Iowa Public Television

 

Ag exports increase, so do oil prices

posted on February 25, 2000


LOOMING LARGE ON THE HORIZON ARE RISING OIL PRICES, AN INFLATIONARY FORCE THAT CAN ONLY EXACERBATE THE TRYING TIMES FOR THE MOST CAPITAL- AND ENERGY-INTENSIVE SECTOR OF THE U.S. ECONOMY -- AGRICULTURE.

THOUGH NOT AS RELIANT ON FOREIGN OIL AS IT WAS IN THE 1970s, THE U.S. STILL GETS MORE THAN 50 PERCENT OF ITS CRUDE FROM FOREIGN SHORES. SO, RECENT SHARP INCREASES IN FUEL PRICES HAVE AMERICAN MOTORISTS AND THE U.S. TRUCKING INDUSTRY HOWLING FOR FEDERAL INTERVENTION.

USDA PREDICTS IT WILL BE FARMERS PREPARING FOR SPRING PLANTING WHO NEXT WILL FEEL THE PINCH, TO THE TUNE OF ABOUT A BILLION DOLLARS. THAT'S HOW MUCH MORE AMERICAN PRODUCERS WILL SPEND THIS YEAR AS A RESULT OF THE FUEL PRICE INCREASE. THE JUMP IN FUEL COSTS IS IN CONTRAST TO PROJECTED OVERALL FARM PRODUCTION EXPENSES, WHICH ARE EXPECTED TO RISE BY A MODEST ONE PERCENT THIS YEAR.

FARM STATE LAWMAKERS ARE CALLING ON THE WHITE HOUSE TO PUT PRESSURE ON PERSIAN GULF ALLIES TO PUMP MORE OIL INTO THE WORLD MARKET TO EASE PRICES.

FARMERS NOT ONLY WILL PAY HIGHER FUEL COSTS TO PLANT A CROP, BUT ALSO TO MOVE IT IN THE FALL. THAT PROSPECT PUTS A DAMPER ON USDA PROJECTIONS OF HIGHER FARM EXPORTS THIS YEAR. THE AGENCY RAISED ITS ESTIMATE OF EXPORTS BY $500 MILLION DOLLARS TO $49.5-BILLION DOLLARS.

ANALYSTS ATTRIBUTE THE GROWTH TO STRONGER-THAN-EXPECTED COTTON AND LIVESTOCK SALES, AND SAY IT MARKS THE START OF A SLOW RECOVERY FROM THE 1997 ASIAN CURRENCY CRISIS.

BAILY: "U.S. export growth has been virtually non-existent. We're now seeing that starting to turn around."

FARM EXPORTS ACCOUNT FOR ABOUT A QUARTER OF CASH RECEIPTS RECEIVED BY U.S. FARMERS. BUT SINCE 1996, SAGGING DEMAND HAS FORCED A DECLINE OF MORE THAN $10 BILLION IN THE VALUE OF FARM GOODS SHIPPED OVERSEAS.

Tags: agriculture commodity prices news oil