Sunday, May 31, 1998

Farm export projections fall another $1 billion for 1998

By CURT ANDERSON / AP Farm Writer

WASHINGTON (AP) -- Farm export projections for 1998 were lowered Friday by $1 billion due to the Asian economic crisis and increased foreign competition in corn and wheat, the Agriculture Department announced.

But the bad Asian forecast was partially offset by expected trade increases with Canada and Mexico, the two U.S. partners in the North American Free Trade Agreement.

"I think they are down a bit less than some people had been anticipating," August Schumacher, chief of USDA's Farm and Foreign Agricultural Services, said of the overall export numbers.

Still, the forecast for $55 billion in exports -- down from $56 billion in February -- for 1998 would be the lowest since 1995, when the United States exported $54.6 billion in farm products. About one-fifth of farm cash receipts come from exports.

Exports of the nation's largest crop, corn, were lowered by 4 million tons compared with February's forecast, and expected value dropped from nearly $5 billion to $4.3 billion.

Wheat exports were lowered 2 million tons compared with the February projections, and value decreased from $4.4 billion to $4.1 billion.

Even soybeans, which have generally remained stronger than the other two major crops, saw forecasts reduced 3 percent from February to $6.5 billion, and shipments dropped about 2 million tons.

Overall, expected farm exports to Asia are now $20.3 billion, down from $23.8 billion last year. But exports to Canada and Mexico of a broad range of commodities are predicted to rise $1 billion over the same time span, led by Mexico's recovering economy.

"It's a very strong performance in NAFTA," Schumacher said.

Other factors in the export decline are the favorable worldwide weather for growing crops -- particularly for U.S. competitors such as Argentina, the European Union and Australia -- and the strong U.S. dollar compared with other currencies.

Although the United States still enjoys a sizable agricultural trade surplus with the world, the new forecast of $17 billion is the lowest since 1991 and 20 percent below 1997.

One major factor is the rapidly increasing imports of vegetables, which have now surpassed coffee as the leading foreign agricultural product sold in this country. The United States is also importing more beer and wine than ever.

Although officials do not expect further large decreases in the 1998 export forecasts, sanctions imposed on India and especially Pakistan because of their nuclear tests could have some impact.

Food, humanitarian aid and bank credits for the purchase of food are supposed to be exempt, but Schumacher said it is unclear whether that covers a USDA program under which Pakistan is buying millions of dollars in U.S. wheat.

"We're awaiting a clarification. The lawyers are working on that now," he said.

House Agriculture Committee Chairman Bob Smith, R-Ore., and the panel's ranking Democrat, Rep. Charles Stenholm of Texas, sent President Clinton a letter Friday urging that agricultural credit programs be exempted from the sanctions. Pakistan, they said, will buy some $500 million in farm goods this year.

"Our farmers and ranchers should not suffer because of actions taken by the Pakistan government," Smith said.