Posted on 12/20/2004 6:03:47 PM PST by hedgetrimmer
For nearly two years, U.S. farmers and ranchers watched as the second shoe grew bigger and bigger.
On Nov. 22, it officially dropped. According to U.S. Department of Agriculture Economic Research Service estimates released that day, 2005 will be the first year in nearly 50 that America will not turn an agricultural trade surplus.
The dubious milestone was met with odd silence at USDA. Odd because throughout the fall presidential campaign, Secretary of Agriculture Ann Veneman talked herself hoarse each time some farm community in a swing state dedicated a new, USDA-sponsored street light.
Now, as America is about to become a net food importer for the first time in generations, Veneman has no explanation of how Bush Administration economic and trade policies have taken American agriculture from a $13.6 billion trade surplus in 2001 to a flat line in four short years.
Who can blame her. Would you want to be the first secretary of the last 11 to report such death-in-the-family news?
The news is made worse by the speed in which ag imports overtook ag exports. In August, ERS predicted a $2.5 billion ag trade surplus for 2005, the skinniest since 1972 but still a surplus.
Three months later, though, ERS lowered 2005 exports by $1.5 billion, raised imports by $1 billion (in a curious coincidence, both now are pegged at $56 billion) and the thin margin was gone.
In reporting the change, ERS chose language more suitable to politics than economics. Yes, 2005 ag imports will rise by $3.3 billion over 2004. "But, this 6 percent gain in import value," it noted, "is less than half the 15 percent import pace in 2004 import value."
Translation: While both of your shoes were on fire in 2004, only one will be on fire in 2005.
Ironically, the very thing farmers have been told for years would be their savior, a cheaper dollar, is worsening the ag trade balance. Despite the dollar now falling to new lows against most of the world's major currencies, 2005 ag exports will be $6.3 billion less than in 2004.
Simultaneously, the fast-cracking dollar has not slowed more expensive imports. Indeed, says ERS, the 2005 "import volume (will be) unchanged," but "their higher prices will continue to push the total U.S. import bill up."
The ERS report carried other surprising news. For example, beef imports "are forecast at $3.8 billion, up $300 million from 2004 ... (when) beef was among the fastest-growing imports, posting 27 percent growth in value and 23 percent in volume from 2003."
Big news, too, is where that beef is coming from. According to ERS, "Imported fresh or chilled beef, largely from Canada and worth $1.5 billion, increased 54 percent in 2004... (while) frozen beef imports, mostly from Australia and New Zealand, jumped 46 percent..."
Wow, and all this occurred while the U.S.-Canadian border remained closed to live cattle imports (the White House promises to open the border soon) and quotas limited Aussie beef exports to the U.S.
Imagine the flood to hit when the World Trade Organization kicks the American door open even more.
On second thought, little imagination is necessary. Three news items - all tied to Brazil and combined with the trade report - paint a clear picture of where U.S. farmers and ranchers will find themselves in a more open global food market: farther behind.
Brazil recently noted it exported more soy and soy products in the first 10 months of 2004 than the U.S. will export in the entire year - $9.3 billion for them, $8.83 billion for us.
Also, in mid-November Brazil and China formalized an ambitious trading relationship. The deal opens China to Brazilian beef, soy and minerals and commits China to invest $5 billion to $7 billion in Brazilian roads, ports and railways.
Additionally, the Chicago Board of Trade recently confirmed it will launch a Brazilian soybean futures contract in mid-2005. The contract "is a historical change," notes a CBOT spokesman.
These latter news items suggest the ERS trade report wasn't the proverbial second shoe to drop. It was the first; and more are coming.
PING
We had better take better care of our farmers, with the way the world feels about the US, we'd better be able to feed ourselves.
I find it hard to believe that Bush is responsible for this. It seems to me it's the long-term result of letting down the bars to trade. Exactly what has Bush done to change the picture?
It seems to me that I read an article last year on the investment opportunities of cattle raising in Brazil and Argentina. In other words, this is just more outsourcing, which began quite some time ago.
The reason is simple, NAFTA. It is much cheaper to raise many foods in Mexico and import them into the US.
Farmers with capital are looking at moving their farming operations out of the country in greater and greater numbers. Farmers without capital to export are losing their livelihoods and farms unless they can find a pricey niche product to produce.
We are feeling Al Gore's "wrenching transformation" of sustainable development which continues to be implemented by the Bush administration.
My family has been farming a couple thousand acres in Tennessee for several generations. This year they bought huge tracts of farm land in Brazil.
I agree. Food is a critical industry for the defense of the country. If we become dependent on foreign food, the UN automatically gets the leverage over us it needs to exert sovergnty over us.
especially when they have little or no pesticide or quality standards there. why should we expect any better quality for cheap imported food, then the quality of the cheap manufactured junk coming from china.
free trade is the race to the bottom - in what we buy, in the jobs available to us, and now in the food we eat.
what the Bush administration is guilty of - is seeing the effects of unrestrained free trade and these GATT/WTO agreements, and not doing anything to stop it. Its like the driver of a car that sees an impending collision, but hits the gas pedal instead of the brake.
Example: I have a trade deficit with my grocery store. They take all my cash and all I get in return are canned vegetables and ground beef and other dry goods.
They never come to my factory to buy an equivalent amount of widgets so our trade is more balanced.
Somehow I have yet to plow the backyard and plant vegetables and raise chickens.
I could if the need arose, but to date I remain satisfied with the current arrangement.
Best regards,
That's exactly what our Liberal Globalist New World Order Presidente BUSH wants to accomplish.
Nothing but bellyaching. Americans need to get past the idea that we need to produce anyting. We are consumers folks. The rest of the world produces; we consume. That's just the way it is. Get over it.
I don't believe that. It's inconsistent with Bush's other actions. I think Bush just has a misplaced faith in the free market's ability to optimize resources.
The market can and will optimize resources across the total market, but that doesn't always equate to what is in the best interest of the U.S. Especially when it means that we become net importers of food and exporters of the means of production.
This is the "half empty" viewpoint. US farmers do not care so much whether there is an ag surplus or deficit. If exports are up and non-import domestic sales are up, then times are good, even if imports are also up.
and where does the money for that consumption come from, when the production jobs go offshore? government? more debt? how long can that last?
Read it and weep.
You can't be serious!
Wealth comes from production not consumption. If your view is maintained America will utterly and completely loose its wealth. Don't forget that America's history and traditions are production oriented. Shall we loose our culture as well?
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