Trading Up: Marketers Drive Appetite for Ag Exports, Feed U.S. Economy
Whether through television, newspapers, radio or the internet, news about tariffs, trade wars and truces are stealing the headlines. With its exports reaching $138.4 billion in 2017, agriculture is a central part of any trade talk or negotiation. But while it may seem that the fate of the U.S. export market is solely in the hands of a few government leaders and influencers, marketers have a significant role in how the agriculture industry fares.
Two trade situations are particularly important in 2018:
- the North American Free Trade Agreement (NAFTA), which heated up earlier this year and still simmers in the background, and
- trade talks with China, which seem to have more twists and turns than Disney World’s Space Mountain.
To underscore the significance of these discussions, the three countries involved (Canada, Mexico and China) are the top three importers of U.S. agricultural goods, with each accounting for approximately $20 billion of U.S. exports.
Source: USDA Foreign Agricultural Service
From a purely agricultural view, Canada and Mexico account for 28 percent of the total value of U.S. agricultural exports. In the past 25 years under NAFTA, U.S. exports have grown from $8.7 billion to $38.1 billion in 2016, with similar results for our imports. The U.S. Chamber of Commerce highlights specific success stories for various sectors within agriculture, such as the roughly $2 billion in annual sales the beef industry developed thanks to no tariffs on U.S. beef exports.
The agricultural benefits from trade agreements with China are significant as well, with perhaps even greater potential than NAFTA. A recent news release from the U.S. Department of Agriculture’s Foreign Ag Service regarding a trade mission trip said, “Southern China is a major import hub and a growing market for U.S. agricultural exports, which already average $8 billion annually.”
When negotiations with China seemed to be reaching some form of agreement, Morgan Stanley experts noted, “We estimate a potential increase of US$60–90bn in Chinese purchases of US goods, with a rise in agriculture imports (particularly beef) in the near term.”
Source: USDA Foreign Agricultural Service, 2016
Though there are a lot of political maneuverings and policy involved in trade discussions which have the U.S. swinging violently between no tariffs to full-on trade wars every other day, ag marketers have a vital role in the success of trade negotiations and agreements. Through efforts to educate potential international customers about the value of U.S. agricultural products, marketers are helping spur demand.
For example, the USDA FAS news release regarding China mentioned above highlighted consumers in southern China who had “an affinity for U.S. products” and increased “demand for many consumer-oriented goods — from bakery ingredients to fresh fruits to alcoholic beverages.” Much of that demand was generated from U.S. marketing efforts, and most likely factored heavily into China’s decision to rethink potential tariffs.
Additionally, marketing efforts from groups like the U.S. Soybean Export Council and United Soybean Board have no doubt demonstrated the value and quality of U.S. soybeans through their numerous trade mission trips and outreach. The result is China’s purchasing of more than half of U.S. soy exports, which totaled more than $10 billion last year.
Source: Farm Credit Administration, “Major U.S. Agricultural Export Markets,” 2018
Other commodity groups, such as the Oregon and Washington State Potato Commissions, have been similarly successful marketing their products through trade missions, educating other countries on the benefits of their products by showcasing their use through culinary demonstrations and more.
As John Deere’s John Lagemann noted during his presentation late last year at the Kansas City Agricultural Business Council’s Ag Outlook Forum, the U.S. is currently the world’s leading exporter, but our share has waned over the last several years dropping from 50 percent to 35 percent as we face more competition from Brazil, Argentina and Russia.
As marketers, that means we have to continue our education efforts, being creative in how we show the value our farmers and businesses bring to customers throughout the world. Whether through trade mission events or other unique international engagements, we’ll not only help our government leaders and policymakers in their trade discussions, but we’ll also shine a spotlight on the great job our farmers are doing to provide high-quality, consistent agricultural products that feed, fuel and clothe our country and our world.
At Woodruff, we love to find new ways to showcase agriculture both domestically and internationally. If you want to do the same and are looking for a partner to help, we’d love to talk.