domination of the world poultry market, the U.S. will be exporting almost as much beef as Australia, the current world leader." He says meat exports will account for more than half of the $22 billion expected increase in the value of agricultural exports.

The optimistic outlook for agricultural exports stems primarily from new market access opportunities derived from trade agreements and from the positive macroeconomic situation in developing countries. "Several large, emerging markets are demonstrating strength and stability in income growth," says Smith. "This is a much different international macroeconomic situation than in the last decade."

Smith says this general optimism is tempered by concerns about greater commodity price volatility in the future and temporary price weakness. With steady growth in demand and supply, agricultural commodity prices will become more responsive to weather-induced yield shocks, and price variability will continue to increase.

The combined effect of demand growth in large, emerging markets, additional market access brought on by new trade agreements, large reductions in government-funded carryover stocks, and increasing variability in production implies strength in average farm prices and income. But Smith says this combined effect also implies large price fluctuations in the near term. "The commodity price variability experienced in 1996 is a good example," he says.

The FAPRI analysis shows that in the next decade, barring a fundamental change in world weather variability or in stockholding behavior, price instability will probably be at or above 1996 levels. A change in producer or processor stockholding could help offset this instability.

FAPRI has core centers at the University of Missouri-Columbia and at Iowa State University, with affiliates at Texas A&M, University of Arkansas, Arizona State University, North Dakota State University and Kansas State University.

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