The U.S. agricultural sector is experiencing some of the best financial times ever, thanks to strong export markets and increased domestic demand. According to newly revised agricultural export forecasts, the USDA predicts sales will reach $61.5 billion for fiscal year 2004.
Secretary of Agriculture Ann Veneman told reporters in a news conference that the strong sales reflect higher prices and increasing demand. Forecasts predict the exports will be $5.3 billion over the previous year, and $1.6 billion more than the record set in 1996.
Veneman also adds that farmers may arguably be in the best financial health ever. The net cash farm income was $63 billion in 2003, well above the 10-year average. Farmers are doing a good job of managing their debt providing a solid balanced sheet, she says.
Trade stimulating agriculture prosperity
"Exports to China continue to be a real bright spot for U.S. agriculture," says Veneman. "U.S. agricultural exports to China will have more than tripled since their accession to the World Trade Organization, rising from $1.8 billion in 2001, to $3.5 billion in 2003, and they are forecast to reach a record $5.9 billion in fiscal year 2004. China was our fifth largest agricultural customer last year, and our number-one market for soybeans, cotton and hides/skins."
China has talked about slowing their booming growth. However, USDA Chief Economist Keith Collins says this is to slow the growth from a current 9% to 7-8%. This growth is still huge compared to world standards and doesn't see the economic growth slowing down the forecasted exports for this year.
Wheat and corn exports are likely to account for 50% of the annual increase in agricultural exports. U.S. wheat is in high demand and is benefiting from reduced competition due to poor harvests in the European Union, Russia and Ukraine. Corn is experiencing strong sales growth to Egypt, Colombia, Israel and Korea.
Other commodities benefiting from large sales increases this year include cotton and horticultural products. Cotton sales are forecast to rise $1.5 billion over last year to $4.2 billion. Cotton farmers are benefiting from strong prices and high global demand. Horticultural sales are forecast to set a record of $13.5 billion, with tree nuts and a broad array of processed foods accounting for two-thirds of the overall gain. Horticultural exports to Canada and Mexico remain strong, sales to Europe of selected products are brisk, and exports to several Asian countries are rising sharply.
Livestock still strong despite diseases
The 2004 forecast of livestock and livestock products of $7 billion is $1 billion higher than the February level. This increase is due to high beef, pork and poultry prices and also the Department's efforts to reopen some key beef and poultry markets that were closed following findings of bovine spongiform encephalopathy and avian influenza. Livestock exports in fiscal year 2003 totaled $9 billion.
Imports, forecast at $51.5 billion for 2004, are $5.8 billion higher than last year resulting in an agricultural trade surplus of $10 billion.
As they have for the past three decades, horticultural imports continue to rise, accounting for about half of the overall import gain. Off-season demand for fresh products and competitive prices are driving the long-term growth in imported fruits and vegetables.