Ag Trade Deficit in Context

In the latest USDA Ag Export forecast, a stronger dollar and competition are the two primary reasons for U.S. ag export expectations declining to 170.5 billion dollars. Well below the 2022 amount of more than 196 billion.

Meanwhile, ag imports are set in 2024 to increase by about five and a half billion dollars, to two hundred one billion, setting the country up for a more than 30 billion dollar ag trade deficit.

“But I think bringing some context to what is in those numbers is really important. Some of the largest growth of imports that we have seen is actually products like distilled spirits, things like tequila.” 

USDA Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor says farm trade deficit is not immediately bad.

Going back to that tequila statistic, she says the U.S. consumes more tequila by volume than anywhere in the world, including Mexico. It also is a new addition. In 2021, the USDA adopted the World Trade Organization’s definition of Agricultural Products including distilled spirits.

Additionally, half the value of U.S. agricultural imports are in horticultural products, Taylor says that would be year-round produce in the grocery store.

“As you look into some of the numbers of our imports, they are things like products that are non-competitive, that we don’t produce. So, think things like bananas, pineapple, and coconuts. Things that are maybe counterseasonal, like blueberries in January, which are good for our consumers, are also good for our industry to keep year-round demand of blueberries.” 

These items can also support local food manufacturing and rural communities, Taylor says.  And another reason the deficit needs context? Economic trends have been good.

“The United States has recovered better than anyone, and certainly better than projected from the COVID pandemic. We have a very strong U.S. dollar, incomes are rising so people have more money. So we are a demanding, voracious consumer base here in the United States. Which people want to access and tap into.”

Still, as consumers get the diversified markets they want, Taylor says that does not give any excuses to stop selling U.S. farm. She points to the new Regional Agriculture Promotion Program among other projects and trade missions aimed to break into new foreign markets.

“So our producers, our exporters and agribusinesses have the opportunity to expand, so I think there’s two sides to that coin. And we need to be focused on that export side, opening new markets, knocking down barriers, and that’s exactly what we’re trying to do here at USDA.”