Food industry is productive and resilient to collapse.

Earlier this year, when we released the Department’s initial projections for 2020 at USDA’s Agricultural Outlook Forum, the immediate future looked to be improving (www.usda.gov/oce/ag-outlook-forum). We were expecting better weather, improved trading relationships, and global economic growth that would fuel demand for US agricultural exports. The COVID-19 outbreak has severely dampened expectations for 2020 and 2021. And while the timing and pace of the economic recovery remain uncertain, the fundamentals of U.S. agriculture are sufficiently strong to withstand the crisis.

The sector continues to chart productivity gains; and smart policies, technology, and innovation are helping farmers deal with the effects of adverse weather conditions. Although the early August derecho in the Midwest, the severe fires in the West, and the more recent Hurricane activity in the Gulf have caused localized losses, from a national perspective weather conditions have improved relative to 2018 and 2019, signaling a more bountiful harvest in the fall. Record levels of meat and dairy production are expected in 2020 and 2021.

We know that U.S. agriculture is highly competitive in global markets, and the trade outlook is looking more favorable with expected global economic recovery in 2021. Overall, agricultural exports during the COVID-19 period appear to have been holding up relatively well compared to overall U.S. exports. In the first seven months of 2020, U.S. ag exports were down 3.5 percent from last year compared to a decrease of 18 percent for non-ag exports. Just recently we have seen a major uptick in Chinese purchases. For instance, while U.S. soybean exports had started off slow this year, since July, China has purchased 14 MMTs. Over the past few months, China has also signaled the intent to purchase corn at amounts exceeding its 7.2 MMT quota if they all finalized. Purchases are up across the board, with total accumulated sales for wheat, sorghum, cotton, pork and beef exceeding the pace of 2017 levels year-to-date.

The limited impact of the crisis on overall agricultural exports reflects the fact that demand for food is relatively income-inelastic, and that marine transportation used for most agricultural products (in particular bulk products) has not been significantly disrupted. U.S. agricultural exports in Fiscal Year 2021 are projected at $140.5 billion, up $5.5 billion from the FY 2020, primarily driven by higher exports of soybeans and corn. Soybean export volume is forecast to rise nearly 26 percent year-over-year as growing demand in China and significantly reduced export volume forecast from Brazil opens the door for a rise in U.S. exports. Corn exports are also forecast to rise $700 million to $9.0 billion in FY2021 and horticultural exports by $500 million to $35.0 billion due to expected increase in sales of tree nuts, among other products. Similarly, livestock, poultry, and dairy exports are forecast up $500 million to $32.3 billion.