2008 Data Overview
Record-setting U.S. agricultural export values in 2008
generated employment, income, and purchasing power in
both the farm and nonfarm sectors. ERS estimates that
each dollar of agricultural exports stimulated another
$1.36 in business activity in 2008. The $115.4 billion
of agricultural exports in 2008 (the estimated value as
of June 2009) produced an additional $157.2 billion in
economic activity for a total economic output of $272.6
billion. Every $1 billion of U.S. agricultural exports
in 2008 required 8,000 American jobs throughout the economy.
Calendar year 2008 agricultural exports required 920,000
full-time civilian jobs, which included 608,000 jobs in
the nonfarm sector.
Introduction
As the world's economies become more integrated, global
trade and the links between countries grow ever deeper.
Through the first three quarters of 2008, the world economy
grew at the highest rate ever recorded, fueling demand
for U.S. agricultural commodities. U.S.
agricultural trade is a significant contributor to
the overall U.S. economy, with impacts felt in countries
worldwide. The United States is a net exporter of
agricultural products, with its $35 billion surplus helping
to offset some of the U.S. nonfarm trade deficit, which
reached more than $960 billion in 2008.
Trade has always been important to U.S. farm and rural
economies. From early colonial days, when tobacco and
cotton were the dominant export commodities, to more recent
times, in which grains, oilseeds, and processed foods
account for the bulk of exports, agricultural trade has
contributed to U.S. economic growth. Trade agreements
have expanded agricultural trade with developed and developing
countries and, in turn, have created growth opportunities
for U.S. agriculture. Free trade agreements, such as the
North America Free Trade Agreement,
have lowered trade barriers and created additional consumer
demand in foreign nations for U.S. agricultural commodities.
The purchasing power these nations acquire when
their products are sold in the United States and elsewhere
helps satisfy that demand.
In 2008, domestic harvests declined slightly from 2007
levels, but U.S. agricultural export value increased at
a record-setting rate, generating higher farm and economywide
income than the previous year. High prices for farm commodities
contributed greatly to the value of 2008 agricultural
exports. Foreign demand for these exports was spurred
by continued economic growth in other countries and a
weakened U.S. dollar. The U.S. dollar continued its slide
against most major currencies in 2008, making the price
of U.S. goods more competitive abroad. Except for a small
turnaround against the British pound, the value of the
U.S. dollar declined against the euro, yen, and Canadian
dollar, making U.S. products more affordable to holders
of those currencies.
Canada and Mexico are the leading U.S. trading partners,
followed by Japan and, as of 2008, China. Together, these
nations buy 50 percent of U.S. exports. Meanwhile, U.S.
imports of agricultural goods did not slow in 2008, despite
the weakened buying power of the U.S. dollar. U.S. imports
from Canada rose from $13.8 billion in 2005 to $18.9 billion
in 2008, a 38-percent increase and 22 percent of 2008
U.S. agricultural imports. In 2008, U.S. agricultural
imports from Canada totaled $18.9 billion, a 38-percent
increase over 2007. In the same period, Canada accounted
for 22 percent of U.S. agricultural imports. Together,
Canada, Mexico, and the European Union (EU) supplied 55
percent of all U.S. agricultural imports in 2008. Since
2005, the 27 countries that make up the EU have been either
the first or second largest supplier of U.S. agricultural
imports. If the EU is considered as a single supplier,
then China becomes the third largest supplier—U.S.
imports from China rose from $2.9 billion in 2005 to $4.9
billion in 2008. U.S. consumers in 2008 continued to demand
a large variety of imported goods and were willing to
pay a premium for them.
Agricultural trade is most importantly a generator of
output, employment, and income in the U.S. economy. For
every dollar spent on U.S. exports in 2008, another $1.36
was created in the U.S. economy to support the exporting
activity. ERS Estimates
of Agricultural Trade Multipliers (ATM) show that
every $1 billion of U.S. agricultural exports in 2008
required 8,000 American workers engaged in either direct
or indirect supporting activities. For more information
on these estimates and the tools used to calculate them,
see the ATM Assumptions
and Methodology pages.
Impacts of Agricultural Trade in 2008
The impacts of agricultural trade on the U.S. economy
change from year to year. Just as the composition of the
agricultural export "basket" changes yearly,
so, too, do the direct
and indirect impacts
on the economy. The structure of the U.S. economy also
changes, which influences the impact of agricultural exports.
The domestic economy is now dominated by the service sector,
and the high level of supporting activity in the service
industries reflects that structure.
In calendar year 2008, the $115.4 billion of U.S. agricultural
exports (June 2009 estimate) produced an additional $157.2
billion in economic activity for a total of $272.6 billion
of economic output (see U.S.
economic activity triggered by agricultural trade, 2008 ).
(As of October 2009, the value of U.S. agricultural exports
in 2008 has been revised downward to $115.2 billion.)
In the same period, the value of supporting activity continued
to climb, surpassing the $100 billion mark for the fourth
consecutive year. Agricultural exports generated 920,000
full-time civilian jobs, including 608,000 jobs in the
nonfarm sector. Farmers' purchases of fuel, fertilizer,
and other inputs to produce commodities for export spurred
economic activity in the manufacturing, trade, and transportation
sectors. (For information on how the data are derived,
see ERS Estimates.)
The production equivalent of over one-fourth of U.S.
cropland moved into export channels in 2008. Of raw crops,
the United States exported 40 percent of food-grain production,
15 percent of feed grains, and more than 43 percent of
oilseeds. While oilseed exports as a percentage of production
held steady, both food and feed grains percentages decreased
significantly from 2007 levels. However, because the value
of all agricultural exports increased more than imports,
net agricultural exports in 2008 contributed $35.0 billion
to the overall U.S. economy, an increase of $16.4 billion
over 2007.
Exports Generated New Business, Added Jobs
Of the $115 billion in direct
U.S. agricultural exports in 2008, the value of exported
raw products accounted for $43.7 billion, compared with
$44.9 billion for processed commodities and $26.9 billion
for trade and transportation services. Over $157 billion
of supporting, or indirect,
activity was generated by agricultural exports in 2008,
encompassing the value of activity required to facilitate
the movement of exports to their final destination (e.g.,
computer and financial services, warehousing and distribution,
packaging, and additional processing). The service sector
accounted for $69.6 billion of the total. Nonfarm sectors
of the economy accounted for about 79 percent of this
additional economic activity.
Employment required to produce, transport, and service
agricultural exports soared from 808,000 jobs in 2007
to 920,000 jobs in 2008. The increase was largely attributed
to price changes, which affect the estimates of workers
per billion dollars of exports. Changes in the export
commodity mix and the volume of goods exported also contributed
to the increase. Of the full-time civilian jobs related
to agricultural exports in 2008, farmworkers accounted
for more than 312,000. Based on a Bureau of Labor Statistics
estimate of 1,818,000 full-time-equivalent agricultural
workers in 2008, approximately 17 percent of the U.S.
farm workforce produced for export during the period.
In 2008, 608,000 jobs in the nonfarm sector were involved
in assembling, processing, distributing, and servicing
agricultural products for export, an increase of 71,000
over 2007 levels. About 110,000 of those jobs were in
food processing, 197,000 were in trade and transportation,
65,000 were in other manufacturing sectors, and 237,000
were in other services.
 d
PNG
| JPG
Bulk exports have a smaller proportional effect on the
nonfarm economy than processed, or high-value, exports.
In 2008, bulk exports of $48.4 billion generated
an additional $44.3 billion of business activity, while
nonbulk exports of $67.0 billion generated $112.9 billion
(e.g., $0.92 additional output per dollar of bulk exports,
$1.69 for nonbulk exports, and $1.36 for all agricultural
exports).
Of the additional business activity attributed to bulk
exports, the service sector accounted for 59 percent and
food processing accounted for 0.5 percent. By contrast,
the service sector and food processing accounted for 39
percent and 11 percent, respectively, of the additional
business activity generated by nonbulk exports. Of the
920,000 jobs related to U.S. agricultural exports, 598,000
(65 percent) supported nonbulk exports.
Impacts of Agricultural Imports on U.S. Output
It is not possible to measure the total economic activity
associated with imports because there are no end-use data
on imports available. When imports enter the United States,
their value is recorded. After that, they are no longer
tracked as imports but instead enter the general domestic
economy to be used in the same fashion as domestically
produced goods.
The end-use of a product determines its multiplier effects.
Imports can be put into inventory (an almost negligible
multiplier) or can be used in a highly processed product
(a very large multiplier). Thus, without end-use data,
the indirect, or supporting, impacts of actual agricultural
imports cannot be measured in terms of output, employment,
value-added, or as a multiplier. Only the value of imports
as measured upon entry into the United States can be discerned
(direct effects).
Imports can be assigned the generally held view of an
economywide domestic business multiplier of between 2.00
and 2.50 because activities associated with "absorbed"
imports are the same as those associated with any other
domestic commodity. After adjusting for inflation from
the benchmark year (2002) to 2008, the average output-weighted
domestic business multiplier in 2008 for all U.S. business
can be calculated as 2.43.
To illustrate the point, consider that almost all fish
products are imported. If reliable statistics on consumer
demand and consumption of fish were available, the supporting
activity required to deliver imported fish could be measured.
But this measure would reflect only part of the contribution
of fish imports to the economy because fish is also turned
into meal and feeds, processed products, pet foods, and
other uses not related to direct human consumption. These
uses become completely intertwined with domestic production.
Finally, to fully measure all fish outputs, one would
also have to separate the movement of imported fish products
from the small but growing amount of products from domestic
farm-raised fish.
Due to these data limitations, the economic impact of
imports described here is the value of imported products
as if they were produced in the United States and then
assigned the value of that activity as a theoretical loss
of economic activity to the United States. The only actual
"loss" to the U.S. economy that can be measured
is the actual value of agricultural imports. After the
imported product is absorbed into the U.S. economy, the
supporting activity required to deliver the imported goods
to final consumers can be assigned a general business
multiplier, usually, between 2.00 and 2.50.
The domestic output effect of the $80.4 billion of U.S.
agricultural imports in 2008 was $199.5 billion. Like
exports, imports generate jobs in the data processing,
financial, legal, management, administrative, marketing,
and transportation sectors. Each dollar spent on agricultural
imports in 2008 would have required another $1.48 in supporting
goods and services if those imported items had been produced
domestically, indicating an output multiplier of 2.48.
U.S. agricultural trade had a positive effect on all
sectors of the economy in 2008. Even the food processing
sector's theoretical loss in trade in high-value processed
products (-$9.7 billion) was offset by gains from trade
in bulk products and the supporting activity associated
with bulk and nonbulk trade. The farm sector's $76.5 billion
of output associated with agricultural exports more than
offset the $40.3 billion of farm output implicitly lost
because of agricultural imports. The nonfarm sectors,
including food processing, gained $36.9 billion in total
output via the agricultural trade balance, creating about
108,700 jobs and generating $18.0 billion in income. The
U.S. economy gained a net $73.1 billion in output (after
the theoretical loss to agricultural imports is considered).
Outside of farming and food processing, the United States
gained a net $5.9 billion in 2008 from direct
agricultural trade--that is, exports minus imports of
agricultural goods that are neither farm nor processed
goods (pharmaceuticals and adhesives, for example)--and
$24.2 billion in total output because the direct plus
indirect value
of these exports was greater than that of the imports.
Total Jobs Required Per Billion Dollars of Agricultural
Exports Dropped in 2008
In 2007, 9,000 workers were required to deliver each
billion dollars of agricultural exports from the farm
to their final destination. In calendar year 2008, that
number fell to 8,000 workers. The farm sector is the largest
generator of jobs related to agricultural exports. Because
farm price increases continued their substantial rise
begun in 2007, particularly for the commodities that are
included in bulk exports, the sector generated less employment
per dollar of exports than other sectors.
When farm prices are low, customers buy large amounts
of bulk grains and oilseeds. This activity creates jobs
on the farm and in the supporting transportation and distribution
industries, but job growth bypasses the processing and
manufacturing sectors. In 2006, the United States exported
record setting quantities of bulk commodities. Because
the volume of exports largely determines the overall supporting
labor requirements, many farm and farm-related jobs were
generated as a result.
According to USDA's National Agricultural Statistics
Service, prices received by farmers for food grains, feed
grains, and oilseeds increased between 18 and 47 percent
from 2007 to 2008. Over the same period, the total value
of U.S. bulk exports increased from $32.9 billion to $48.4
billion, or 47 percent.
Because the change in agricultural export value from
2007 to 2008 was mostly price driven, the actual number
of jobs generated per billion dollars of exports decreased
over the period. In addition, because many farm and closely
related industry jobs are dependent on bulk exports, for
which prices rose significantly in 2008, farm jobs generated
by agricultural exports fell in 2008. By comparison, in
2006, bulk exports created more jobs than nonbulk exports
because of high volume and low farm prices. In 2008, the
estimates returned to the historical pattern of nonbulk
exports generating more jobs per billion dollars of exports.
While the jobs per $1 billion of exports fell again in
2008, total employment supporting U.S. agricultural exports
reached new heights due to increases in supporting nonfarm
employment. Not since the early 1980s, when $35 billion
to $45 billion of agricultural exports generated an estimated
1-1.2 million jobs, has job creation reached higher than
the level in 2008 (920,000). Nonfarm job growth (608,000)
increased significantly for the second straight year in
2008. ERS estimates that $38 billion of agricultural exports
created 1.1 million jobs in 1983, a multiplier of 29,000
per billion dollars of exports (Foreign Agricultural
Trade of the United States, 1984). In 2008, three
times the value of exports created almost the same level
of jobs as in 1983, but because of prices, productivity,
and structural/technological changes in the intervening
years, the number of jobs per billion dollars of exports
declined to 8,000 workers.
 d
PNG
| JPG
Historical Analysis
|
