Trade surplus has agriculture sitting pretty in 2010

“We need to export more of our goods,” said President Barack Obama in the State of the Union Address, stating his plans to double America’s exports throughout the next five years to strengthen the economy. This includes agricultural efforts.

According to the Outlook for U.S. Agricultural Trade, issued Nov. 30 by the USDA Economic Research Service, we are well on our way.

It’s a big year for the U.S. in terms of agricultural trade. 2010 exports are forecast to be the second highest on record, increased $1 billion from the August 2009 forecast alone. Our country will also experience resumed import growth.

A reviving global economy is a factor in this surplus. Demand for U.S. high value-products, such as corn, soybeans and cotton, is also influencing the predictions.

Increased demand in oilseed, cotton and dairy markets is also important to note. The USDA says the recent decision by the European Union to sharply reduce its export subsidies has provided a significant boost to global dairy prices.

Since the August 2009 Forecast
  • Exports raised $1 billion to $98 billion
  • Imports lowered $4.5 billion to $77.5 billion
  • Surplus raised $5.5 billion to $20.5 billion

Grain Export Forecasts in Summary
  • Corn exports will increase
  • Soybean exports will increase

So what does this mean to American farmers and consumers?

Farmers in highly affected industries – corn, soybeans – should sell stored grain to take advantage of the
strong export demand. Farmers in industries in which exports are predicted to decrease should carefully measure future-production planning.

Consumers can take co
mfort in a healthier national economy. "Retail food-price inflation in 2010 will rebound from the 2009 level toward a moderate level, slightly above the long-term historical average," the USDA stated.

Food-price inflation will not be as strong as in 2008, when corn, wheat, soybean and fuel prices were much greater.

Forecasted Exports in billions by Commodity Group

The financial gains of bountiful exports should be reflected in our nation’s GDP. When the dollar appreciates against foreign currencies, U.S. exports cost more in foreign local currencies and thus demand for them declines. Conversely, a depreciation of the dollar increases U.S. agricultural competitiveness by lowering prices of U.S. products in foreign markets, as explained by the U.S. Department of Economic Analysis.

America is exporting more goods than ever to East Asia but exporting less to North America. Though export figures to Canada have decreased, Canada and Mexico will remain our country’s top export markets in 2010.

In regards to our country’s imports, though the volume of U.S. farm imports fell by 3 percent in 2009, which is the first volume drop since 1995, USDA said that a further retreat is not forecasted in 2010.

2010 agricultural imports are forecast up $4.1 billion since August to $77.5 billion. The increase consists of an additional $400 million in livestock and meats, $200 million in dairy products, $200 million in grains and feeds, $650 million in oilseed products and $1.2 billion in sugar and tropical products.

High domestic unemployment, weak disposable income, and lower purchasing power of the dollar contributed to our country’s need for increased imports.

America’s balance of trade is welcoming to consumers and the agricultural industry and is beneficial to our national economy.

Challenges for biodiesel industry impacting national economy and environment

An extension of a $1-per-gallon biodiesel tax credit originally enacted in 2004 is being urged in Congress. The tax credit, which expired Dec. 31, 2009, encouraged businesses and consumers to use biodiesel to reduce the nation’s dependence on foreign oil.

MarketWatch reporter Steve Gelsi echoes, “Despite Washington's promotion of ‘green’ jobs, the biodiesel industry could instead deliver green-collar layoffs if the program isn't revived.”

Biodiesel is a domestic, renewable fuel made primarily from soybeans that is biodegradable and cleaner burning than petroleum diesel fuel. It aids in job creation, offers energy security and promotes a healthier environment. For these reasons, a retroactive extension of the biodiesel tax credit, directly reflected in the price of fuel at the pump, is being sought in Congress.

Last year, the U.S. biodiesel industry displaced more than 26 million barrels of foreign oil, supported nearly 23,000 jobs in all sectors of the economy, added more than $4 billion to the nation’s GDP and generated $866.2 million in tax revenue for federal, state and local governments.

“The U.S. has nurtured its biofuels industry to this point, and it would be a shame to see it slide back because the federal government failed to renew critical tax breaks for producers,” said a columnist in Kansas’ Hutchinson News.

Without domestic biodiesel production to offset the country’s energy costs, gas prices would increase between 20 cents and 35 cents per gallon, according to the U.S. Department of Energy. If the tax-credit extension is not passed, the average U.S. household will not experience the $150 to $300 savings it did in 2008.

In a letter to House Democratic Leadership Jan. 8, Iowa Reps. Leonard Boswell, Dave Loebsack and Bruce Braley urged for quick passage of the biodiesel tax-credit extension when the House returns for session.

Failure to extend the credit means that biodiesel will now be significantly more expensive in the marketplace than petroleum diesel fuel. As a result, the production and use of biodiesel throughout the nation has been severely curtailed and layoffs for workers in businesses supported by domestic biodiesel production are imminent, directly affecting the prosperity of biodiesel plants, biodiesel distributors and biodiesel retail fuel stations.

"Pretty much every biodiesel-production plant is idle," said Michael Frohlich, director of communications for the National Biodiesel Board (NBB).

The domestic production and use of biodiesel provides critical economic, security and environmental benefits that cannot be ignored.

Do you use or do you know anyone that uses biodiesel? Do you think consumers are aware of the effects domestic biodiesel production has on this country? Should greater emphasis be given to this issue by the Obama administration?