We recently ran across a belt buckle from the 1980s that read, “The American Farmer feeds the world.” For many producers, that statement underlies much of what they do from their on-farm decision-making to the policies they support.
As the 1996 Farm Bill was being debated, we remember talking to farmers who wanted to “get the government out of agriculture.” When asked why, they argued that government policies had shut them off from the export market. With the government out of the way they believed that world markets for grains were theirs for the taking because, as they said, “we are the most efficient farmers in the world. Let us loose and we can outcompete everyone.”
In the first decade of this century, some of the major farm and commodity groups pressured their legislators and trade representatives for trade deals that would reduce tariffs on agricultural products. The belief was that with a “level playing field” the exports of U.S. agricultural products would boom.
When prices began to surge a few years back, there was also a resurgence in the belief that the key to feeding the hungry world was the application of advanced technologies to the production of grains in the developed nations, primarily the U.S. Much less was said about the potential for developing nations to increase their production of staples to better feed the hungry they already have and to provide for population growth in the future.
Based on those expectations, one would expect to see U.S. grain exports to steadily increase over time or at least as fast as or faster than other exporters. Certainly, given the dominant narrative, it would not be expected that the U.S. share of world exports would remain steady. So what happened?
U.S. grain (barley, corn, oats, rice, and wheat) exports peaked at 106.8 million tonnes in the 1980-81 crop year. U.S. grain exports are projected at 88 million tonnes in this (2010-11) crop year, 82.4 per cent of grain exports three decades earlier. Roughly, for every five bushels of grains exported from the U.S. in 1980-81, four bushels will be exported in 2010-11.
Although not directly comparable to grains as a food staple, U.S. soybean exports have increased markedly over the decade. If one adds soybean exports to the grain numbers, the 1980-81 crop year U.S. exports were 126.5 million tonnes and the 2010-11 projected exports are 131.3 million tonnes, an increase of 3.8 per cent – not an annual increase of 3.8 per cent but a 3.8 per cent increase from the beginning to the end of a 30-year period.
So how do U.S. exports compare to world exports over the same period? In the 1980-81 crop year, world exports of the five grains were 196.7 million tonnes. For the 2010-11 crop year, world exports of those same grains are projected to be 261.3 million tonnes, an increase of 37.6 per cent. In 1980, the U.S. accounted for 54.3 per cent of world exports.
By 2010-11, with world grain exports increasing by 37.6 per cent compared to 1980-81 and U.S. exports decreasing by 17.6 per cent, the U.S. share has dropped from its 1980-81 per cent of 54.3 to 33.7 per cent.
If one adds soybeans into that mix, world exports increased from 217.5 million tonnes to 359.6 million tonnes over that same period, an increase of 65.3 per cent compared to a 3.8 per cent increase in U.S. exports of soybeans and grains. The U.S. share of world exports of soybeans and the five grains declined from 58.1 per cent in 1980-81 to 36.5 per cent in 2010-11.
Amazingly, the drop in U.S. share of world exports between the two periods is greater when soybeans are included than when only the five grains are considered.
So what is happening here? While, over the last three decades, the U.S. has seen itself as the world’s ongoing breadbasket, the numbers indicate a much more modest role, that of the residual supplier. Our exports are most likely to increase when both importing nations and our export competitors run short on supplies.
A recent news story suggests that the future is likely to be more of the same. In that story, we read that a Chinese company is planning on acquiring access to 500,000 acres of farmland in Argentina, Australia, Brazil, the Philippines, Russia, Venezuela, and Zimbabwe. In some countries, they will provide machinery and labour for a portion of the crop, while in others they will purchase land. In still others, the land will be rented.
The current high prices and tight supplies have provided two countervailing forces.
They have impressed upon the Chinese the importance of locking in the supplies they need to feed their people. At the same time some countries are restricting exports or limiting land ownership by foreigners. However, the Chinese do not need to make progress in all of the countries to lock in at least a portion of their needs, including their need for soybeans, the bright spot in U.S. commodity export numbers.
Concurrently, there is a gradual reaffirmation of agricultural development concepts that were widely held at one time but fell out of favour the last quarter- century or so. Developing countries usually develop by developing their agricultures and, by increasing agricultural production for domestic consumption so they can better take responsibility for their food requirements.
When we look at U.S. commodity exports over the next couple of decades, we will not be surprised if the Yogi Berra line, “It’s déj vu all over again,” will be true; the U.S. may well remain the world’s residual supplier of agricultural commodities.
Daryll E. Ray holds the Blasingame Chair of Excellence
in Agricultural Policy, Institute of Agriculture, University of
Tennessee, and is the director of UT’s Agricultural Policy Analysis
Center (APAC). Harwood D. Schaffer is a research assistant professor at APAC.