Wisconsin agricultural exports hit hard by trade disruptions

MADISON–With trade wars, retaliatory tariffs and low farm incomes nearly a daily discussion point for farmers and politicians, Wisconsin officials at the Department of Agriculture, Trade and Consumer Protection took a deep dive into data on how much trade means to farmers in the state.

In the first quarter of this year, Wisconsin exported over $800 million in agricultural and food products to 147 countries which sounds pretty good until it’s compared to last year. That figure is down 4.8 percent or nearly $40 million in value compared to the first quarter of 2018.

Food and agricultural exports made up 14.8 percent of Wisconsin’s overall first quarter exports of all goods – valued at $5.42 billion. Total U.S. agricultural exports were valued at $40.8 billion in the first quarter which was a decrease of 4.57 percent compared to the same period last year.

Wisconsin is ranked 14th among U.S. states in agricultural exports, according to figures from the International Agribusiness Center at DATCP.  The state is first in the export of ginseng roots and prepared or preserved cranberries, sweet corn that has been processed, raw fur skins and cattle semen. America’s Dairyland ranked second in the export of whey and third in the export of cheese. But all of those products took a hit in sales, especially to China in the wake of the ongoing tariff battles.

The top three export markets for Wisconsin’s ag and food products – Canada, China and Mexico – make up over 57 percent of total exports. In the first quarter, sales to Canada were down 6.2 percent (at $349 million); sales to China were down 31.3 percent (at $56 million); sales to Mexico were down 0.7 percent (with sales of $53 million). In data prepared by his bureau, Mark Rhoda-Reis notes that sales to Korea were down 18.8 percent as well in the first quarter, with sales of $46 million.

There were a couple of bright spots in the Wisconsin agricultural trade picture. He noted that sales to Japan were up 1.7 percent in the first quarter with sales of $42 million. Also, among the top 20 markets that make up nearly 89 percent of all Wisconsin exports, nine of those markets had double-digit increases totaling a little over $25 million. Thailand was up over 71 percent, Germany was up over 59 percent, Saudi Arabia was up nearly 47 percent, and Singapore and Italy were up nearly 25 percent.

However, the top five product categories making up nearly half of total exports added up to $346 million in the first quarter – a decline of nearly 6 percent from the same period last year. The top 20 products exported make up nearly 95 percent of total exports at $754 million – a decline of 6.5 percent.

While exports of prepared vegetables, fruits and nuts were up 8.6 percent to $76 million, sales of cheese and whey were down 18.9 percent in the first quarter, totaling $58 million; sales of meat and fish products were down 12 percent from year-earlier levels.

Nearly one-third—$1.43 billion in Wisconsin’s agricultural and food exports—have been affected by the retaliatory tariffs levied by China. The full list is over 40 items. The IABC compared sales of those products before the majority of the trade war tariffs took effect. There was a 1.4 percent drop in exports of the tariff items from 2017 to 2018. However, in the first quarter of 2019 there was a nearly 21 percent drop of those same items compared with the same period last year.

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According to the IABC data, sales to China of a number of agricultural commodities plummeted in the first quarter of this year, compared to sales in the same quarter last year. Whey sales to China dropped 55 percent; sales of whole hides and skins from cows and horses dropped 21 percent. Similarly, sales of tanned hides and skins from horses and cattle dropped 93 percent in the first quarter of this year.

Sales of lactose and lactose syrup to China were down 41 percent and sales of two categories of wood products were down 34 and 39 percent. Ginseng took a hit with sales to China in the first quarter down nearly 24 percent.

Wisconsin’s Secretary-designee for DATCP, Brad Pfaff recently returned from a trip to Mexico’s premier dairy event “Expo Leche” – leche being the word for milk. The event, held in a region that is five hours’ drive northeast of Mexico City showcases the dairy industry in Mexico.

“I give my predecessors at this agency credit for building relationships with the people and the businesses down there,” Pfaff told Wisconsin State Farmer. “We are well recognized as dairy leaders with everyone I met there. When you say Wisconsin to dairy people there, there is a sense of awe.”

Pfaff visited several dairy farms in Mexico, where the average herd size is 50 cows. Some of the farms were smaller as that number would indicate, but another featured a large rotary parlor with several thousand cows and one had a double-30 parlor.

Making the calculations from their system to compare dairy prices, he noted farmers there are getting paid roughly the same for their milk as farmers here are getting paid currently, perhaps a little bit lower in Mexico.

Accompanying Pfaff to Mexico were representatives of several Wisconsin businesses hoping to build relationships and open new markets. Those businesses view DATCP as a partner, he said, and value relationships with the people of Mexico.

"In Mexico they want to add a lot more dairy to their diet and I saw expansions taking place,” he said.

The Secretary said he hopes the trade wars can soon be resolved. “Wisconsin farmers would rather trade than receive aid,” he said. “This has to be resolved. We export food and the world needs food.

“Wisconsin agriculture should not, cannot continue to be used as a negotiating tool. We need greater clarity as we try to plan for our future,” Pfaff said.