Falling exports, rising imports to drive record ag trade deficit in ’25

The U.S. Department of Agriculture has released its latest agricultural trade forecast, predicting a sharp rise in the trade deficit for the upcoming fiscal year 2025. The forecast anticipates a record deficit of $42.5 billion, a significant increase from the $30.5 billion deficit projected for FY 2024, which ends on September 30th.

This widening gap is attributed to both a decline in agricultural exports and a rise in imports. Notably, soybean exports are expected to decrease by $1.5 billion to $22.9 billion, while corn exports are forecast to drop by $900 million to $12.2 billion.

On the import side, the USDA anticipates a significant rise, with agricultural imports projected to increase by $8 billion, reaching $212 billion. Higher imports of sugar, fruits, vegetables, and tropical products like coffee, tea, and cocoa fuel this increase. The USDA attributes part of the rise in fruit and vegetable imports to improved growing conditions in Mexico, the leading supplier of these products to the U.S.

The growing trade deficit has become a point of contention among farmers and lawmakers from agricultural states. Many in the farming community express frustration over the lack of aggressive trade negotiations by the current administration, which has avoided entering new tariff-cutting deals.

Economists and agricultural experts have highlighted that falling commodity prices are a major factor behind the declining export values. Betty Resnick, an economist with the American Farm Bureau Federation, pointed out that while export volumes for certain commodities have increased, their overall value has dropped due to lower unit prices. The strong U.S. dollar further exacerbates the situation by making imports cheaper and U.S. exports less competitive on the global market.

The projected trade deficit is seen as an alarming indicator for the future of American agriculture. John Kran, National Legislative Counsel for the Michigan Farm Bureau, emphasized the need for policy reforms, particularly in areas like agricultural workforce challenges. Without these reforms, Kran warns, the U.S. could become increasingly reliant on foreign food sources, undermining the nation’s ability to sustain its agricultural sector.

The USDA’s report also forecasts a decline in agricultural exports to China, which are expected to drop by $3 billion to $24 billion in FY 2025. This decrease is attributed to reduced demand, strong competition, and lower prices for key U.S. exports.

Loren Koeman, Lead Economist for the Michigan Farm Bureau, expressed concern over the rapid shift from the U.S. being a net exporter to a net importer of food. He stressed the importance of enacting policies that support the domestic agricultural industry, such as the farm bill and reforms to the agricultural guest worker program.