Economic Tidbits

Is the U.S. a Residual Supplier?

Nebraska farmers and ranchers rely heavily on exports to support their livelihoods. However, some people argue against such heavy reliance on exports believing the U.S. is a residual supplier. In other words, importing countries buy first from other exporting countries and only buy from the U.S. when needed to fill their buying needs. As such, these people argue export markets are not a reliable source of demand, are subject to significant volatility, and not a dependable source of market growth for U.S. producers.

Agricultural economists at the University of Illinois tackled this issue in a recent paper. The economists examined the variability of U.S. exports of corn, soybeans, and wheat relative to other large exporting countries over the past decade. If U.S. exports were found to be more variable relative to other exporting counties, it might indicate the U.S. is a residual supplier.

Figure 1 shows the researcher findings regarding average variability for certain crops and countries. Australian wheat exports were found to be the most variable, and soybean exports from Brazil were the least variable. Across all countries, the average variability for corn, soybean, and wheat exports was 28 percent, 20 percent, and 29 percent, respectively. U.S. wheat and soybean exports had an average variability of 12 percent, low relative to other commodities and countries, while the average variability for U.S. corn was 28 percent, average across all countries. Corn exports tended to be more variable across all large exporting countries.

The researchers conclude the variability of U.S. crop exports isn’t any more sizeable than that observed by other large exporters. This rejects the notion of the U.S. as a residual supplier. The authors summarize by stating the results, “should make U.S. agriculture feel more comfortable with the viability and sustainability of export-led demand growth.” More information on the research can be found at: https://farmdocdaily.illinois.edu/2021/07/variability-of-exports-for-large-corn-sybean-and-wheat-exporters.html.

Figure 1. Variability of Export Share of Large Exporting Countries, 2011-2020

Source: Zulaug, C., G. Schnitkey, K. Seanson and N. Paulson. Variability of Exports for Large Corn, Soybean, and Wheat Exporters. Farmdoc daily (11):104, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 7, 2021.

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