Export shipping changes may reduce income says
PARK RIDGE, 111. - Proposed
requirements that a large portion
of U.S. farm exports move on
higher-cost American vessels have
the potential to reduce farm in
come by six billion dollars, say
American Farm Bureau
Federation economists.
Their study finds that, if cargo
preference requirements are
enacted by Congress, inflated
labor costs and non-competitive
features of U.S. shipping will work
a significant hardship on the U.S.
farm economy. Anticipating in
creases in shipping costs of from
$4O to $BO a ton, the study concludes
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that farmers could expect reduced
foreign trade and lower farm
prices that are strongly influenced
by export sales.
Current proposals before
Congress would direct that five
percent of U.S. farm exports be
carried on American flagships in
1984—rising one percent a year
until a minimum of 20 percent is
reached on all shipments. Com
puted on the basis of the 1982/83
crop year, Farm Bureau
economist Bruce J. Blanton finds
that a five percent cargo
preference directive would have
required almost six million metric
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tons of grain soybeans to have been
shipped in higher-cost U.S. vessels.
A 20 percent cargo preference
would have figured out to some 24
million metric tons of those
commodities shipped under those
conditions.
“Plainly, the U.S. farm economy
faces serious export difficulties
under such proposals,” Blanton
said.
The study notes substantial
ripple effects of the cargo
preference formula, which—in a
loss of export markets—would
increase farm costs closely tied to
pxoort sales, as well as increase
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the cost of federal farm programs
programs to make up a share of
income lost farm deficiencies in
foreign trade. A significant
disappearance of jobs in the export
trade is seen.
“Certain casualties” under
cargo preference requirements
are the U.S. Department of
Agriculture’s new blended credit
program for exports and the
proposed export PK program—
both promising new ideas to
reduce surplus stocks and
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Lancaster Farming, Saturday, May 14,1983—023
Farm Bureau
government farm program costs to
taxpayers.
liie study concluded that, “in a
competitive world market, ar
tificially high shipping costs of
cargo preference could not be
passed on to foreign buyers, who
would simply buy at lower world
prices without paying additional
transportation charges. These
would be transferred back down
the marketing chain to U.S. far
mers in the form of reduced ex
ports, and lower farm income.”