Trade Takes a Tumble
Cooperative trade plunges 41% as Asian markets cool
Tracey L. Kennedy,
Agricultural Economist
USDA Rural Development
Editor's note: The Rural Business-Cooperative Service of USDA Rural Development began an annual survey of cooperative involvement in international markets in 1997. Prior to 1997, cooperative exports and imports had been measured at five-year intervals. An overview of survey findings for 1998, with comparisons to 1997, is presented here. A follow-up article in a future issue will provide further detail.
gricultural exports by U.S. cooperatives were down more than 41 percent in 1998, reflecting declining demand and the subsequent fall in commodity prices in Asian markets, as well as the economic pressures related to currency devaluations and other policy changes in other regions.
Cooperative exports had climbed to a record $7.8 billion in 1997 before falling off to $4.59 billion in the wake of worldwide economic woes (figure 1).
Participation in exporting has remained relatively steady with 96 cooperatives reporting exports for 1998. Magnitude of export sales ranged from less than $100,000 to more than $1billion.
Exports continued to be heavily concentrated among a few cooperatives, with the top five exporters accounting for 60 percent of all cooperative exports. However, this compares to a 76 percent concentration among the five largest cooperatives exporting in 1997.
Cooperative exports were down from 1997 in all major product groupings: bulk commodities, intermediate products and consumer-oriented products (figure 2). Demand for bulk commodities in particular showed the effects of the Asian downturn, falling 54 percent to $2.5 billion.
Exports of intermediate products partially processed or ingredient products fell 24 percent to $308 million, while consumer products, including fresh and processed fruits and vegetables, meats and other food products, turned in the smallest decrease, falling by just 10.8 percent to $1.78 billion.
U.S. cooperatives also reported exports of nonagricultural products mainly farm inputs valued at $83.5 million, for a total of $4.68 billion.
Bulk commodities continue to account for the largest albeit a shrinking portion of all cooperative exports, accounting for 53.7 percent in 1998 compared with 69.6 percent in 1997. Intermediate and consumer-oriented products gained in importance in 1998, rising from 5.2 to 6.7 percent and 25.3 percent to 39.6 percent, respectively, of all cooperative exports.
After establishing a record 13.8 percent share in 1997, the cooperative share of U.S. agricultural exports fell back to 8.8 percent in 1998. Cooperatives accounted for 12.8 percent of all U.S. exports of bulk commodities, down from 23.3 percent in 1997.
Cooperatives' consumer product share dropped to 8.8 percent from 9.5 percent in 1997, while their share of intermediate product exports fell from 3.2 percent to less than 1 percent.
Where the markets were
Trade patterns and flows for cooperative exports showed significant change in 1998. Although Asia continued to be the most important destination for cooperative exports, markets in this region accounted for only 31 percent of all cooperative exports, compared to almost 50 percent in 1997. Significantly, the second largest regional market for cooperatives was Latin America, accounting for about 20.5 percent of cooperative exports, vs.10 percent in 1997. European markets increased marginally in importance from 17.7 percent to 20.2 percent.
Canada fell from almost 9 percent to about 6 percent, while Africa became a more significant player, increasing from 5 percent to 8 percent of cooperative exports.
The impact of much of the global economic situation is clearly reflected in changes in trade flows to most major regions from 1997 to 1998, with the only gains in Latin American, Middle Eastern and African markets (figure 3). As expected, exports to Asia experienced the most significant drop, down 63 percent from $3.9 billion in 1997 to $1.4 billion in 1998.
Exports to Canada fell almost 60 percent, from $684 million to $275 million, while sales to Australia and New Zealand (Oceania) fell almost 54 percent, from $57 million to $26 million. On the other hand, export sales to Latin American markets increased 20 percent, from $796 million to $957 million. Sales to Middle Eastern markets increased 7.5 percent from $236 million to $254 million.
Imports by cooperatives
Cooperatives import a variety of products, mainly non-agricultural and consumer-oriented products. In 1998, cooperatives imported products valued at $203 million, down from $252 million in 1997. Non-agricultural products mainly fertilizer and petroleum products, along with farm supplies, equipment, and machinery accounted for 67 percent of cooperatives' imports.
Consumer-product imports primarily of fresh and processed fruits and vegetables accounted for almost 30 percent of the total, while intermediate product imports (primarily sweeteners and frozen bovine semen) accounted for a little over 2 percent (figure 4). A negligible amount (less than 1 percent) of grain imports accounted for all bulk agricultural commodity imports.
The majority of consumer products mostly horticultural products originated in Latin American countries (46 percent), while Canada was the largest originator of non-agricultural products (42 percent).
It remains to be seen whether 1998, the height of the world economic instability, has had a long-lasting impact on cooperatives' activities in international markets. A follow-up article in a future issue of this publication will take a more detailed look at 1998's results and look ahead to 1999 and 2000.
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