For the second consecutive year, the U.S. is on track to register a record agricultural trade deficit, with American Farm Bureau Federation economists pinpointing various catalysts for this trend in their latest Market Intel report. A projected $32 billion deficit is attributed to several factors, including an increase in fresh fruit and vegetable imports. American produce farmers are struggling to compete with cheaper foreign produce, primarily due to the scarcity of affordable farm labor.
Betty Resnick, an AFBF economist, highlights in the Market Intel that, "Production of many fresh fruits and vegetables is extremely labor intensive. For U.S. agricultural production broadly, labor accounts for about 10 percent of expenses. For fruit and vegetable production, labor costs account for 38.5 percent and 28.8 percent of input costs, respectively."
Additionally, a decrease in agricultural export values is linked to dropping commodity prices for American crops and a strong U.S. dollar, which diminishes the competitiveness of U.S. products abroad. "The strong U.S. dollar is making U.S. products less competitive on currency exchange alone," Resnick notes.
The absence of new trade agreements with other countries since 2012, contrasted with other nations securing their own deals, further complicates the situation. AFBF President Zippy Duvall expressed concern, stating, "This is a difficult time to be a farmer, and looking ahead at another year with a record agri trade deficit proves that." He calls for policy changes to mitigate these challenges. This marks the fourth agricultural trade deficit for the U.S. in six years, a stark contrast to the historical trade surpluses enjoyed prior to fiscal year 2019.
Source: agdaily.com