Arkansas commodity exports up 49 percent in 2008
July 7, 2009Download story
FAYETTEVILLE, Ark. – The value of Arkansas farm exports increased by 49 percent in 2008 to $3.2 billion, according to a recent U.S. Department of Agriculture report. Nationwide, the value of agricultural commodity exports was 40 percent higher than in 2007.
The outlook for 2009 is that world supplies of major Arkansas crops are returning to more normal levels, which could result in a lower volume of U.S. exports and lower prices, agricultural economists with the University of Arkansas System’s Division of Agriculture say.
Poultry exports from Arkansas in 2008 had an estimated value of $509 million, compared to $380 million in 2007, for an increase of 75 percent.
Wheat exported from Arkansas in 2008 was worth nearly three times more than in 2007, at about $276 million.
Arkansas soybean exports increased 92 percent in 2008 to a level of $807 million.
Rice export revenue for Arkansas in 2008 was an estimated $918 million, a 69 percent increase over the previous year.
University of Arkansas System Division of Agriculture economists Eric Wailes and Bobby Coats were among those interviewed for a June 3 Arkansas Democrat-Gazette article about the USDA report by Matt Harris. http://www.nwanews.com/adg/Business/263392/
Excerpts from the article are provided below.
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Inflated prices, a depreciating dollar, export restrictions by some suppliers and supply shortages in some importing countries helped spur increases in export revenue, said Eric Wailes, a (Division of Agriculture) professor of agricultural economics (based) at the University of Arkansas at Fayetteville.
"The U.S. was one of those suppliers who didn't pull back," Wailes said of domestic exporters. "For a time, you had the U.S. price [for rice] about three times higher than what it had been in the past."
Skyrocketing global demand for wheat from Third World nations, especially in northern Africa, were a boon to U.S. and Arkansas producers.
Despite a record global wheat crop a year ago, prices surged by 126 percent in 2008 from 2007, according to the United Nations' Food and Agriculture Organization. In the United States, export revenue for wheat was $14.8 billion, or 70 percent higher than 2007.
"We saw going into that year supplies were just really far behind," said Matt King, an economist with the Arkansas Farm Bureau. "There was just no grain you could find. ... It's used to make bread, and it's the cheapest form of feed. People use it instead of corn, and there wasn't much corn available last year."
Arkansas wheat, which is primarily soft red winter wheat, is exported mostly to Egypt, King said, adding that the nation imported 300,000 metric tons - or 87 million bushels - in 2008.
Rice was in high demand as well and was the state's leading export. (Arkansas farmers produced 44 percent of the U.S. rice crop in 2008, according to USDA.)
The crop accounted for 28 percent, or $918.1 million, of the Arkansas export revenue and roughly half of the total for the U.S., according to USDA. "You had a global shortage," said Carl Brothers, senior vice president at Riceland Foods, "and Vietnam and India both put holds on export business, so it did push more business to U.S. producers."
Those export restrictions propelled prices higher because they came at a time when importing countries such as Bangladesh were trying to buy rice to make up for crop loss, the Food and Agriculture Organization reported in June 2008.
Soybeans also gained an increasing share of export revenue in Arkansas during 2008, growing by 92 percent to $806.8 million. Nationally, soybean export revenue increased 75 percent.
Demand for soybeans, which saw 2008 export increases of 92 percent in Arkansas and 75 percent nationally, is sluggish to start 2009. Globally, countries ended 2008 with their stocks up to 95 million metric tons, or 5.5 million more than 2007, said Bobby Coats, rice economist with the University of Arkansas (Division of Agriculture’s) Cooperative Extension Service.
Despite rapid growth, economists don't expect 2009 to be another banner year.
Acreage is down for rice and wheat this year, and grain prices are one-third to half of what they were a year ago, Wailes said.
Wheat supplies are up 118 percent nationally in 2009 from a year ago, the U.S. Department of Agriculture's National Agricultural Statistics Service reported this week. King said Arkansas' supplies have risen to 164 million bushels in 2009 from 55 million in 2008.
"Demand for stock isn't solely for the U.S.," King said. "The European Union and Australia are also back to producing at the same level that they have in the past."
Meanwhile, the Food and Agriculture Organization expects 4 percent decline in wheat production for 2009 and falling trade compared with a year ago. The U.N. organization also predicted similar slowdown for rice, with production slowing after of fast growth in 2007 and 2008.
Coats said rice supply should be back to normal and the price will likely fall once the Vietnamese government, which purchases excess supply from its farmers, begins selling its rice on the international market.