A salad, a glass of wine, a bit of time and U.S. will be a food importer
The American preference for fresh foods year-round, often washed down with a glass of wine — or something stronger — will drive a $100 billion increase in food and ag imports in the years ahead, according to the Agriculture Department. It would turn the United States into a net importer of food in the long term and question the proud sentiment in farm country that America feeds the world.
As soon as 2023, the United States would begin running ever-larger deficits in agricultural trade, despite exports that are forecast to be the highest ever this year, said USDA economists as part of their 10-year agricultural baseline, released ahead of this week’s Agricultural Outlook Forum. They forecast imports to rise by an average 6% a year, far faster than the 0.8% a year increase in exports in the decade ahead.
“Domestic consumer spending is expected to remain strong over the next decade combined with domestic preferences for an array of agricultural goods that continue to exceed domestic production,” said the USDA in an essay devoted to agricultural trade. “The highest-growth commodity sector by value is expected to be horticultural products, which are projected to expand by around 5% per year.”
Fruits, vegetables, wine, beer, and distilled spirits are the leading horticultural imports. Half of this year’s forecast $165 billion of U.S. ag imports fall in the horticultural category. Sweeteners and tropical products such as cocoa and coffee account for an additional $25 billion. The United States grows only a portion of the fruits and vegetables that it consumes and produces small amounts of coffee.
Growth in horticultural imports will be “largely driven by beverages, especially distilled spirits, which alone comprised over 11% of the total of horticultural products in 2021,” said the USDA baseline. “Other sectors of significant growth include fresh fruit and vegetables (e.g., citrus) and packaged or prepared food products. Many imported products are differentiated (e.g., organic) or high-value products for which demand is less sensitive to price and currency fluctuations.”
For decades, ag exports turned a reliable surplus in a U.S. balance of trade that routinely ran an overall deficit, although there were small deficits on the ag ledger in fiscal 2019 and 2020. They got little notice. Exports provide 20¢ or more of each $1 of farm income, so the farm sector avidly follows export data. The United States is the largest agricultural exporter in the world. The productive capacity of U.S. agriculture often is regarded, at least in the industry, as a safeguard against domestic hunger and a cornucopia for less-fortunate nations.
Ag exports were forecast at a record $175.5 billion this fiscal year, which ends on September 30. They would be large enough to generate a $10.5 billion surplus in trade, according to USDA. It will update its estimates of exports and imports on Thursday.
In its baseline, the USDA said exports would decline in value from 2023-25 before a slow but steady upturn through 2031, the end of the 10-year projection period.
While the Farm Belt monitors bulk commodities such as corn and soybeans in export data, high-value goods, including meat and horticultural products, are equally important in dollar value at present. By 2031, high-value goods would account for two-thirds of exports, just as they did a few years ago, said the USDA.