Kentucky Ag News


Kentucky ag exports remained stable in 2016


University of Kentucky College of Agriculture, Food and Environment


LEXINGTON, Ky. – Kentucky agricultural exports remained relatively stable in 2016 at $2.1 billion, nearly 40% of the state’s ag cash receipts, the U.S. Department of Agriculture reported in October. Soybeans and related byproducts (e.g. meal/oil) remained the state’s top ag exports representing nearly 1/3 of Kentucky’s ag exports, followed by live animals, primarily horses (18%), and tobacco (11%).

National trade data indicate that U.S. ag exports may increase this fiscal year in response to improving global economies, abundant U.S. supplies, and a weaker U.S. dollar. USDA is forecasting U.S. ag exports to total $139 billion in FY 2017, up from $129.6 billion in FY 2016, but still 9% below FY 2014 record high of $152.3 billion. Entering 2017, many analysts had expected the U.S. dollar to strengthen amidst anticipated higher U.S. interest rates. But inflation in the United States has remained limited so far in 2017, resulting in the Federal Reserve keeping interest rates remaining relatively low. Plus, improved economic outlooks in Europe and Japan have also contributed to the weakness in the U.S. dollar in 2017. The U.S. dollar has declined by around 8% since the first of the year compared to our major trading partners.


Soybean exports are estimated to increase to record levels (up 10% in FY 2017) thanks to continued strong demand in China, but corn exports will likely be lower in response to strong competition from South America. Livestock exports are forecast to increase by approximately 15% this fiscal year on the heels of strong beef, pork, poultry and dairy product exports. China remains our number one export customer for U.S. agriculture, followed by our other two major export customers – Canada and Mexico
Collectively, these three markets comprise 45% of U.S. agricultural exports.

Of course, most of the ag trade attention of late has centered on the renegotiation of the North Atlantic Free Trade Agreement (NAFTA). Trade negotiations on NAFTA 2.0 have begun with a lot of focus on agriculture as well as automobile manufacturing (another huge issue for Kentucky). Prior to the passage of NAFTA in the early 1990s, Canada and Mexico accounted for around 20% of U.S agricultural trade compared to nearly 30% of our export sales today. Despite concerns over Mexican and Canadian buyers looking to other markets to replace U.S. agricultural imports amidst their frustration over NAFTA politics, U.S. trade with our NAFTA partners has remained fairly strong so far this year. USDA is projecting that the U.S. will send $40 billion of ag commodity/products to Canada and Mexico in FY 2017 (up $2 billion from last year), compared to $8.9 billion in 1993 – the year prior to the implementation of NAFTA. However, a collapse of NAFTA could have significant long-term trade repercussions for U.S. and Kentucky agriculture. Collectively, Mexico and Canada are the largest buyers of U.S. corn, wheat, beef, pork and poultry.


This article was written by Will Snell, Extension professor for agricultural policy, marketing, and trade in the University of Kentucky College of Agriculture, Food and Environment . The article first appeared in the October 2017 edition of the Economic and Policy Update.