Agriculture andInternational
Trade
Chapter 16
Discussion Topics
Growth and instability in agricultural trade
The importance of agricultural tradeThe composition of agricultural tradeDirection of U.S. agricultural tradeU.S. agricultural trade performance
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Importance of Trade
Crop agriculture in U.S. has become export dependent.
More than one-half of annual cotton, rice and soybean production is exported
Livestock agriculture less dependent on foreign sales for sustainable demand
Greater dependence on imports as well
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2.5
4.0
5.5
7.0
8.5
10.0
11.5
13.0
14.5
U.S. Exports and Imports as a Percent of Total U.S. Milk Solids Production
Dairy Exports
Dairy Imports
% of Dairy Solids
Dramatic DropIn Milk Prices
5
Importance of Trade
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U.S. agricultural exports generate jobs inboth the farm and nonfarm sectors…
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Bulk commodities dominated U.S. agricultural exports until the early 1990’s when value-added sales began to-increase.
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U.S. agricultural exports by region and selected countries.Note the growing importance of Asian markets (36%).Canada (15.6%) and Mexico (14.1%) accountfor more than all of Western Europe (10.2%).
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U.S. agricultural imports by region and selected countries.Western Europe is a more significant supplier of imports to theU.S. than it was a source of export sales for U.S. agriculturalexports. Latin America is largest supplier to U.S.
Balance of TradeThe balance of trade is a measure of overall
trade performanceTrade Surplus
Exports greater than imports Provides capital since the nation is selling more than it is
buyingTrade Deficit
Imports greater than exports Can reduce a nation’s capital reserves over time forcing it
to either limit imports or borrow capital
U.S. agriculture has recorded trade surpluses since the 1950’s
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SummaryTrade distortions have prompted nations to
seek general agreements on tariffs and trade (GATT).
U.S. agriculture becoming increasingly dependent on export sales
Imports supplying a growing share of domestic food and fiber consumption.
Developing countries are supplying a growing share of world exports
U.S. agriculture generates a trade surplus each year partially offsetting trade deficit in other merchandise
Chapter 17 focuses on exchange rates and their impact on trade….
