Even with emerging economies slowing and a record drought that reduced output while making it harder to get crops to ports, agricultural exports are still going strong, the U.S. Trade Representative Ron Kirk said in Atlanta.
U.S. ag exports climbed to $136.4 billion in 2011 and are up an additional 2 percent through October of this year. Since 2009, they have jumped 40 percentk in line with the goals of President Obama‘s National Export Initiative.
When the administration in 2010 began the ambitious effort to double American exports by 2014, its main driver was the fact that every $1 billion in exports equates to 5,000 jobs, according to studies. For agricultural products, the number is 7,000, Mr. Kirk said during a briefing at the Metro Atlanta Chamber on Dec. 11.
That’s one reason for the ambassador’s efforts to open new markets around the world, particularly through the Trans-Pacific Partnership, a U.S.-led trade pact focused on Asia but including Western partners with coastlines along the Pacific, such as Peru and Chile.
Asia is already home to 40 percent of the world’s gross domestic product, and it will account for a large proportion of the growth in the middle class in the coming years, Mr. Kirk said.
“The common denominator of all those billions of new consumers in the world? Most of them are hungry, and most of them live somewhere they can’t feed themselves,” he said. “So agribusiness is a huge, huge place for us to grow.”
The trade rep argued that efficient food production in the U.S. equates to a 25 percent income boost for Americans compared over the rest of the world.
Making the resilience of ag exports all the more impressive, this year has seen one of the worst droughts since 1933. Lack of rainfall has made it harder not only to grow staple crops like corn and soybeans, but it’s also brought the country’s main inland shipping channel to a low point, he said.
“Because of the drought, the Mississippi is about four months away from being just about non-navigable. Right now we have $9 billion worth of merchandise on barges that can’t get down the Mississippi River because it is so low…” he said, likening it to a clogged road with only one functioning lane and workers managing traffic with stop signs.
That shows the need for America to continue investing in infrastructure (and education) even as Congress debates spending cuts and tax increases in search of a bipartisan solution to the looming fiscal cliff, he said.
As for prospective trade deals like the TPP and a movement for a comprehensive free-trade agreement with the European Union, agriculture is likely to be one of the most contentious issues.
Mr. Kirk said one of the hallmarks of his work has been getting various stakeholders to the table to forge deals that open markets while addressing concerns from labor and environmental groups, which led to bipartisan votes passing deals with Colombia, Panama and Korea last year.
“Within 24 months we built a new paradigm,” Mr. Kirk said. “My goal wasn’t passing the agreements. My goal was building a different coalition for trade so that every battle wouldn’t be as divisive as Nafta and China’s entry into the World Trade Organization],” Mr. Kirk told Global Atlanta.
He said the presidents involved in TPP have set a goal of wrapping up negotiations by the end of next year. He wouldn’t put a timeline on it, but was confident that they could overcome sticking points like intellectual-property concerns and labor rights.
“We’ve got some tough issues, but we think we can get it done. We’re pretty good at what we do,” he said.
Countries will always find ways to protect their local industries, even where free-trade agreements remove tariff, but open markets provide transparency and accountability, which can only help exporters, said Jerry Hingle, executive director of the Southern United States Trade Association, which helps U.S. companies market agricultural products all over the world, mostly through trade shows.
Over the past five years, U.S. food exports have skyrocketed, far outpacing growth in other categories thanks to a weak dollar and low interest rates that encouraged farmers to invest in technology and automation, Mr. Hingle said.
“This is the best run that we’ve seen in the United States in the history of the country. Since 2009 our exports are up 50 percent already. It’s been really strong; we’ve had the wind at our backs,” he said.
The drought, he said, has actually increased U.S. food exports by value, since beef and pork producers culled their stocks to deal with higher feed costs that came as a result of shortages in corn and soybeans. That flooded the market with cheap proteins, enticing overseas buyers.
He added that the U.S. is now exporting fewer crops in bulk but instead is creating more value-added products.
In 2011, American ag exports hit a record $155.29 billion.