Johann's appearance was the first of many congressional hearings to come on the budget. When it's all said and done, a farm budget is expected to be completed and on the president's desk this fall. Whether the budget arrives at the president's desk with all the Administration's recommended cuts remains to be seen. But no crystal ball is needed on the U.S. agricultural export and import front. While the U.S. still is the world's largest exporter of agricultural goods, imports are rising nearly twice as fast as exports. And a look at the government's latest trade forecast reveals little cause for a reversal in the trend.
Between 2004 and 2005, the gap closed by almost half from 6.6 billion dollars to 3.5 billion dollars. The news for 2006 is not much better. This week, the USDA projected the agricultural trade surplus at a wafer thin 1 billion dollars.
Surprisingly, as the gap closes agricultural exports and imports are expected to hit all time highs. The USDA is projecting the new trade numbers at a record 64.5 billion dollars for exports and 63.5 billion dollars for imports. The numbers reflect, among other things a brighter outlook for the beef industry and a bleaker one for soybean exports.
Despite the strong numbers, the report shows a continuation of the downward trend in the U.S. agricultural trade balance. In 2001, the difference was 13.7 billion dollars but exports have failed to increase at the same rate as imports. The USDA puts much of the burden on, among other items, lower cost fruits, vegetables, sugar and coffee.
According to the USDA, the European Union, Canada, Mexico, Australia and Brazil are expected to provide even more of the same low cost agricultural products over the coming year. Not surprisingly, these are some of the same countries the U.S. is negotiating with over reducing barriers to trade.
Rob Portman, U.S. Trade Representative: "In terms of subsidies, yes we have subsidies in this country. But in terms of trade distorting support, the European Union continues to use three times the amount of trade distorting support than we use."
John Bruton, EU Delegation to the U.S.: "We will not be making any further offers in agriculture at this point and I think we've gone as far as we can on agriculture. We're now looking for others to show some leadership in other areas."