Looking Back On the History Of Ag Trade

How has USDA Ag trade changed over the course of a century? USDA Senior economist Sharon Sydow offers that view of changes at Ag trade from the 1920s. 

“The agricultural economy was under some stress post World War I price volatility, debt foreclosures, high land value,” she stated. 

To the present. 

“Chinese, we still have issues with them, but they did have to undertake a lot of reforms to join the WTO and as a result that helped to create the conditions for their imports,” Sydow said. 

This year's USDA Agricultural Outlook Forum celebrated a centennial milestone that included a look back at historical perspectives of aspects of the Agriculture Department over those 100 years.  For example, the changes regarding agricultural trade during the past century, Sydow offered her insight.  She started with the economic landscape of the 1920s. 

“We weren’t looking too bad there, in terms of our exports, but it really masks the fact that the agricultural economy was under some stress,” she said. 

With price volatility, foreclosures and high land values, Sydow adds the first Farm Bill would not become law until the 1930s, so Ag trade was seen as a potential remedy to Ag economic woes. 

“The thinking at that time was import tariffs and protection. That's the way to help U.S. agriculture. And so, we have the very famous Smoot Hawley Tariff Act of 1930.” 

Causing not only a decline in Ag exports, but also seen as a contributor to both the Great Depression of the 1930s and the structure of Farm Bills as we know them today.  Another policy response, the reciprocal Trade Agreements Act of 1934, designed to expand food and farm exports. 

“Which gave the president the authority to enter into reciprocal trade agreements to promote U.S. exports. US tariffs could be lowered only if countries made reciprocal cuts during that period of time,” Sydow pointed out. “There was a lot of reciprocal, bilateral trade agreements being negotiated and implemented.” 

That, along with the post World War II global economy, set the stage for increased demand of US AG exports around the world. Another significant trade-oriented event occurred in the decade of the 1940s. 

“In terms of the world trading system in terms of the GATT, the General Agreement on Tariffs and Trade in 1947, implemented on January 1st of 1948. 

The three-decade period following GATT saw increased U.S. Ag production through mechanization and technological advances and lower costs for inputs.  Meanwhile, declines in farm and food tariffs and duties in that same time period were established upon previous decreases in pre-GATT reciprocal bilateral trade agreements for U.S. Ag production and exports, that culminated in the 1970s. 

“That sharp increase in U.S. Ag exports reflected broader market and macroeconomic conditions at the time.” 

That decade, however, also featured various challenges and obstacles to US AG export opportunities. One of those that developed in the latter half of the 70s and early 80s, various export restrictions, including the Soviet grade embargo. 

“Studies have differed on the severity and longevity of the impacts of this action, but most indicate that U.S. market share was adversely affected,” Sydow said.  “U.S. competitors benefited, trade concerns with reputation of the U.S. being an unreliable supplier and issue stemming from disrupted markets and supply chains.” 

The late 1980s and early 1990s featured the North American Free Trade Agreement. 

“Tremendous impact on integrating North American agricultural and food market. Significant trade investment growth, not to say we haven't had our frictions in certain sectors, but this agreement is vitally important to U.S. agriculture.” 

Domestically, within the 1996 Farm Bill. 

“Trade and food aid programs were also reoriented towards greater market development and emphasis on high value and value added products.” 

The timing of that Farm Bill coincided with the Uruguay Round of GATT, where its successor, the World Trade Organization, was formed. 

“For once, agriculture was there at the table. All sectors covered a single undertaking and brought about comprehensive trade rules and reform modalities for the first time.” 

Since WTO U.S. Ag trade has experienced everything from free trade agreements, trade promotion authority, commodity price spikes, animal health issues, supply chain disruptions and global pandemics yet. 

“Our trade was really resilient during this period,” Sydow noted. 

And overall remained strong.

If you have a story idea for the PNW Ag Network, call (509) 547-1618, or e-mail glenn.vaagen@townsquaremedia.com