US farmers get encouraging news as export outlook brightens
Chicago — Uncle Sam knew he served too much. The dinner table almost always overflowed with heaping bowls of corn and soybeans and wheat. And year after year, no matter how hard they tried, Americans could never finish off the surplus. So, in the 1970s, Sam began to invite large numbers of foreign guests, with a simple logic: If America wouldn't clean her plate, maybe foreign countries could.
Although the logic seemed to work in the '70s, it has gone awry in the '80s.
Why? Because of world recession, a strong dollar, and inflexible farm programs, heaped on top of ill will already created by a couple of US grain embargoes.
The result: Uncle Sam's dinner table was not only overladen with food, it was losing guests and was loaded with problems.
This year the picture is beginning to brighten.
Recently, when state Farm Bureau leaders gathered here to talk about export prospects, they were given a two-pronged prediction:
1. US farm exports will increase.
2. They won't increase very fast.
The US Department of Agriculture (USDA) expects farm-export revenues this year to climb 8 percent above fiscal '83. That good news is tempered, though, by the fact that higher prices, not higher export volumes, will cause the increase, and that 1983 was such a poor year anyway.
Since farm products account for one-fifth of US exports, the predictions are good news - especially after the recent announcement that the woeful US trade deficit had reached a one-month record in January.
For agriculture, the figures were both good news and bad news. Revenues from farm exports were the highest in nearly two years. Unfortunately, revenues from agricultural imports were at an all-time high, says Thomas Warden, agricultural economist with the USDA.
Economists predict that a mixed bag of good and bad news lies ahead for US farmers.
One bright spot is that the US dollar appears to be weakening. The general consensus is that the dollar is overvalued by 25 percent, says Dr. Luther Tweeten, an agricultural economist at Oklahoma State University. If it returns to normal levels, he predicts farm exports would jump 10 percent.
That increase is long-term, points out Terry Francl, an agricultural economist with Continental Bank, and common wisdom says the initial impact won't be felt for six months to a year. In the short term, the deficit could even increase as imports into the US eat up more dollars and other nations turn only slowly to the bounty of American farmers.
Another bright spot is the import potential of the booming Pacific Rim. At conferences for specific commodities during the Farm Bureau meeting, speakers spoke glowingly about such countries as South Korea, Taiwan, and Malaysia, whose growing populations and economies would be demanding more and better food.
And, adds Mr. Warden of the USDA, these countries have such a large trade surplus with the US that they are eager to buy food and stave off trade frictions that have arisen in US ties with the European Community (EC) and Japan.
Japan probably will allow in more US beef, citrus, and noncitrus products, says Don Nelson, assistant US trade representative for agricultural policy. But the additional amounts the Japanese are talking about in beef, for example, amount to less than one hamburger per Japanese per year, he says. In the EC, he doubts much can be done in the near term.
Currently, a storm is brewing between the US and the EC over corn gluten feed. The feed - a byproduct of processed corn used primarily to feed dairy herds - is a drop in the bucket of US-EC trade. Nevertheless, the Europeans want to restrict imports of corn gluten feed to 3 million metric tons. Some 3.7 million tons - 90 percent of all US production - was shipped to Europe in 1983.
Not surprisingly, the National Corn Growers Association opposes such quotas, which it argues would lead the EC to try to restrict soybeans and other important farm imports from the US.
Agriculture Secretary John Block has backed that stand. ''We're not going to just cave in on this one,'' he said in a recent interview with the Monitor. ''We're going to counter them if they press this issue on us.''
Relations between the two have already been strained by last year's subsidized sale of US wheat flour to Egypt. The sale caused a furor in the EC - even though it is a practice the Europeans have followed for years, American observers say. The EC, meanwhile, has not been pleased with US quotas on imported European steel.
''I don't anticipate a trade war, frankly,'' Mr. Block says. ''But I do anticipate the continuation of a few little skirmishes. . . . We'll keep up the blended credit sales.''
What may emerge, observers say, is that the agriculture industry will become more concerned with how domestic farm policy is coordinated with overall trade policy. With congressional debate on the '85 omnibus farm bill looming next year , that shift in thinking could provide an impetus for innovative ways of dealing with Uncle Sam's overloaded dinner table.