USDA is forecasting record farm products export sales of $61.5 billion for fiscal 2004, surpassing the previous record of $60 billion set in 1996. The strong sales reflect higher prices and expanding demand in major growth markets, despite some markets being closed to beef and poultry products.
Agriculture Secretary Ann Veneman made the announcement during a teleconference on the farm economy and export forecast.
“Rising exports, good domestic demand and relatively scarce crop supplies all around the world have resulted in farm prices getting steadily stronger,” Veneman said. “In fact, the index of prices received by farmers for all farm products reached a record high in March of this year and then set another record in April. It is the highest for any month since we started keeping records in 1910.”
USDA expects total sales of farm products to be a record also at $215 billion. Net cash farm income was a record $63 billion in 2003, which was $2 billion above the previous record. “Net cash income will be strong again this year, perhaps quite not another record but above the 10-year average,” Veneman said.
In addition, farmer's equity reached a record $1.16 trillion last year “putting agriculture in, arguably, the best financial health ever. The value of farm assets has grown steadily, reflecting continued growth in land prices in every region of the country.
“At the same time, farmers are doing a good job of managing debt, which is growing more slowly than asset values, resulting in a very solid balance sheet,” the Secretary said.
Veneman said she couldn't comment specifically on the WTO ruling on Brazil's complaint about U.S. cotton subsidies, since the final ruling will not be released until June 18. A preliminary ruling was not friendly to U.S. cotton interests.
“But I think it's important to remember that the United States in the summer of 2002, after we had a successful launch of the Doha Round in 2001, put a very aggressive proposal on the table to say that if other countries would do the same, we would accept additional disciplines on our own subsidies.
“We have been aggressive about this. Our agriculture community has supported that position, that if the world takes these steps then the United States will follow suit.
“A key to us in these negotiations, of course, is market access. Average tariff for U.S. food and agriculture, for products coming into the United States, is about 12 percent; worldwide it's about 62 percent.
“So it's very important to us that we get tariffs down, that through these negotiations we get increased market access for our farmers and ranchers.”
Veneman said that remarkable increases in sales to China “result directly from the increased prosperity that comes from its opening the economy and from the market access that we negotiated as a condition of the WTO accession in 2001.”
“China has quickly become our fifth largest market with sales last year reaching $3.5 billion. Our sales this year are forecast to jump to $5.9 billion, more than triple the amount in 2001, when China joined the WTO. And its long-term prospects appear very bright with the possibility that it will become the world's top agricultural growth market over the next decade.”
China is now the No. 1 market for U.S. soybeans and cotton, “and it is now our sixth largest wheat market. Our analysts continue to speculate that corn purchases could be in the offing at some point in the future as well.”
USDA chief economist Keith Collins added that recent weakness in demand from China is because the country trying to assert control on strong economic growth.
“China's economy has been growing very strongly — last year it was 9.1 percent. The Chinese government is concerned that some sectors have had some over-investment, and it's going to take a while for that excess capacity to be absorbed by the overall economic growth. So they've implemented some limitations on loan volume for banks.
“They are shooting for an economic growth-rate somewhere in the neighborhood of 7 to 8 percent,” Collins said. “Even at those rates, that's huge by world standards. And we would expect that even if they are able to achieve some slowing of their economy, it's still going to be a booming economy, and they're going to be looking increasingly toward the United States.
“Certainly in any one year they could have a big crop, good weather, whatever, which might cause them to pull back some on imports of a particular commodity. But I think the trend is up, and I don't think the economic growth slow-down will impede that long-term growth.”
Veneman added that agricultural export sales to NAFTA countries “has been far faster than the growth in sales to the rest of our trading partners. In the 10 years of NAFTA, our sales to all markets rose $250 million a year on average. At the same time, our sales to NAFTA rose $800 million a year.” The secretary said that seven bilateral and regional agreements “bring new market access to 119 million consumers who have an annual income of $820 billion.”