Economic Factors Affecting Agricultural Trade
Economic Factors Affecting Agricultural Trade
With 95% of the world’s population residing outside of the United States, coupled with around 20% of U.S. farm production (or 1/3 of ag cash receipts) being purchased by foreign consumers, agricultural trade is a critical component of the U.S. farm economy. While ag trade may have a greater benefit to exporting businesses beyond the farmgate, there is a relatively high degree of correlation between ag exports and farm prices/income. Since the early 2000s, U.S. agricultural exports have more than doubled with greater than one-half of U.S. soybeans, tobacco, and wheat entering international markets and a growing importance of trade for U.S. meats and other food and forestry products.
The United States ships agricultural commodities and value-added products to over 200 countries worldwide. Our county also imports a lot of food items from more than 70 nations that can’t be grown in the United States (e.g., coffee, cocoa, bananas), possess unique preferences of U.S. consumers (e.g. wines and cheeses from Europe), seasonal items purchased during winter/non-growing months in the U.S. (e.g., fruits and vegetables from Mexico and Latin/Central America) or can be grown cheaper in foreign markets (e.g. seafood, limes, labor-intensive fruits and vegetables). In addition, USDA reports that a growing share of U.S. ag imports can be attributed to intra-industry trade, whereby U.S. based agribusinesses perform certain processing steps in foreign countries such as Canada and Mexico and then import processed food products from their subsidiaries back into the United States (e.g., meats and other processed foods). Overall, around 15 to 20% of the U.S. food supply is imported.
Author(s) Contact Information:
Policy & Trade
