THE BLACK SEA: A GROWING PLAYER IN CROP PRODUCTION
South America has "has supplanted the U.S. as the leading producer of soybeans," according to the farmdoc daily article "Spanning the Globe - Corn, Soybean, and Wheat Production and Exports since 2000: Focus on the Black Sea Area and the U.S. " While IL Corn is obviously is in the business of corn, this fact represents a significant change in the landscape of ag commodity exports. The Black Sea, a tiny region in Eastern Europe, has increased its ag commodity production over the last few years, changing dependence on U.S. commodities. If the trend continues, other US ag commodities could see a plateau in exports and spell trouble for trade relationship expansions. Read the original article here or continue below to a summary of findings by the study:
- The Black Sea area has been a key contributor to the increase in world corn, soybean, and wheat production since 2000.
- Reinforcing the need to pay attention to the Black Sea area is its more variable yields than in North and South America (see Figure 4, data note 1, and farmdoc daily, November 11, 2015).
- Since the turn of the 21st Century, the U.S. has seen its share of world exports of corn, soybeans, and wheat decline.
- Since the turn of the century, U.S. share of world exports of most meat and animal products has increased, except for broilers and beef/veal. A factor that has likely contributed to the decline in the U.S. share of world broiler and beef/veal exports is the increasing share from South America. These observations prompt an important question: "Over time, how much does a country's exports of meat and animal products ultimately rest upon increases in its domestic production of grains and oilseeds?".
- The U.S. is more dependent on yield to expand production of corn, soybeans, and wheat than the rest of the world as a whole. Between 2000-02 and 2014-16, land harvested for corn and soybeans increased 15 and 62 percentage points less in the U.S. than rest of the world (see Figure 5). Land harvested for wheat declined in the U.S. while increasing in the rest of the world. Reasons for the smaller increase/decrease in the U.S. include little growth in total land in crop production and the high share of land already planted to corn, soybeans, and wheat. In short, it appears that expansion of corn, soybean, and wheat acres in the U.S. will be limited relative to the rest of the world and largely constrained to shifts from other crops.
- Interacting with the previous point is an important change in U.S. farm policy. During the 1973-1980 period of farm prosperity the U.S. eliminated all land retirement programs, including those with a conservation orientation. During the 2006-2013 period of farm prosperity, the U.S. did not eliminate and only moderately reduced land retirement programs, all of which now have a conservation orientation.
- Due to lower U.S. farm returns in recent years, considerable discussion is occurring about expanding land retirement conservation programs, in particular the Conservation Reserve Program (farmdoc daily, May 4, 2017). While sound reasons exist for this discussion, it is important to note that such a policy decision will make it harder to expand U.S. farm exports.
- In summary, for a variety of reasons, it may not be easy to expand U.S. exports of farm commodities. At the very least, sustained expansion of U.S. exports of farm commodities will likely require a significant commitment of resources to increasing U.S. yields.
Zulauf, C., A. Lines, and N. Pryshliak. "Spanning the Globe - Corn, Soybean, and Wheat Production and Exports since 2000: Focus on the Black Sea Area and the U.S." farmdoc daily (7):102, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 2, 2017.