2007 Data Overview
Record setting U.S. agricultural export values in 2007
generated employment, income, and purchasing power in both
the farm and nonfarm sectors. ERS estimates that each export
dollar earned stimulated another $1.40 in business activity
in 2007. Every $1 billion of U.S. agricultural exports
in 2007 required 9,000 American jobs throughout the economy.
The $89.9 billion of agricultural exports in 2007 produced
an additional $125.8 billion in economic activity for a
total economic output of $215.7 billion. Calendar year
2007 agricultural exports generated 808,000 full-time civilian
jobs, which included 537,000 jobs in the nonfarm sector.
The positive agricultural export surplus helped to offset
the nonagricultural trade deficit.
Introduction
As the world's economies become more integrated,
global trade and the links between countries grow ever
deeper. The world economy grew at an unprecedented pace
in recent years, 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 the surplus helping to offset
some of the U.S. nonfarm trade deficit, which reached more
than $900 billion in 2007.
The U.S. farm and rural economies have always been vulnerable
to the macroeconomic influences of trade. From early colonial
days, when tobacco and cotton were the most important export
commodities, to today's grain, oilseed, and processed
foods, agricultural trade has been an important part of
the U.S. economic engine. Trade agreements have expanded
agricultural trade with developed and developing countries
and, in turn, have created growth opportunities for U.S.
exports. Free trade agreements, such as the North
America Free Trade Agreement, have lowered trade barriers
and created additional consumer demand for U.S. agricultural
commodities in foreign nations. In turn, that demand
is satisfied with purchasing power acquired when foreign
products are sold in the United States and elsewhere.
In 2007, there were both record domestic harvests and record
setting increases in U.S. agricultural exports, generating
farm and economywide income. Foreign demand for these exports
was spurred by strong economic growth in other countries
and a weakened U.S. dollar. The weakening U.S. dollar,
which began depreciating in 2002 and continued to fall
throughout 2007, made the price of U.S. goods more competitive
abroad. Between 2002 and 2007, the value of the U.S. dollar
declined 40 percent against the euro, 15 percent against
the yen, and 28 percent against the British pound, making
U.S. products more affordable to holders of those currencies.
Canada and Mexico are the leading U.S. trading partners—together,
those nations buy almost 30 percent of U.S. exports. Meanwhile,
U.S. imports of agricultural goods did not slow in 2007
despite the weakened buying power of the U.S. dollar. The
European Union alone supplied 21 percent of U.S. imports.
Together with Canada and Mexico, they supplied 57 percent
of all U.S. agricultural imports in 2007. U.S. consumers
continue to demand a large variety of imported goods and
have so far been 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 2007, another $1.40
was created in the U.S. economy to support the exporting
activity. ERS
Estimates of Agricultural Trade Multipliers show that
every $1 billion of U.S. agricultural exports in 2007 required
9,000 American jobs.
Impacts of Agricultural Trade in 2007
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 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 those industries
reflects that reality.
In calendar year 2007, the $89.9 billion of U.S. agricultural
exports produced an additional $125.8 billion in economic
activity for a total of $215.7 billion of economic output
(see U.S. economic activity triggered by agricultural trade,
2007 ).
Supporting activity continued to climb after surpassing
the $100 billion mark for the first time in 2005. Agricultural
exports also generated 808,000 full-time civilian jobs,
including 537,000 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 2007. Of raw crops, the United
States exported 60 percent of food-grain production, 19
percent of feed grains, and more than 43 percent of oilseeds.
These percentages all increased significantly over 2006
levels. Because exports increased more than imports, net
agricultural exports in 2007 contributed $18.6 billion
to the overall U.S. economy, an increase of $12.9 billion
from $5.7 billion in 2006.
It is not currently 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 is what 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). There is no economically defensible
way to measure the indirect or supporting impacts of actual
agricultural imports 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).
Exports Generated New Business, Added Jobs
Of the almost $90 billion in direct U.S.
agricultural exports in 2007, the value of exported raw
products was $32.7 billion, compared with $37 billion of
processed commodities, and $16.9 billion for transport
and trade services. Nearly $126 billion of supporting or indirect activity
was generated by agricultural exports in 2007, 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 generates
$54 billion of the total. All nonfarm sectors of the economy
received about 81 percent of this additional economic
activity.
Employment required to produce, transport, and service
agricultural exports in 2007 declined from 2006 levels
(841,000). Export commodity mix, price changes, and the
volume of goods exported were responsible for the decline.
Of the 808,000 full-time civilian jobs related to agricultural
exports in 2007, more than 271,000 were U.S. farmworkers.
Based on a Bureau of Labor Statistics estimate of 1,955,000
full-time-equivalent agricultural workers, this would mean
that approximately 14 percent of the U.S. farm workforce
is producing for export. Almost, 537,000 jobs in the nonfarm
sector were involved in assembling, processing, distributing,
and servicing agricultural products for export, an increase
of 55,000 over 2006 levels. About 98,000 of those were
in food processing, 168,000 in trade and transportation,
60,000 in other manufacturing sectors, and 211,000 in other
services.
 d
Bulk exports have a smaller proportional effect on the
nonfarm economy than processed, or high-value, exports. Bulk
exports of $35.2 billion generated an additional $36.3
billion of business activity, while nonbulk exports of
$54.7 billion generated $89.5 billion (e.g., $1.03 additional
output per dollar of bulk exports, $1.64 for nonbulk exports,
and $1.40 for all agricultural exports).
Over 58 percent of the additional business activity attributed
to bulk exports took place in the service sector and 3
percent in food processing. By contrast, the additional
business activity for nonbulk exports was 13 percent in
food processing and 37 percent in services. Of the 808,000
jobs related to U.S. agricultural exports, 508,000 (63
percent) supported nonbulk exports.
Impacts of Agricultural Imports on U.S. Output
The economic impacts of imports described in this section
are based on using the value of an imported product as
if it were produced in the United States. The resulting
value of that activity is then treated 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.
The domestic output effect of the $71.3 billion of agricultural
products imported into the United States in 2007 was $172.7
billion. Just as with exports, moving imported products
to consumers generates jobs in the data processing, financial,
legal, management, administrative, marketing, and transportation
sectors. Each dollar spent on imports would have required
another $1.42 in supporting goods and services if those
imported items had been produced domestically, indicating
an output multiplier of 2.42.
U.S. agricultural trade had a positive effect on most
sectors of the economy in 2007. The farm sector's
$56.7 billion of output associated with agricultural exports
more than offset the $32.8 billion of farm output implicitly
lost because of agricultural imports. The nonfarm sectors,
including food processing, gained $19.1 billion in total
output via the agricultural trade balance, creating about
73,500 jobs and generating $10.5 billion in income. The
U.S. economy gained a net $43 billion in output (after
the theoretical loss to agricultural imports is considered).
Outside of farming and food processing, the United States
gained a net $2.2 billion in 2007 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 $15.2 billion in total
output because the direct plus indirect value
of these exports was greater than that of the imports.
The positive trade balance in such goods had not occurred
since 2003.
Total Jobs Required Per Billion Dollars of Agricultural
Exports Drop in 2007
In 2006, 11,800 workers were required to deliver agricultural
exports to their final consumer. In calendar year 2007,
that number fell to 9,000 workers. There are three main
reasons for the decline in jobs required per $1 billion
of agricultural exports.
- The farm sector is the largest generator of jobs related
to agricultural exports. Because of price increases in
2007, particularly for bulk exports, the sector generated
less employment per dollar of exports than other sectors.
- The 2007 model was changed to reflect the new North
American Industrial Classification System (NAICS) accounting
conventions. In the 2006 and previous models, agricultural
service workers were included in the base number of farmworkers
under the old Standard Industrial Classification (SIC)
system. These jobs in landscaping, land clearing, dehydrating,
providing irrigation, tobacco drying, and the like may
have been included in the farming total, but more properly
belong in the agricultural services sectors. This change
in classification dropped about 200,000 workers from
the total farm workforce from which the model draws its
estimates of job requirements.
- Third, the 2007 model uses the 2002 Benchmark Input-Output
(I/O) tables from the U.S. Department of Commerce, Bureau
of Economic Analysis, which reflect a more current and
accurate picture of the structure of today's economy
than the 1997 I/O tables used in the 2006 analysis. This
switch shrinks the importance of the farm sector and
many of its supporting industries.
When farm prices are especially low, customers buy large
amounts of bulk grains and oilseeds. Jobs are created on
the farm and in the supporting transportation and distribution
industries, but job growth bypasses the processing and
manufacturing sectors. In 2006, record setting quantities
of bulk commodities were exported, and it is volume that
largely determines overall labor requirements.
In 2007, farm prices increased dramatically over 2006
levels. According to USDA's National Agricultural
Statistics Service, prices received by farmers for food
grains, feed grains, and oilseeds increased between 37
and 40 percent over 2006 prices. The total value of bulk
exports increased 35 percent, from $24.4 billion in 2006
to $32.9 billion in 2007.
The change in 2007 export value over 2006 was almost completely
price driven. Therefore, the actual jobs required per billion
dollars of exports decreased from 2006 levels. In addition,
because more farm and closely related industry jobs are
generated by bulk versus nonbulk exports, farm jobs required
by agricultural exports fell in 2007. Bulk exports created
more jobs than nonbulk in 2006 because of high volume,
which was driven by low farm prices. The historical pattern
of nonbulk exports generating more jobs per billion dollars
of exports resumed in 2007.
While the jobs per $1 billion of exports in 2007 dropped
significantly, total employment supporting U.S. agricultural
exports did not (841,000 in 2006 versus 808,000 in 2007).
Nonfarm job growth (537,000) increased over 2006
levels (482,000) and total jobs generated was higher than
in many recent years.
 d
Historical Analysis
Previously assessments of the effects of trade on the
U.S. economy are available from the Supplementary
Periodic Trade Articles page in the U.S.
Agricultural Trade briefing room.
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