Wisconsin has exported about $2.44 billion of agriculture, food and forestry products from January through September, down 2.8% from the same time period in 2019, according to the latest figures reported on by the Wisconsin Department of Agriculture, Trade and Consumer Protection’s International Agribusiness Center.
Overall, U.S. food, ag, and forestry exports are down about $3 billion, about 2.5%, according to Mark Rhoda-Reis, bureau director of the Wisconsin Department of Agriculture, Trade and Consumer Protection’s International Agribusiness Center.
“If you think about that number, $3 billion, in 2019 we exported about $3.3 billion (in the same timeframe),” Rhonda-Reis said during a Dec. 17 presentation to the state Board of Agriculture, Trade and Consumer Protection. “So sometimes the percentage looks small until you start to look at the dollar numbers.”
If those export numbers hold true through the end of the year for Wisconsin, Rhonda-Reis said, the state would export $3.25 billion in agricultural goods, about $47 million, or 1.4%, down from last year.
“When the COVID activities hit and the continuation of the retaliatory tariffs, the concern was it was going to get worse,” Rhoda-Reis said. “It’s not as bad as we thought it would have been.”
Unfortunately, following several years of trade tensions and exacerbated in many cases by the onset of the global coronavirus pandemic, exports to several of the state’s Top 5 markets are down by double-digit percentages, he said.
Exports to Canada, the state’s No. 1 market, are down 13.5%.
“I think a lot of that’s related to COVID-19 and the economic impact seen earlier in the year in Canada,” Rhoda-Reis said.
Rhonda-Reis said the U.S. has put Canada on notice following Canada taking measures seen as detrimental to the U.S. dairy industry.
U.S. Trade Representative Robert Lighthizer on Dec. 9 announced that the U.S. was exercising its rights under the United States-Mexico-Canada Agreement to address measures adopted by the Government of Canada that are contrary to the provisions of the agreement and harm U.S. dairy farmers. The announcement said the U.S. was challenging Canada’s allocation of dairy tariff-rate quotas.
“By setting aside and reserving a percentage of each dairy TRQ exclusively for processors, Canada has undermined the ability of American dairy farmers and producers to utilize the agreed-upon TRQs and sell a wide range of dairy products to Canadian consumers,” the notice said.
“The concern there is that Canada is not buying at the level or will not be buying at the level that we expect them to,” Rhonda-Reis said. “In the USMCA, they are to increase the quota levels, and the companies that were granted those amounts — because they also producers themselves — are expected to not have the volume of purchase that we would expect.
“We’ll see what the result of that action is going forward, but we don’t believe it’s going to have that much impact by the end of the year on on cheese and dairy purchases but may help move things forward as we move into the new year.”
Exports to China, the state’s No. 2 market, are up 18.3%, largely due to repopulation of the swine herd in China. Whey and other dairy products have been major beneficiaries of the increased exports to China, Rhonda-Reis said. Meat products and livestock genetics have seen quite a large increase in that market as well, he said.
“We see that as a positive,” Rhonda-Reis said, noting some concerns with continuing trade tensions between the U.S. and China and China’s failure to reach the dollar levels agreed to with the Phase One trade agreement on agricultural purchases.
“They bought quite a bit, but not to the dollar levels agreed,” he said. “So whether they’re able to really consume the amounts that that they had agreed to remains to be seen. And there’s not really much of a way we’ll be able to force them to buy that amount and certainly not by the end of this calendar year.”
Exports to No. 3 market Japan have remained nearly flat, down about a half percent, based on strength of dairy and meat exports, Rhonda-Reis said.
No. 4 market, South Korea, is down 12.7%. South Korea has been traditionally been a strong market for Wisconsin, growing in a number of areas, “especially in dairy products, meat products, processed foods,” Rhonda-Reis said.
“We see that largely due to their COVID-related economic downturn,” he said. “Although they’ve come back to some degree, to catch up with that market still will take a while.”
Wisconsin’s No. 5 market, Mexico, which had been the state’s longtime No. 2 market, is down 31% year-to-date. Mexico’s purchases from Wisconsin had reached about $400 million before their decline started with a trade dispute. In 2019, Mexico’s purchases dropped to $216 million, down $34 million or 13.5% from 2018, and the decline continues today.
“Retaliatory tariffs were one of the major items to begin with, and then there’s been an ongoing economic downturn in the market exacerbated by COVID-19, so we don’t see Mexico coming up anytime, frankly, in the near future,” Rhonda-Reis said. “So we’ve got at least another year before they begin to recover and that will depend largely on how well the economy here recovers.”
Rhonda-Reis said exports of prepared vegetables are down 15% year to date, one of few double-digit declines in product categories. He said dairy, mink and prepared meats are performing strongly in the export market, leaving him optimistic for next year.
“As we roll into the new year it’s probably going to take a quarter, maybe even two quarters before we really start to see the strong upticks,” Rhonda-Reis said. “But with vaccines rolling out, with the economy’s improving, we look to finish off 2021 in a better spot than we are going to finish off in 2020.”