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US trade deficit tops half trillion as farming imported Original Source Link: (May no longer be active)
http://www.kansascity.com/mld/kansascity/news/world/10248331.htmhttp://www.kansascity.com/mld/kansascity/news/world/10248331.htm
Posted on Mon, Nov. 22, 2004
Government Projects Farm Exports to Drop
MARTIN CRUTSINGER
Associated Press
WASHINGTON - U.S. farm exports will plunge by 10 percent to just over $56 billion in 2005 as soaring crop production around the world lowers prices and results in greater competition for U.S. farmers, the Agriculture Department predicted Monday.
The projected decline follows a year in which sales of American farm products hit an all-time high of $62.3 billion for the 12 months ending in September, the department reported.
USDA forecast that Americans' appetite for foreign farm products would continue to increase, pushing imports of agriculture products to a record high of $56 billion in 2005.
That would mean that U.S. farm sales abroad and imports of agricultural products would be roughly in balance, something that last occurred in the late 1950s, according to USDA statistics.
While USDA trade statistics show the United States still enjoyed a surplus in farm trade in recent years, the Commerce Department - the agency charged with keeping the government's overall trade accounts - has reported that the U.S. trade surplus in agriculture disappeared in 2002, with small deficits that year and in 2003.
Through September of this year, the trade in farm products has been roughly in balance, according to Commerce statistics. One reason for the different statistics is that Commerce figures are based on a calendar year while the USDA figures are computed on the federal government's budget year, which starts Oct. 1.
For decades, the United States counted on farm products to help trim the country's overall trade deficits.
In recent years, however, that advantage has disappeared as foreign food products - from wine and beer to fresh citrus and vegetables - have grown in popularity with American consumers.
U.S. farmers have also faced increasing competition in global markets. Brazil, for example, is taking away traditional American markets in such areas as soybeans. Russia has gone from being a huge customer of American wheat to a competitor with its own large exports of wheat.
Agriculture in the United States has also been hurt by European barriers to certain genetically modified U.S. foods as well as last December's discovery of the first U.S. case of mad cow disease, which triggered bans on U.S. beef by a number of countries.
USDA said the United States exported a record $62.3 billion in products for the 12 months ending in September, compared with $52.7 billion in imports. The level for both exports and imports was at an all-time high in 2004.
But for 2005, USDA projected that imports would rise by 6.3 percent to $56 billion while exports will drop by 10 percent to $56 billion.
The government blamed expected lower prices for wheat, corn, soybeans and cotton for the export decline. Some of the drop in prices will be made up in higher volume, USDA said, projecting an increase in bulk volume of 2.3 million tons next year, with both corn and soybean shipments projected to increase in volume terms.
While pork and dairy exports will continue to be strong, beef exports will continue to be limited, USDA said.
USDA projected that imported food products will continue to rise, led by wine, beer, fruits, vegetables and beef, although the government said the increase is likely to be slower than in recent years as a weaker dollar makes imported goods more expensive for American consumers.
The overall U.S. trade deficit in goods and services hit a record $496.5 billion last year and is on track to top $590 billion this year.
ON THE NET
Agriculture's Foreign Agriculture Service: http://www.fas.usda.gov
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