Could A 59-Year Streak Be Over?
Like death and taxes, one can always count on U.S. agriculture to run a trade surplus with the rest-of-the-world. A trade surplus means the U.S. sells more to the rest-of-the-world than it imports. U.S. agricultural exports typically consist of corn, soybeans, beef, pork, poultry, animal feed, and other products.
Imports from other countries include fruits, vegetables, wine, coffee, malt beverages, and lean beef. The last time the U.S. ran a deficit in agricultural trade was 1959 when Dwight Eisenhower was president when the U.S. imported $144 million more agricultural goods than it sold overseas. Since then, the U.S. has consistently sold more agricultural goods overseas than it has bought, reaching a record surplus of $40 billion in 2013. The 59-year agricultural trade surplus streak may be in jeopardy in 2019.
Figure 1. U.S. Agricultural Trade Balance, 1959-2018
Source: USDA Economic Research Service
Through July of this year, the U.S. is running an ever so slight agricultural trade deficit of $0.004 billion. Between 2015 and 2017, the U.S. had yearly trade surpluses between $17-$20 billion. Last year the surplus dropped to $11 billion. Year to date, U.S. exports of agricultural goods are off 5 percent this year, or $4.3 billion. U.S. agricultural imports are up almost 2 percent, or $1.5 billion. The net result—the disappearance of the U.S. trade surplus in agricultural goods.
Figure 2 provides examples of the struggles for U.S. agricultural exports this year. It shows the percentage changes in exports this year compared to last year for exports of six different agricultural goods important to Nebraska. Seven months into this year, wheat is the only Nebraska export commodity showing a gain at 25 percent over last year. Exports of red meat are holding their own, but corn, soybeans, animal feed, and hides are off compared to last year. Retaliatory tariffs implemented by trading partners, foreign competition, and a strong dollar are all contributing to less exports this year. Meanwhile, U.S. economic growth fuels consumers buying of coffee, fruits and vegetables, wine, and other imports.
Just over three months remain in the year. Exports of agricultural products can still surge to finish out the year, particularly if there’s some movement with China or the agreement with Japan is finalized. Passage of the USMCA with Canada and Mexico could help too. If not, 2019 might be the first year since 1959 the U.S. does not have an agricultural trade surplus.
Figure 2. Percent Change in Export Value, 2019 vs. 2018, January – July
Source: NEFB calculations using data from the USDA Economic Research Service