Domestic Production for an International Market

The opportunity to trade and market products outside the country is at the center of our modern, commercial world. International trade occurs for many reasons, including lower production costs in one country versus another, specialized industries, availability of natural resources and consumer tastes. Agricultural production in Oklahoma and the United States provides economic and social benefits at home and in other developed and developing countries around the world through trade.

In 2014, U.S. agricultural exports reached a record-setting $152.5 billion, an increase of 58 percent over the last five years. The U.S. House of Representatives Committee on Agriculture has stated that with 95 percent of the world’s population living outside the United States, it is imperative that the U.S. continues to work to expand access to foreign markets and eliminate international barriers to trade.

Currently, only one percent of U.S. companies export products, but population growth and rising incomes in developing countries are creating significant new opportunities. As the efficiency of American agricultural production continues to improve, U.S. farmers and ranchers are poised to capitalize on increasing global demand for safe and affordable food and fiber.

USDA Economic Research Service estimated that in 2013, each dollar of agricultural exports stimulated another $1.22 in economic activity. And, agricultural trade provides a substantial economic benefit in the job market. Based on 2014 USDA data, agricultural exports require 1,094,400 full-time civilian jobs, which includes 793,900 jobs that are not in the farm sector. Despite the fact that farming accounts for a relatively small share of U.S. gross domestic product today, agriculture has a significant impact on the overall U.S. economy and has economic impacts felt around the world.

Much like agricultural production in general, agricultural trade has evolved throughout history. In colonial days, tobacco and cotton were the most important export commodities. According to the USDA, American producers currently export half of U.S. wheat, milled rice and soybeans; 70 percent of almond, walnut and pistachio production; more than 75 percent of cotton production; 20 percent of poultry and pork production and ten percent of beef production. In addition, farmers’ purchases of inputs including equipment, fuel and fertilizer to produce export commodities spur economic activity in manufacturing, trade and transportation industries.

The most common barriers to international trade are foreign tariffs, unscientific regulatory barriers and bureaucratic administrative procedures designed to block trade. Trade agreements are designed to break down those barriers and level the playing field for U.S. producers in the international market. With more than 260 preferential trade agreements worldwide, and only 20 of them involving the United States, domestic producers’ efficiency advantage can be overcome by preferential agreements, especially in price-sensitive developing countries.

While the agreements are complicated, the opening of new and emerging international markets offers promise for Oklahoma’s farmers and ranchers. As domestic producers continue to efficiently and safely produce an abundance of crops and livestock to meet growing international demands, fair trade agreements remain a critical focus to ensure the products can reach the people who need them most.