With all of the attention focused on the domestic refining of corn by the ethanol industry, has the export market for farm products withered away? Not really, based on a presentation that opened the recent USDA Outlook Conference. The bottom line is that commodity exports are increasing, the expansion of trade is a priority, and farm income will be bolstered by grain and livestock that make their way around the world. This is quite a story.

At the beginning of the Outlook Conference, possibly to underscore the importance of the international market, Deputy Undersecretary Ellen Terpstra said there have been four successive years of increased farm exports with the annual value near the $80 billion mark.

Let’s take a quick look at some of the facts that were presented.
• NAFTA’s importance has grown with the fact Canada and Mexico are the largest customers of US food products.
• Chinese demand for US food has surpassed the EU for third place, and the $6.6 billion worth of business will increase $2 billion in 2007.
• The FY 2006 export business of $68 billion will grow to $95 billion by 2016 with the help of global demand for bio-fuels; significantly improving the outlook for the US farm sector.
• By 2020 the size of the middle class throughout the world is expected to double to almost 1 billion households with 87 percent of that growth coming from developing countries, particularly China and India.

Trade Negotiations
• The average tariff charged by foreign nations on imports is 62%, compared to 12% for products imported into the US. Such a barrier adds to the cost of doing business and hinders trade, which is the purpose of the World Trade Organization negotiations.
• The Brazilian complaint against the US cotton subsidy program is in a final stage, and if the US loses its last appeal, then the WTO will determine how much money the US will have to compensate Brazil.
• The Canadian complaint against the US feed grains program is in an initial stage, but 8 other nations have joined in the complaint.

Free Trade Agreements
• In the past decade since NAFTA has been in place there has been a $17 billion increase in US products sold to Mexico and Canada, which will buy $25 billion in 2007, or 1/3 of US farm exports.
• The Free Trade Agreement is still being negotiated with Korea, which is the 6th largest US market, but imposes an average tariff of 50% on products imported from the US.
• As trade agreements are reached, some countries impose health and sanitary restrictions on US products, such as pointing at the BSE issue and halting imports to circumvent free trade rules.

2007 Priorities
• USDA is offering a $20 million grant to help work out solutions to those health and sanitary issues.
• Funding for technical assistance to specialty crops.
• The US will try to gain more seats on the international committees that oversee trade issues. Currently the EU has 83% of the positions and the US has 1%.

Summary:
Even though ethanol gets the headlines, US farm exports are certain “the rest of the story.” Based on projects offered at the USDA’s Outlook Conference, exports are in the fourth consecutive year of growth, USDA has increased its 2007 projections twice in the past four months, and exports which are near $80 billion will push toward $100 billion in the coming decade. The expansion is being fueled by the demand for US food commodities and for bio-fuels. The continuation of trade negotiations, both within the WTO and bi-laterally, is a priority for reduction of tariffs that make US products more expensive and reduce their demand abroad.