It has been pretty evident to the farm community that foreign exports were down in 1998. The January edition of the USDA agricultural trade update has confirmed those expectations.

"The United States is in a full-blown recession for some farm commodities and this is having serious consequences for some sectors of the farming community because we are a trade driven industry," said Craig Infanger, Extension Economist in the University of Kentucky College of Agriculture.

While some sectors of American business were able to downplay the financial impact of declining foreign markets in 1998, farmers that grow bulk farm commodities such as feed grains, oil seeds, wheat, cotton and tobacco experienced very weak foreign demand.

"Bulk commodities were down fifteen percent for the year, although some crops did show an upturn over the last two months of the year. Even high value farm products such as meat, poultry, hides, fruits and nuts exports were all down for 1998," added Infanger. "One bright spot was vegetable oils that were up about a third to finish at two billion dollars."

Final farm export figures for 1998 could be as low as 52 to 54 billion dollars. That is down dramatically from the 60 billion dollars worth of exports that were moved in 1996. And the picture for 1999 may be even more dismal with projected exports of only 50 to 52 billion.

The strength of the American dollar and the Asian financial crisis have combined for a one-two punch that will have some farmers seeing red ink for months to come.

"Export sales to South Korea were down over forty percent in 1998 and sales to other Southeast Asian countries are down over 20 percent," noted Infanger.

While the crisis has begun to stabilize in some of these areas, problems with Latin American economies have begun to lower export potentials to those areas.

"Latin American financial woes may have less of an impact on American farmers than the Asian financial troubles. Fortunately for us, Brazil, one of the key countries in Latin America, is only the 21st largest export market for American farm exports," said Infanger.

The other big factor hurting farm exports is the strong American dollar. "By the end of the summer it was at its highest level since 1989. When the dollar is strong it takes more of our foreign buyers currency to purchase American products," said Infanger.

But there is hope in this area. Since last fall, the American dollar has been sinking in price and this could bode well for stronger farm exports towards the end of 1999.

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