Iowa Public Television


USDA Projects Farm Export Decline

posted on November 26, 2004

U.S. manufacturers are keeping their fingers crossed that the weaker value of the dollar will boost orders from overseas customers. The dollar in recent weeks has set new lows against major foreign currencies like the euro. Normally, that makes U.S. goods cheaper to buy on foreign shores.

But for U.S. farm goods, the cheaper dollar isn't helping. High freight costs, increased competition, and the improved self-sufficiency of former customers have dampened prospects for U.S. farm exports.

USDA Projects Farm Export Decline According to USDA, the value of U.S. farm exports will drop by at least 10 percent in 2005 to $56 billion. The government blamed the drop on two main factors: increased competition for overseas markets ... and an explosion in crop production that has dampened commodity prices.

The projected decline follows a year in which sales of American farm goods reached a record high of $62.3 billion for the 12 months ending in September.

At the same time, USDA says imports of foreign farm products will increase next year to a record $56 billion. That means a virtual balance in projected farm trade in 2005, something that hasn't happened since the late 1950s.

For decades, the U.S. has relied on farm products to help trim the nation's overall trade deficit. But the farm trade surplus has been shrinking rapidly since 2001, mainly because former net importers like Russia have become net exporters. Overall, the U.S. trade deficit is on track to hit a record $590 billion this year, nearly $100 billion above last year's mark.

Tags: agriculture crops government markets news trade USDA