3/11/99

Contacts:
John Beghin, Economics / FAPRI director, (515) 294-5811
Samarendu Mohanty, Economics / FAPRI crop analyst, (515) 294-6296
Frank Fuller, Economics / FAPRI livestock analyst, (515) 294-0570
Brian Meyer, Agriculture Information, (515) 294-0706

SLOW TURNAROUND EXPECTED FOR U.S. AG EXPORTS DURING COMING DECADE

AMES -- The decline in U.S. agricultural exports is likely to bottom out this year in response to large global supplies and weak agricultural demand, according to an analysis by the Food and Agricultural Policy Research Institute (FAPRI).

"As global food demand progressively recovers, the United States is in an excellent position to capitalize on expanding consumption, especially in meats and feed grains," said John Beghin, professor of economics and FAPRI director at Iowa State University.

The new FAPRI report, which provides an outlook for agricultural exports over the next decade, states the value of U.S. exports will increase more than 40 percent by 2008.

"In the long run, optimism for U.S. agricultural exports stems primarily from new market-access opportunities derived from trade agreements and from the expected economic recovery in Asia and other emerging markets," Beghin said.

Feed grain exports, led by corn, are projected to rise by 19 million metric tons by 2008. The growth comes primarily from an increase in per capita meat consumption. "World meat production will increase 20 percent to meet the additional global demand, which consequently raises the use of feed grains," said Samarendu Mohanty, FAPRI crop analyst at ISU.

U.S. indirect exports of corn -- measured as exports of grain-fed beef, pork and poultry -- also will grow. Together, direct and indirect corn exports will increase by 25 million metric tons.

U.S. oilseeds and oilseed product exports are expected to rise, with soybeans accounting for most of the increase. Although soybean oil and meal consumption are rising significantly in developing countries, the United States is unlikely to capture much of the market expansion because of competition from Argentina and Brazil, Mohanty said. The United States is projected to capture 10 percent of the 10 million metric ton increase in demand.

U.S. wheat exports will grow steadily through 2005-06 as weak world prices limit European Union exports to levels stipulated by the General Agreement on Trade and Tariffs (GATT). However, after 2005-06, the EU is projected to be able to export without subsidy, limiting U.S. exports through 2008-09.

Excess pork supplies have kept hog prices low, allowing U.S. exporters to post an 18 percent increase in shipments, despite a downturn in Asian demand. Hog prices in 1999 are expected to average $35.41 per hundredweight, enabling U.S. exporters to increase their share of the international pork market and boost exports an additional 14 percent. Continued export growth will help bring U.S. hog prices back to more than $40 per hundredweight in 2000 and for most of the next decade.

U.S. exports of beef and poultry are expected to decline slightly this year, but broad-based growth in meat trade is projected to coincide with the recovery of most Asian economies in 2000.

"High-quality beef exports will allow the United States to surpass Australia as the world's largest beef exporter in 2001, and to become a net exporter of beef in 2003," said Frank Fuller, FAPRI livestock analyst at ISU.

Likewise, low production costs and competitive prices make it possible for the United States to capture virtually all the projected growth in the international broiler market after 2000. Also, U.S. poultry exports to Mexico will double following the elimination of barriers under the North American Free Trade Agreement (NAFTA).

Cheese demand dominates the U.S. dairy sector in the coming decade. U.S. non-fat dry milk prices will drop 12.5 percent after federal support prices are removed, yet prices will remain well above international levels, limiting unsubsidized U.S. dairy exports.

FAPRI provides economic analysis for policymakers and others interested in the agricultural economy. Its core centers are at Iowa State and the University of Missouri. It has affiliates at Texas A&M University, the University of Arkansas, Arizona State University, North Dakota State University and Kansas State University.

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