Market diversification is path to increased farm exports, say trade officials

U.S. food and ag exports are concentrated in four markets that generate nearly $6 of every $10 in sales, said two senior U.S. ag trade officials on Thursday. To expand sales volume, they said at a trade group meeting, new customers must be developed in countries that have been off the export radar in the past.

Ag exports are forecast to fall for the second year in a row during fiscal 2024, down 12% from the record $193.1 billion of fiscal 2022, while imports are expected to reach $200 billion for the first time, according to USDA analysts. The United States has run an ag trade deficit in four of the past five years.

Market diversification could be the solution, said Doug McKalip, U.S. chief agricultural negotiator, and Alexis Taylor, USDA undersecretary for trade. The USDA is launching a new cost-sharing initiative, the Regional Agricultural Promotion Program, to help exporters break into new markets and expand market share in growth markets. It has made $300 million in grants available in the program’s first year.

McKalip, who appeared with Taylor at the American Peanut Council conference, urged exporters to look to countries that “have a lot of potential” and said the administration was trying to give a boost to specialty crop exports. He said the U.S. trade representative’s office was “very deep” in negotiations with Taiwan, Kenya, and 12 countries in the Indo-Pacific Economic Framework. The administration, he said, is trying to speed up the pace of trade talks, which typically take years to reach fruition.

“Diversification is an important tool for maximizing growth opportunities for your industry as well as a way to hedge risk of market contraction and general volatility in the global marketplace,” said Taylor. “While we remain committed to our established consumer base around the world, we are also setting our sights on those growth opportunities … in places like Africa, Latin America, the Middle East, and Southeast Asia.”

Those vast regions, with huge populations, are forecast to account for one-fifth of U.S. food and ag exports this fiscal year. By contrast, China, Mexico, Canada, and the EU, the four largest customers, would generate three-fifths of sales.

China, increasingly viewed as an adversary nation, is the No. 1 destination for U.S. food and ag exports, with purchases forecast at $29.5 billion this year. Annual sales to China slumped to $17 billion during the Trump-era trade war, then crested two years later, in fiscal 2022, at $39.2 billion. During the trade war, Trump officials spoke about the need to find alternative markets.

Soybeans, cotton, rice, wheat, and feed grains such as corn — “major bulk products” — account for one-third of U.S. export sales. Horticultural products, such as fruits, vegetables, and nuts, make up nearly a quarter of sales. Livestock, dairy, and poultry are one-fifth, and sugar and related products such as coffee are 4 percent.

U.S. imports of sugar, fruits, vegetables, and nuts are nearly twice as large as exports of those products. On top of that are imports of beef, wine, and distilled spirits, estimated at $22.8 billion this year.