Grain silos and a cargo ship at Nikolaev port in Nikolaev, Ukraine. Photograph by Vincent Mundy/Bloomberg
How U.S. Farmers Are Winning—and Losing—With Exports
By Alan BjergaAlan Bjerga, Cindy HoffmanCindy Hoffman and Blacki MigliozziBlacki Migliozzi
March 13, 2017

For many years, U.S. dominance as the top agricultural exporter has been slipping even as rising sales have allowed producers to prosper. Simply put, other countries have been able to catch up as they develop more farmland and improve their own trade prospects. Now President Donald Trump’s aggressive positions on U.S. trade relations threaten to worsen the relative decline of U.S. exports, as countries look elsewhere for agricultural products.

Proposed legislation introduced in Mexico’s parliament would block U.S. corn in favor of Argentinian and Brazilian products, and South American countries are trying to seize market share away from the U.S. Adecoagro SA, an Argentine operator of farmland, made its first-ever rice sale to Mexico after betting that souring trade relations with the U.S. could boost South American producers.

And that could exacerbate a problem for the U.S. apparent in agricultural commodities data. A look at the U.S. share of bulk farm commodities shipped overseas—ranging from corn, soybeans and wheat to cotton, coffee and rubber—from the past 15 years shows the U.S. portion of global exports has fallen from 26 percent in 2000 to 18 percent in 2015. While U.S. exports have increased, Brazil and the Black Sea have risen proportionally much faster, making the U.S. less central to agricultural trade.

Top Agricultural Commodity Exporter Loses Dominance

Values are in billions of U.S. dollars

Note: Figures are nominal.

Percent change: Data is shown on a logarithmic scale, which is often used in graphs where there’s a large range of numbers. In a logarithmic scale similar percentage changes are given similar space. So the distance from 1,000 to 2,000 is the same as the distance from 100 to 200, while in a linear scale the distance would be ten times as great.

Much of the trend is simply due to the rest of the world having more room to grow, said Gary Blumenthal, chief executive officer of World Perspectives Inc., an agriculture consultant based in Washington. Brazil had more uncultivated farmland, and still does, while the Black Sea nations of Russia and Ukraine were recovering from the inefficiencies of communism. And greater diversity of food sources is good for the world, he said.

“Considering the underutilization or misutilization of existing agricultural assets, meeting future food needs is not that difficult if other countries can better meet the demand,” he said in a telephone interview.

In some ways, U.S. agriculture has benefited from the rise of its competitors, whose prosperity creates new markets, said Joe Glauber, a former chief economist for the USDA and the lead U.S. farm negotiator during the Doha Round of global trade talks. Increased trade has brought gains across the board, with American farm sales rising 134 percent during the period as sales to China mushroomed and other trade relationships, including those with Canada and Mexico, have prospered. Those three nations are expected to buy 45 percent of U.S. agricultural exports in 2017, the USDA said last month.

Still, from a competitive position, a less-central U.S. has less control over its own destiny, Glauber said. Policies to limit overproduction become useless when other countries can replace acreage, and the U.S. is also more vulnerable to long-term export damage should it discourage trade, simply because rivals are now more able to take advantage of missteps, he said.

“If a trade war led to the U.S. being less able to sell its soybeans or wheat, you would find quickly that the rest of the world would say, ‘thank you.’ ” he said.