Biden administration policies are driving a U.S. agricultural trade deficit that’s expected to explode to $42.5 billion in 2025, according to new estimates from the USDA’s Economic Research Service.
The forecast expects U.S. agricultural exports to hit $169.5 billion in fiscal year 2025, compared to $212 billion in imports.
The decline, with imports down $4 billion from a revised forecast for FY 2024, “is primarily driven by lower unit values of soybeans, corn, and cotton, as well as lower volumes of beef,” according to U.S. Department of Agriculture “outlook” published Tuesday.
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Michigan Farm Bureau National Legislative Counsel John Kran pointed to numerous issues facing American farmers, from supply chain disruptions, to inflation, the pandemic, international conflicts, and higher labor costs, as key drivers behind the growing trade deficit.
“Our policymakers have failed to enact much needed reforms like addressing our workforce challenges,” Kran said. “If we don’t get some of these issues resolved soon, we will likely become even more dependent on foreign sourced food. We have generations of expertise to grow and process food here, on our soil, under our standards. Why would we want to give that away?”
USDA data shows the $10.5 billion increase from the current 2024 deficit will involve a $1.5 billion decline in soybean exports, $900 million decline in corn exports, $900 million decline in cotton exports, and $1 billion decline in beef exports.
Livestock, poultry, and dairy exports are projected to decline by $100 million, while some exports including pork, poultry, variety meats, and dairy products are set to increase, according to the USDA.
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“U.S. agricultural imports in FY 2025 are forecast at $212.0 billion, $8.0 billion higher than the revised FY 2024 estimate, largely due to rising imports of horticultural as well as sugar and tropical products. For FY 2024, agricultural imports are forecast at $204.0 billion, up $1.5 billion from the May projection,” according to the outlook.
A table included in the outlook shows U.S. agricultural exports outpaced imports by $12.1 billion under President Donald Trump in 2018, before the pandemic.
Michigan Farm Bureau Lead Economist Loren Koeman told Michigan Farm News the country’s shift from net exporter to importer for food is alarming.
“The gap unfortunately continues to widen as U.S. farmers face guest worker costs over double the minimum wage and increasing yearly at over double the rate of inflation,” Koeman added.
“The U.S. is at a crossroads and needs to decide whether we want to continue to be able to feed ourselves or rely on others to feed us, particularly in fresh fruits and vegetables. If we want to continue to have a strong domestic supply of food, we need to put an immediate emphasis on policies like the farm bill and agricultural guest worker reforms.”
Michigan Farm Bureau has led the fight against the Biden-Harris administration’s Adverse Effect Wage Rate that has led to massive labor cost increases in the H-2A program farmers in the U.S. rely on for guest workers. The AEWR rates, set by the Department of Labor, are the minimum wage farmers in the program must pay temporary workers. The national average AEWR for 2024 was set at $17.55, a 5.6% increase from the year prior, marking the third year in a row with an increase over 5%, though rates vary some by state.
In January, when Michigan’s AEWR rate jumped to $18.50 per hour, MFB gained support from delegates at the American Farm Bureau’s 105th Annual Convention to eliminate the AEWR rates that have grown at twice the rate of inflation, and back legislative proposals that would cap year-over-year increases until the AEWR is overhauled.
Republicans in both chambers of Congress have pushed to freeze the AEWR rates at January 2023 levels at the behest of farmers, but have been blocked by Senate Democrats.
“If costs continue to increase as they have, the pressure put on America’s food producers will fundamentally shift the food production model that has allowed us to be agriculturally independent and secure,” Senate Republicans wrote in a letter to Senate Majority Leader Chuck Schumer, D-NY, in March.
“The United States already imports much of our fruit and produce, as operating costs and competition from abroad have driven out many domestic producers,” the letter read. “If we continue with these unsustainable policies, we are not only damaging our country’s longstanding agricultural heritage, but also threatening our domestic food supply.”