Opportunities for Michigan Agricultural Exports Titus Awokuse Department of Agricultural, Food and Resource Economics Michigan State University Presentation at Global Business Club of Mid-Michigan, February 16, 2017

Pop Quiz: Question What percent of US overall economy (GDP) is due to international trade (exports and imports)? A) 6 percent B) 13 percent C) 21 percent

Pop Quiz: Answer What percent of US overall economy (GDP) is due to international trade (exports and imports)? A) 6 percent B) 13 percent C) 21 percent Big picture: 30 percent globally (2015)

Importance of Global Trade Exports is very important for US producers Imports benefits both US producers and consumers Exports is a major driver of US economic growth

US Major Trade Partners Mixture of developed and emerging economies Top 3 US largest export markets: Mexico, Canada & China

Trends in Exports: US versus Michigan Michigan exports mirrors US performance Most recent decline in real exports began in 2014 50% of Michigan exports in transportation equipment - auto Significant decline of $3.2 billion in auto exports from 2013 to 2014

Rising Trade Deficits: Major Partners

Trade Deficit: Ag/Food is bright spot US Ag/Food exports: $129 billion in 2016 more than 20 percent of all the food grown in the US Ag/Food export volume more than double in past decade

Recent Trends in Agricultural Trade Midwest region: 13% of all exports in 2015 were in food and agricultural products (8.4% for the rest of US ) Prior to 2014, US food and agricultural products exports had been growing rapidly Mostly due to large demand from Asian markets Michigan: $3.18 billion in ag/food exports in 2014 Mostly to Asian (China, Japan, S Korea) and NAFTA (Canada, Mexico) countries Decline in food exports in 2015-16 Stronger US dollar and slow down in global economy Lower ag income and profitability  less employment

Ag/Food Exports Opportunities: WHERE Ag/Food Exports Opportunities: WHERE? Trade Volume: Annual % Change, 2012-2017

Ag/Food Exports Opportunities: WHERE? Mostly in emerging and developing economies China, India, Argentina, Brazil Chile, Peru, etc. There are still opportunities for exports growth due to: Huge market size and shifting food consumption patterns Growing middle class and purchasing power Lesser known countries have upside for importing US food products 

Ag/Food Exports Opportunities: WHAT? Processed food products Dairy products Fresh fruits and nuts

Michigan Ag-Food Exports Growth: Key Challenges Timely knowledge of prevailing market conditions and policies in foreign markets US trade policy changes & potential for trade wars Uncertainties with global markets and macroeconomic changes Other? Open Forum: Questions?