USDA’S ECONOMIC RESEARCH SERVICE FORECASTS A $32 BILLION AGRICULTURAL TRADE DEFICIT IN 2024

For 2024, the United States Department of Agriculture (USDA) Economic Research Service (ERS) forecasts a $32 billion agricultural trade deficit. This forecast follows the realized $16.7 billion agricultural trade deficit in 2023. The American Farm Bureau Federation Team (AFBFT) attributes the following factors to the continuing growth of the U.S. agricultural trade deficit.

Horticultural products account for the largest trade deficit and include fresh fruits and vegetables. By value, horticultural products account for 49% of all imports, and, since 2020, have increased by $22 billion. AFBFT states that rising imports is both a cause and effect of the reduction of U.S. production of fresh fruit and vegetables. The decline in production is due to urban encroachment on agricultural land, plant diseases, labor shortages, and high labor costs. Broadly, labor accounts for approximately 10% of expenses in U.S. agricultural production. In the production of fruits and vegetables, the cost of labor jumps to 38.5% and 28.8% of input costs, respectively. Due to the low availability of farm laborers in agriculture, producers have been utilizing the H-2A program at an increased cost that requires producers to pay an hourly rate set established by the government titled “Adverse Effect Wage Rate (AEWR).” The wage is determined regionally based on local rates for livestock and field workers. Puls, employers must provide housing, food, transportation, visa fees, and insurance for every worker in the H2-A program. Offsetting the high labor costs for producers, imports are lowering prices and anticipated revenue for producers during the growing season.

The decreasing value of U.S. exports since 2021 is another attributing factor to the U.S. agricultural trade deficit, and the two factors contributing to this include falling commodity prices and a strong U.S. dollar. On currency exchange alone, the strong U.S. dollar makes U.S. products less competitive. China’s effort to lessen their dependence on U.S. imports is also impactful. Plus, the U.S. has not entered into a new free trade agreement since 2012 while other countries have taken action to do so.

AFBFT suggests that policy changes be looked at to bring inflated labor costs down, lower tariffs and better market access need to be negotiated, and more funding for international market promotions to hep return U.S. agricultural trade surpluses.

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