September 22, 2003



US Could Be Net Agriculture Importer By 2007


American agriculture imports are fast catching up with export values, with analysts predicting that the country could turn into a net importer of agricultural produce by 2007


Two agricultural economist from Purdue University, in their news release last Friday, projected an increase of $500 million in U.S. agricultural exports to $56.5 billion in the fiscal year beginning October. Imports are estimated to jump as much as $3.5 billion in 2003-04.


One reason for such a prediction is that despite the apparent U.S. economic downturn, agricultural exports have been relatively flat in real dollars while imports have been rising quite rapidly, from $41 billion in previous years to $45 billion last year. The report went on to say that exports are likely to reach $47-48 billion if the trend continues. 


The last time the U.S. was a net agriculture importer was during the fiscal year 1958-59, said the economists. Demand for U.S. agricultural products stagnated after Europe completed the rebuilding of its agricultural industry following World War II.


This current trend in slower agriculture export could be traced back to 1996, say the economists. Changed in diet and lifestyle have been reflected in rising imports, as foods produced in the U.S. appear unable to keep up with changes in consumer demand. One example points to the Mexican dish of guacamole, made probably from imported avocadoes, and babyback ribs, which might come from Denmark.


Yet another reason for the fall agriculture trade balance could lie with Europe's resistance to genetically modified grain. U.S. agriculture, however, is growing high on the back of such biotech crops, which are genetically modified to resist insects and herbicides.


Rather than relying on traditional European markets, U.S. exporters should starting setting their sets beyond the Atlantic, for example on the growing Chinese market, and how U.S. GM foods could be received by the authorities in Beijing. U.S. trade continues to rely to a great extent on its agricultural export sector, even as import values swell. Imported products are also essentially different from those exported and understanding such differences, whilst noting agriculture's diversity and U.S. comparative advantage in some crops, remain crucial, added the report.