A flurry of anxiety usually accompanies the U.S. jobs data. Gross domestic product or GDP figures are met with even more nervousness. Clearly, the U.S. economy’s up now-down later graph has investors, economists, and policy makers perplexed. But there is a bright spot that most seem to have overlooked. A sector that seems to have quietly outperformed more watched sectors. Agriculture. While the recession dragged America’s famed automobile and other manufacturing sectors to its knees, agriculture continued to plod along steadily. And today, it has emerged as the bedrock of U.S. growth.
Recent estimates released by the United States Department of Agriculture (USDA) show that agricultural exports are predicted to rise $107.5 billion for the fiscal year 2010, the second highest year ever, with the previous such highs recorded in 2008 when a commodity boom fueled agriculture exports worldwide. A delighted USDA stated that “agriculture is one of the only major sectors of the American economy with a trade surplus – expected to be $30.5 billion this year.” Next year is supposed to be even better with exports increasing to $113 billion.
The U.S. has benefited from a fall in fortunes from key competitors like Russia, whose wheat crop has been scorched by record heat, and even the Ukraine and Kazakhstan have struggled to match export grain targets. This leaves the U.S. in the enviable position of being able to take advantage of rising demand from markets in the Middle East and North Africa – markets that the U.S. so far has failed to dominate. And then there is the giant called China, whose voracious demand is forecasted to make it the America’s second largest market, overtaking Mexico in the process. The U.S. is benefiting from China’s transition from being a net exporter of corn to a net importer of corn. Chinese corn imports are expected to grow to 5.8 million tons in 2011, up from 1.7 million tons this year. Figures like these have helped the agricultural sector sustain its momentum in what has been a rocky year for the U.S. economy. The agriculture industry, in its quiet way, has been generating jobs, sustaining rural America’s economy. The USDA estimates that ‘every billion dollars worth of agricultural exports supports more than 8,000 jobs and generate $1.4 billion in economic activity.’
As the world economy continues to recover, global trade in grain, meat and commodities is only going to rise. The U.S. has worked itself up to this lofty position, and it is an advantage it is not going to surrender anytime soon. There are risks, no doubt. A double-dip recession in the U.S., a widening trade surplus with China or an economic plunge in the European Union. But having weathered many a storm in the past three years, there is a steely resilience to this sector. Strange as it sounds, American agriculture is truly emerging as the leading light at the end of a long recession tunnel.
Postcards from Around the World
Subscribe to get our global publications by email.