Spring 1995
Ag is Top but Unsung Export Performer
By Paul Aasness, Chairman; Minnesota Wheat Council
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
Exports are expected to be bolstered by expanding foreign demand for U.S. bulk commodities, as well as meats, fruits, vegetables and other high-value consumer foods.
This year's robust U.S. ag export forecast is projected to result in a U.S. ag trade surplus (exports minus imports) of $20 billion, the highest since 1982.
Our strong farm business overseas churns out even larger numbers domestically. According to USDA estimates, U.S. ag exports last year generated more than $100 billion in business activity throughout the U.S. economy.
Further, last year's ag export performance provided jobs for nearly a million U.S. workers in all 50 states. More than half the Americans whose weekly paychecks depend on ag exports work off the farm in processing, manufacturing, marketing, and transportation positions.
The graph on this page really puts the U.S. trade balance into perspective. Agricultural products are the real bell ringer. The ability of the American farmer to produce far more than what is needed domestically is a major factor in our ability to provide such a huge supply of ag exports to a hungry world.
Agriculture's export track record has been helped by the Foreign Market Development Program (FMD), which is part of the USDA's Foreign Agricultural Service (FAS) overseas market promotion programs. It is judged by many as one of the most successful examples of cooperation between the private sector and government.
FMD activities are carried out by industry organizations- known as cooperators- including U.S. Wheat Associates, the export market development organization that is governed by a producer-elected board on behalf of American wheat farmers.
U.S. Wheat Associates is supported in part by checkoff dollars administered by the Minnesota Wheat Research and Promotion Council.
For bulk commodities such as wheat, FMD is used primarily on working directly with end users and processors, such as millers and bakers. The program helps provide commodity specific technical assistance and ongoing training programs on the use of the U.S. wheat marketing system, which is essential to gaining and maintaining overseas markets.
This activity is becoming more important due to the rapid and almost complete privatization of global wheat purchases. Markets formerly serviced by one visit to a government buying agency now require visits to ten or 20 more buyers, making trade servicing activities conducted through the FMD even more important.
A classic example of how wheat has benefitted from FMD: In 1983, U.S. Wheat Associates with the help of FMD funding introduced instant noodle technology in southern China, through the installation of the first instant noodle facility in the region. Now there are more than 1,000 noodle plants in operation and wheat consumption in southern China has almost doubled.
Despite its success, however, FMD funding was cut by 10 percent in FY94 and by $10 million, or 30%, in FY95. FMD expenditures for all ag industry cooperators in FY94 was about $31 million. In comparison, the European Union spends more than twice that, $80 million, on its wine export subsidies alone.
Currently, one of the highest priorities for U.S. Wheat Associates is to secure funding for FMD at the FY94 level, which would represent only 0.16 of one percent in President Clinton's proposed FY96 ag budget of $62.3 billion.
It would come to no surprise for those who know me when I say I am no fan of big government, and it is becoming increasingly apparent that federal government spending is indeed under more scrutiny. However, I do support measured government spending on programs that have proven worth, and have yielded results.
The impressive role ag products play in our nation's trade balance is due in part to the efforts of checkoff dollars combined with funding from the FMD. If producers are to become more market reliant, the FMD is one program that for a nominal investment returns huge benefits for U.S. growers and the economic well-being of the United States.