12—Lancaster Farming, Saturday, October 21, 1972
*lO Billion in Ag Exports Predicted by 1980
In the wake of the record $8
billion in farm exports during
fiscal ’72, trade observers are
speculating' about the rate at
which our exports will expand
over the next several years.
Some people predict we’ll top $lO
billion before 1980.
Quenten M. West, an ad
ministrator for the USDA’s
Economic Research Service
explored this possibility in a
paper presented at the annual
meeting of the American
Agricultural Economics
Association last August.
Basing his assessment on ERS
trade projections, Dr. West sayl a
$lO billion export level by or even
before 1980 is a reasonable goal.
But he emphasized that certain
conditions must be favorable.
Dr. West also hinted that even
higher export levels might be
reached through negotiations to
reduce the nontariff barriers to
free world trade
Tariffs, he pointed out, are no
longer the major obstacles to free
trade Six rounds of the General
Agreement on Tariffs and Trade
(GATT) successively lowered
customs duties
In recent years, however, other
trade and domestic policies have
emerged as the main inhibitors to
Farmers Kept $ 731 million
Of Own Production in 71
A class from the city was
touring a dairy farm near
Maryland’s Sugarloaf Mountain
when someone asked the farmer
where he got his table milk
“The supermarket,” came the
reply, causing a good deal of
surprise among the students
They didn’t know it, but few
farmers today raise much of
their own food It’s simply easier
for them to buy it in this age of
specialization
That dairy farmer, for in
stance, never touches the milk he
sells It’s pumped from cow to
storage tank for pickup
Last year, the Nation’s 9 4
million farm people kept about
$731 million worth of their
production for their own food use,
valued at average prices farmers
received in 1971
That’s only a third of the value
they kept 20 years ago, when 21 9
farm people used $2 3 billion
worth of their own livestock and
products, crops, and fuel wood
Part of this decline is due to the
decreasing farm population and
part, to increasing specialization
by farmers
Most of the consumption is in
livestock products Farm
households kept more than $520
million worth last year Cattle
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free world trade. These nontariff
barriers include domestic sup
port programs, export subsidies,
domestic consumption restric
tions, and preferential trade
agreements.
Domestic support programs
have been instituted in the U.S.,
Western Europe and Japan to
raise farm income by supporting
commodity prices. The programs
have led to surplus production,
which in turn has spurred greater
use of trade policies and sub
sidies to protect these programs.
The net result has - been to
discourage trade based upon
economic comparative ad
vantage.
Some countries use export
subsidies to remove surpluses
that develop when domestic
prices are supported above their
equilibrium levels. In some
cases, the subsidies have been
more costly than successful in
expanding exports.
Restrictions on domestic
consumption are a commonly
used nontariff barrier in most
European countries. In curbing
consumer demand through high
prices, these measures also
restrain imports.
Preferential trade agreements
among trading blocs pose a
and calves made up nearly half
this total, followed by dairy
products, hogs, and eggs
Crops accounted for a much
smaller share, not quite 30
percent of the total value of
products produced and consumed
on the farm
serious threat to free trade by
granting easy access to each
other’s markets —thus
discriminating against trade with
other nations.
In projecting U.S. farm trade to
1980, ERS is placing increased
emphasis on assessing the likely
impact of changes in these
national policies.
Three sets of trade conditions
and their possible effects on U.S.
farm exports are being
examined; 1) export conditions
that might result in zero growth,
2) those that would yield
moderate growth, and 3) those
that would significantly ac
celerate farm exports.
In the zero growth situation,
major countries achieve in
creased levels of self-sufficiency
through such nontariff barriers
as income and support programs.
Zero growth assumes that—
The enlarged European
Community (EC) becomes
virtually selfsufficient in grain
production,
anticipated grain markets in
the USSR and Eastern Europe
fail to materialize, and the area
becomes a net exporter of grains;
livestock economies in the
developing countries experience
little growth,
the “green revolution” in
developing nations accelerates;
and
our P.L 480 commitments
hold at relatively low levels.
If all these assumptions were
valid, U S farm exports would
expand little, if any, above the
current $8 billion level. But even
if nontariff barriers remain
essentially unchanged, it’s more
reasonable to expect some export
expansion
Moderate growth would result
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from modification of some or all
of the assumptions linked to the
zero growth conditions. For
example, the EC might remain a
major grain importer. And the
USSR might continue to import
U.S. grains or possibly sup
plements to improve feeding
efficiency.
Too, developing nations will
probably make a concerted effort
to build up their livestock in
dustries. This would augur well
for developed nations with grain
surpluses, although exports to
some developing countries would
likely move under concessional
programs.
Under these circumstances—
even with no basic changes in
nontariff barriers—U.S. farm
exports could easily top $9 billion.
If all factors were favorable, the
$lO billion mark could be topped
by or even before 1980.
The third set of conditions
assumes negotiations succeed in
lowering nontariff barriers. The
result would be rapid expansion
of world trade as a totally new set
of trade conditions emerges.
Exports of commodities in
which the U.S. holds a com
petitive advantage would rise
significantly. The gains,
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however, would be partially
offset by higher imports of
products in which the U.S. lacks a
competitive edge. Moreover,
exports of some commodities
would fall.
For example, ERS’s
preliminary analysis shows
exports of feed grains and
soybeans would rise sub
stantially—possibly by as much
as $4 billion. Two main factors
would contribute to the in
creases: accelerated demand for
meat and livestock products
resulting from lower prices in
developed importing countries;
and a drawdown in Western
Europe’s grain output from
levels that would have existed
under current high grain prices.
But opening export markets for
feed grains might only be
possible if we open our import
markets for beef and dairy
products. This could lift imports
by roughly $1 billion (mostly
dairy products), thus trimming
the net gain in export earnings.
Negotiations might also result
in similar nontariff removals that
would tend to encourage higher
U.S. imports of certain com
modities, particularly fruits and
vegetables.