While U.S. agricultural exports continue to rise, imports are growing at a stronger rate, creating the lowest export surplus since 1998. This is just one of several U.S. trade factors that could have future implications for fruit and vegetable producers, says Greg Fonsah, University of Georgia Extension economist.
"The United States continues to enjoy a positive aggregate agricultural trade balance over the past seven years," says Fonsah. "Total agricultural exports were $53.6 billion, $49.1 billion, $50.7 billion, $52.7 billion, $53.3 billion and $55.5 billion for 1998, 1999, 2000, 2002, 2002 and 2003, respectively. The projection for 2004 U.S. agricultural trade stands at $57 billion."
On the other hand, he adds, the value of U.S. agricultural imports were $36.8 billion, $37.3 billion, $38.9 billion, $39 billion, $41 billion and $45 billion in 1998, 1999, 2000, 2001, 2002 and 2003, respectively. The 2004 U.S. agricultural import trade is projected at $47.5 billion.
"Comparing the export versus the import trade projections leaves an impressive positive balance of trade in favor of the United States agricultural sector," says Fonsah. "However, as the gap between export and import continues to narrow, there has been a persistent downward trend on export surplus since 2001. Consequently, the $9.1 billion export surplus forecast for 2004 is the lowest since 1998."
Although there was a 12-percent increase in import trade, export trade increased by only 3 percent during the same year, notes the economist.
A strong U.S. dollar against foreign currencies also has an effect on trade balances, says Fonsah. "It has an adverse effect on overall agricultural trade balances, compromises the U.S. leading position and competitiveness in the world market, and renders the U.S. agricultural food commodities unaffordable by other nations," he says.
Fresh-market vegetable and melon acreage in the United States dropped by 0.4 percent in 2002 and 2 percent in 2003, according to Fonsah. Increased acreage for broccoli, cauliflower, sweet corn and cucumbers was not enough to offset the overall fall in U.S. production acreage, which stood at 308,100 acres in 2003.
Prices received by farmers and shippers fell by 12 percent in summer 2002 but increased 5 to 10 percent in summer 2003, he continues. Total fresh-market export trade volume in 2002 was 39,322 million cwt compared to almost double the total import trade of 65,609 million cwt.
"A severe heat wave in the West and East created a tomato supply shortage and triggered better shipping-point prices through mid-August. Summer-season fresh-market melons - cantaloupe, honeydew and watermelon - recorded a 2-percent increase in production acreage at 124,300 acres."
At the national level, the U.S. vegetable industry recorded an 8.5 percent increase in area harvested in 2002 and a 3.7-percent decrease in 2003. On the other hand, total production rose 4.8 percent in 2002 and fell 1.1 percent in 2003 at 1,307 million cwt.
Crop value experienced a huge 41.7 percent increase from 2001 to 2002 and remained stagnated thereafter, says Fonsah. Meanwhile, unit value for vegetables increased from $18.99 per cwt. to $20.33 per cwt. in 2002 and remained the same in 2003.
Factors that influenced U.S. food imports for the past two decades, says Fonsah, include temporal dynamics in the domestic food supply chain due to weather and other unforeseen conditions, high purchasing power parity for imported food due to the protracted strength of the U.S. dollar, acquired taste preferences created by an ethnic influx and growing immigrant population, newly acquired flavor for non-traditional American menu such as tropical fruits and crops, steady and reliable overseas suppliers, innovative ocean transportation that facilitates transshipment, controlled atmosphere and warehouse facilities, and increased disposable incomes.
Also contributing to the import growth has been red meats, fish and shellfish. Furthermore, says Fonsah, vegetables such as onions, peppers, tomatoes, cucumbers, olives and asparagus showed remarkable growth.
Fresh and frozen fruits such as pears, melons, grapes and avocados also made appreciable contributions to the growth of imports.
"More so, the economic slump in most Asian countries rendered the U.S. market favorable for Australian and New Zealand meat, as imports rose from 6.5 to more than 9 percent in carcass weight."
The North American Free Trade Agreement, says Fonsah, also has been instrumental in improving trade ties among Canada, Mexico and the United States. "While Canada recently snatched the leading role as No. 1 importer of U.S. fruits, vegetables, grains, oilseeds and meats from Japan, Mexico is increasing its grip in this market, as 27 and 38 percent of U.S. fruit and vegetable imports originates from Mexico."
The U.S. vegetable industry, says Fonsah, continues to experience strong import growth - 5.9 percent and 11.4 percent in 2002 and 2003, respectively. "Incidentally, export demand remained stagnant during the same time period. Per capita use fell slightly in 2002 and made a drastic comeback in 2003."
Although the U.S. vegetable industry export trade increased slightly from 2001 to 2003, the dollar value was lower than the import trade, thus reflecting a negative U.S. vegetable trade balance, says Fonsah.
"For instance, dry bean exports to the United Kingdom, Mexico and Japan fell by 20, 17 and 13 percent, receptively this year compared to 2002. Although exports of kidney, black and pinto beans increased, there was an aggregate 2 percent decrease in dry bean exports in 2003."
In the past two decades, the U.S. per capita food consumption has escalated from 1,800 pounds in the early 1980s to 2,000 pounds per year in 2000, thus reflecting an 11.1 percent increase in average import share, says Fonsah.
Fish and shellfish dominate import share by a large margin, he adds. Consumption of fruits, vegetables and cereals increased by more than 20 percent compared with a 7 percent increase for animal products.
"Fruit and vegetable production and marketing continue to be one of the rapidly growing industries despite the ever-increasing pests and disease problems, numerous restrictions, the high cost of production, limited market windows, and extremely high regional and international competition."
This positive trend in U.S. consumer behavioral patterns, says Fonsah, stems from the ongoing consumer awareness and health-conscious education and advertisement programs.
With the depreciating trend of the U.S. dollar against other currencies, U.S. agricultural export trade by volume and value are expected to escalate as specialty crops such as fruit and vegetables become more competitive in the world market and affordable to other nations, says Fonsah.
"The magnitude of the increase in agricultural commodity trade is yet to be determined since further depreciation through 2003 and the first quarter of 2004 are anticipated. Exports of fruits, vegetables, fruit juice, wine, grain products and processed items to Canada are expected to reach record highs in 2004."
Although China is the main competitor of the United States in the Japanese market, the present downward trend in the strength of the dollar is expected to boost exports to Japan and put pressure on China, says Fonsah.
The largest U.S. agricultural export to China occurred in May of 2003, and this trend is expected to continue in 2004 for the following reasons: 1) China now is a member of the World Trade Organization; 2) China needs more soybeans for their oilseed processing industry; and 3) China has increased the purchase of cotton and livestock products (calf skins and mink pelts) from the United States.
"Mexico and Russia remain the area of concern for U.S. export trade. Although export volume and value for Mexico are expected to stay the same at a record-high of $7.9 billion - and Mexico still is our third largest trading partner - exports of soybean meal, tobacco, vegetable oils, red meat and poultry decreased."