Grain exports surging because of free trade deals
The Farmer’s Exchange | 9 February 2018
Grain exports surging because of free trade deals
The following is from the U.S. Grains Council.
Free trade agreement (FTA) partners purchased half of all exports of feed grains in all forms (GIAF) in 2016-17, according to the U.S. Department of Agriculture trade data and analysis by the U.S. Grains Council.
The United States currently has FTAs with 20 countries in place. These countries represent important customers for U.S. corn, sor-ghum, barley, ethanol, distiller’s dried grains with solubles (DDGS), corn gluten feed/meal and other co-products.
GIAF exports to these countries has increased 26 percent over the last 10 marketing years, setting a new record in 2016-17 at 57.4 million metric tons (2.26 billion in bushel equivalent), a 14 percent increase year-over-year.
This all-time high represents roughly 50 percent of the total 114 million tons (4.48 billion in bushel equivalent) of GIAF exports. The spread between trade to FTA partners compared to non-FTA partners has also shifted dramatically over the last 10 marketing years, further demonstrating the importance of having trade agreements in place to farmers.
These 20 countries collectively represent approximately 10 percent of global domestic product (GDP). Negotiating additional trade agreements with countries accounting for a larger share of total GDP will be important to continuing to expand market access and exports for U.S. coarse grains and co-products, as has been successfully done with existing FTA partners.
In the last marketing year, trade to FTA countries set new records for U.S. corn, ethanol and DDGS exports and helped maintain market share for U.S. barley.
Corn exports increased 18 percent year-over-year to 34.2 million tons (1.35 billion bushels) delivered to FTA partners this part marketing year. The largest share of these sales were delivered to Mexico (13.9 million tons/547 million bushels) with duty-free access established in the North American Free Trade Agreement (NAFTA). Of note, U.S. corn exports to South Korea, with benefit from positive trading terms under the United States-Korea Free Trade Agreement (KORUS), increased 89 percent year-over-year to 5.6 million tons (220 million bushels).
Exports of ethanol to FTA countries also hit an all-time high at 490 million gallons (174 million bushels in corn equivalent) in 2016-17. Canada, the other NAFTA partner, purchased the majority of these exports at 332 million gallons (118 million bushels in corn equivalent), followed by Peru and South Korea.
DDGS exports to FTA partners also set a new record during a marketing year when the world’s two largest historic buyers, China and Vietnam, temporarily dropped out of the market. Despite these disruptions, the United States exported 4.72 million tons to FTA countries in 2016-17, a 16 percent increase year-over-year.
While the value of these exports does not match the all-time records set in quantity, the increase in market share by FTA partners continues to demonstrate the importance of preferential trading terms for U.S. feed grains and co-products into the global marketplace. This market access opens the door for the Council’s market development work that turns opportunities into sales benefiting U.S. stakeholders.
