After setting a record this year, the agricultural trade deficit will balloon further, to $27.5 billion in fiscal 2024, thanks to the unyielding American appetite for fresh produce, coffee, and wine, say government forecasters. More food and ag imports will flow into the United States at the same time that farm exports shrink, led by a decline in sales to China.
The combination of smaller exports and larger imports would widen the trade gap by 45 percent from this year’s largest-ever $19 billion deficit, said a quarterly USDA report. Large agricultural trade deficits are expected to be common in the future, fueled by consumer demand for imported foods that grows far faster than exports. USDA economists have forecast that imports will blossom by an average of 6 percent annually in the decade ahead while exports grow 0.8 percent a year.
Food and ag imports were forecast at $199.5 billion in fiscal 2024, compared to exports of $172 billion. In the current fiscal year, which ends on Sept. 30, imports were forecast at $196.5 billion and exports at $177.5 billion. The most recent ag trade surplus, $1.9 billion, was last year, when exports were a record $196.1 billion.
Imports will increase in fiscal 2024 due to “higher imports of horticultural and livestock products and stabilizing global prices,” said the quarterly Outlook for U.S. Agricultural Trade report. The western hemisphere, particularly Mexico and Canada, accounts for $6 of every $10 in imports. Shipments from Mexico were forecast at $46.7 billion, up $900 million from this year, “driven by a wide array of products, especially fruits and vegetables,” said the USDA. “Central America is is expected to remain a growing source of fruits and vegetables into FY2024, growing 5 percent…to $8.4 billion.”
Farm exports were forecast to fall by 3 percent in the new fiscal year, “largely driven by lower exports of soybeans, soybean meal and dairy products,” said the USDA. Soybeans, the leading U.S. farm export, would drop to $26.5 billion in sales, a 17 percent drop, due to a downturn in production this year, “competition from South America and high domestic crush demand.” U.S. processors are expected to buy 54 percent of this year’s crop.
“Agricultural exports to China are forecast at $33 billion, $3 billion lower from FY 2023, driven by weaker outlook for soybeans, dairy and beef,” said the report. China is the largest customer for U.S. farm exports. “Economic headwinds and lower feed consumption reduce China’s overall import demand, particularly for feed stuff and animal products. Soybeans account for the bulk of the year-over-year reduction as U.S. supplies face stiff competition from Brazil.”
Sales to China peaked at $36.2 billion last year. U.S. shipments to North American neighbors Mexico and Canada have been relatively stable; exports were forecast at $28.2 billion to Mexico and $27.5 billion to Canada.
The quarterly Outlook for U.S. Agricultural Trade is available here.