Transnational Structuring in Food Processing and Marketing: Introduction

Abstract

It is widely recognized that international markets are increasingly important to the economic viability of the U.S. food and agricultural sector. During the past three decades, for example, the value of the sector's exports, when measured in real terms, has more than doubled and, when measured as a share of the sector's gross domestic product, has increased by 80%. Further, with an estimated income multiplier for agricultural and food exports that exceeds 2.3, the overall American economy realizes significant benefits. It is also recognized that international marketings are highly variable. Indeed, much of the boom in the agricultural economy during the 1970s was directly attributed to an unparalleled rate of growth in exports, just as the bust in the first half of the 1980s was tied to a sharp decline. The sources and consequences of this variability have been the subject of much speculation, discussion, and research. Closer examination, however, reveals that much of the variability has been caused by wide swings in exports of primary commodities, essentially the feed grains, food grains, and oilseeds. By contrast, international sales of high-value agricultural products, including processed commodities and manufactured foods, have been more stable. Since 1980, for example, the standard deviation in the annual value of primary commodity exports has been 2.5 times larger than for high-value products. At the least, therefore, stability argues that export markets for high-value products deserve particular attention. Furthermore, estimates of income multipliers suggest that the economy-wide gains from high-value exports (2.9) are more than 50% higher than those from primary commodities (1.8), mainly because of further processing and other valueadding activities. A comparison of the profile of U.S. trade in food and agricultural products with the world market, however, raises questions regarding the international competitiveness of American firms. FAO trade data indicate that during the past twenty-five years, high-value products have accounted for roughly three-fourths of all world trade in agricultural products, whereas they have made up less than 45% of U.S. agricultural exports. By contrast, more than 90% of U.S. agricultural imports are in highvalue categories. This suggests that the American food and agricultural sector is, in essence, transferring to other countries many of the jobs and much of the income that can be earned by producing value-added products for world markets.