Agriculture continues to be a bright spot for U.S. trade. Record-breaking agricultural exports and imports are expected to moderate somewhat but remain relatively high for 2014.
USDA forecasts exports at $137 billion and imports up to a record $110 billion. Pacific Rim and Asian countries are likely to lead the market growth. Grain, feed, cotton and oilseed and product exports will be down, while horticultural product exports, including fruits, vegetables and tree nuts, and coarse grains, will be flat. Livestock, dairy and poultry exports are forecast at a record $31.8 billion.
Market changes are related to changing economic growth expectations for 2014, with growth slowing for Asian emerging economies, including China. The more developed Asian economies (Japan, Korea) and the Western Hemisphere will continue to see gains. Growth in these markets, coupled with a weaker U.S. dollar and improving competitiveness in the U.S. will help minimize losses and preserve export gains.
Pacific-Asian countries have been the fastest growing and top markets for US agricultural exports this past decade. Asia will remain one of our best regional customers, in spite of the slowdown in China and other developing countries. Mexico, boosted by healthy economic growth, will expand purchases from the U.S. An important caveat is that institutional forecasts for world growth vary from -1 percent to near 3 percent. Optimistic projections will not likely be met if growth falters in 2014.
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Trade Promotion Authority for the President continues to be an unresolved issue, although the administration has moved forward on two regional trade agreements. The Trans Pacific Partnership is making substantial progress. Transatlantic Trade and Investment Partnership (T-TIP) negotiations with the European Union will continue through 2014. Both will likely have benefits for much of U.S. agriculture. The Doha Round of the WTO continues to be mired after 12 years of talks, and no new WTO agreement since 1995.
Intermediate-to-long term issues decision makers in the agricultural sector are beginning to discuss include: China’s evolution to the top spot in the global economy likely within 10 years; Washington turmoil over federal deficits and debt that contribute to concern for maintaining the U.S. dollar as the world currency; and growing recognition that tomorrow’s markets for U.S. agriculture are beyond our borders, especially in developing countries where nearly all population growth will take place.
Agricultural leaders, agribusiness entrepreneurs and public policy makers have a solid record of strategic planning with respect to trade and managing risk. Those skills will be even more important in a future fraught with uncertainty.
Parr Rosson is Professor and Head, Department of Agricultural Economics, Texas A&M University.
Larry Sanders is Professor, Department of Agricultural Economics, Oklahoma State University