By Gary Truitt
I tend to be a skeptic when it comes to things like long term weather, political promises, and celebrity fundraisers. One area where I have not been a skeptic is agricultural exports. This may because I have been blessed in my career to have visited many other countries, both developed and developing. I have seen how they produce food, how they consume food, and how they want to improve their diets. Very few places outside of the U.S. have the natural resources, infrastructure, climate, and agricultural technology that we have. U.S. farmers can consistently and sustainably produce more food at higher quality and lower price than almost anyone in the world. This is a good thing because we are going to need these markets in order to keep agriculture profitable.
A recent study has concluded that domestic demand for food is not growing. “The domestic consumption growth rate of animal protein over the last five years has plateaued,” said Will Sawyer, animal protein economist with CoBank’s KED. “With the cow herd at multi-year highs and pork and poultry processors expanding capacity, exports will likely underpin further industry expansion for the U.S. in the years ahead.” As a result, the export market will become vital for the continued viability of the livestock sector. In 2018, the U.S. exported 12 percent of beef production, 16 percent of chicken production, and 23 percent of pork production. While these figures are far higher than where the industry was 20 years ago, further growth in exports will be needed if U.S. producers want to expand production in the coming years. “While the need for increasing exports is clear, it’s frequently met with concern or skepticism among producers and all links throughout the supply chain,” said Sawyer. “Concerns lie primarily in the fear that, the more exports play a role in supply and demand, the more exposure producers and industry participants have to increased market volatility and lower margins.”
This skepticism about exports has been fueled by the Make America Great philosophy that helped put Mr. Trump in the White House. While foreign markets may pose a threat to industrial sectors, that is not the case for agriculture. In fact, growing foreign markets for agriculture benefits our home-grown industry and actually helps make America great.
Skeptics will point to the volatility we have seen this year from trade disruptions cause by tariffs. Yet, the Co-Bank analysis shows that, in the long run, prices and profits rebound after such interruptions. “Profitable growth has always been at the core of the industry and has enabled producers and processors to recover from the historic volatility and costs from 2007 through 2012,” added Sawyer. “The groundwork has already been laid from the supply chain to industry representation to let trade drive the industry forward over the next decade. Long-term, exports will be the key driver for further expansion across the animal protein sector.”
Securing free and fair trade deals and fostering new market development will be major agricultural issues in 2019. It is vital we frame this issue in terms of being good and necessary for U.S. farmers. We need to give the skeptics the boot and to keep this discussion focused on the positive benefits of trade for agriculture.