US Agriculture and the Global Economy

Some recent research from the agency Mr. Trump found too meddlesome, and Mr. Mulvaney tried to dispatch (i.e., the USDA’s Economic Research Service):

Economic Crises and U.S. Agricultural Exports


ERR-282, April 26, 2021


Reforming Market Access in Agricultural Trade: Tariff Removal and the Trade Facilitation Agreement

ERR-280, April 07, 2021

Agricultural Market Access Under Tariff-Rate Quotas

ERR-279, January 05, 2021

On a separate note, this post examines the import of US agricultural exports — including processing and transport, and other backward/forward linkages.

U.S. Agricultural Exports Supported 1.2 Million Full-Time Jobs in 2017

Amber Waves, June 03, 2019

Other interesting items, related to discussions on Econbrowser.

  1. The use of futures for commodity price forecasting: Merits of an Aggregate Futures Price Forecasting Model for the All Wheat U.S. Season-Average Farm Price
  2. China and soybeans: Interdependence of China, United States, and Brazil in Soybean Trade
  3. Tracking farm income during Mr. Trump’s trade war: 2021 Farm Sector Income Forecast

51 thoughts on “US Agriculture and the Global Economy

  1. pgl

    Caterpillar is a major player in the ag sector. I did not know Bill Barr represented them back in the day. Yea Barr covered up for Trump but check this out:

    Let’s go back to a Senate hearing on April 1, 2014 when Senator Levin’s staff produced a report accusing Caterpillar of shifting profits to their Swiss tax haven. PwC represented Caterpillar on transfer pricing and was also their financial auditor, which is a conflict of interest. The shareholders realizing Caterpillar may have to pay more taxes than they were told sued Caterpillar.

    It seems when Barr became AG he may have used his office to shield Caterpillar from legal action. And I thought Dick Cheney was a corrupt CEO.

    1. Moses Herzog

      Whatever one’s thoughts on Mr. Barr, we can have no doubts the man knows who to coax, softly stroke, and persuade to get where he wants to go in life. Can you say “non-violent sociopath”?? Good kids, I knew you could.

    2. Dr. Dysmalist

      In your defense, Darth Cheney was, is, and ever shall be corrupt and evil. As bad as Barr is (and he is indeed very, very bad), I’m not sure that he’s quite reached the depths that Cheney has plumbed. Valiant efforts like this keep getting him closer though.

  2. Willie

    Just out of curiosity, what’s happening with soybeans and what kinds of blips will those prices see in the next year or so? As long as this is about agriculture and all.

      1. baffling

        don’t you understand? its all about the weather. you city folk simply do not understand farming.

      2. Dr. Dysmalist

        I’m on a rare day off and, since it’s raining, at noon I watched the local TV news wherein they display some local commodity prices. Beans $16.09 !?!?!?!?!? Corn about $7.50 and roughly the same as wheat !?!?!? Geeeeez!

        1. Moses Herzog

          I don’t know about the market prices and the units etc. But where I live, I can get a can of green beans or a can of corn (not water-logged) for the same price: 50 cents. Now, I consider myself pretty masterly at finding cheap things, but that, to me, does not spell out “inflation”. Not looking to quarrel here, just saying…..

          1. Dr. Dysmalist

            Consider me slightly amused. Of course, anyone who refers to “commodities”, as I did, is implicitly referring to soybeans and what’s commonly referred to as “field” or “hard” corn at least around here and in the Mid-Atlantic region, and the prices are, of course, per bushel. Not looking to quarrel, just adding specificity, since that seems to be required today

            More seriously, on food price inflation, these commodity price rises would show up in the prices of highly processed foods on grocery shelves, both “dry” and frozen. Outside of bread, tortillas, and frozen vegetables, oh, and the usual crap that a typical college student (our only child), eats, we buy very little processed food, so I am less acquainted with the foods a typical American family eats. Based on what I’ve paid, and the limited number of price changes I’ve had to execute, I agree with what PGL said in the comments to a recent post, that most of the recent food price inflation occurred at the beginning of the pandemic. They’ve been pretty stable since then. There may be further consumer food price rises just around the corner but I’m not aware of them, not being clairvoyant (dagnabit!).

    1. Moses Herzog

      Let’s take an anonymous poll of those who were told they would be banished to KC. Along with 4 options on the method of dying.

    2. Dr. Dysmalist

      I first skimmed that as “banish himself to Mars.” Personally, I may very well choose a barren, oxygenless planet over living 24/7/365 within eyesight, or worse, earshot, of Trump. At least I would be able to admire several defunct, or if I’m lucky, active, marvels of American engineering and space travel instead of a derelict, depraved disgrace of a human being.

  3. Moses Herzog

    @ Menzie
    You’ve sent these links to Navarro right??? (joke, 100% aimed at Navarro, not his former intellectually superior RA’s expense)

      1. pgl

        Maybe you can help me understand this:

        ‘I’m sure that Rust Belt workers would have appreciated such largesse for keeping jobs at home! Let’s all cheer for “free” trade!!!”

        After all – we just went through a trade war which hurt US farmers, may have permanently shifted the share of soybean production towards Brazil and away from American farmers. So we lost jobs from an incredibly stupid movement away from free trade.

        1. Moses Herzog

          @ pgl
          I think that even Menzie would agree, the trade policy changes made during NAFTA had much more negative effects (taken in totality) on the American worker than the orange creature’s trade war. I assume this was the reason for the reference to the Rust Belt.

          Hence, your personal pinup girl for 2020 was not popular running around the midwest telling people she was the “co-author of NAFTA” with hubby Bill. Almost as politically dumb as the New York Governor you called “the national leader” on Covid-19 groping women at the office.

          1. Menzie Chinn Post author

            Moses Herzog: No, not sure I think the trade policy changes made during NAFTA (including NAFTA implementation) were on net negative for workers; certainly negative for *some* workers. Remember, lower costs of imported inputs means increase in output/decrease in costs of production.

          2. Moses Herzog

            I apologize for mis-guessing your thoughts, and if that created misimpressions to readers. I agree one could make a strong case it was helpful on the consumer side (and in producer costs). I’d still argue there’s gray area there. I’ll admit to some bias there as to how it effects those with jobs, which might color my thoughts a little.

          3. pgl

            The damage to farmer income has been well documented here. Now please provide us with your peer reviewed studies on the effects of NAFTA.

          4. Barkley Rosser


            Menzie is right on this, and I have made the point before. The widespread belief of many workers in Rust Belt that NAFTA caused lots of job losses there simply does not hold up. Job losses associated with China joining the WTO? Yes, that one does hold up. But the whole freakout about NAFTA a big crock.

            Again, both the Ross Perots (the giant sucking sound that did not happen) and the super advocates who said lots of jobs will be created by NAFTA were wrong. Most careful studies have it leading to modest job gains in all three countries, although Menzie can correct me if that is wrong. There were certain sectors in the US that lost jobs due to it, but they were mostly in like fruits and vegetables, not automobile production, with in fact NAFTA leading to lots of suppliers in Mexico of US auto firms. NAFTA led to an integrated set of supply chains across the three NAFTA nations, something Trump was unaware of when he started messing with it.

          5. Moses Herzog

            I guess when I saw hundreds of thousands of people losing their jobs, reading peer reviewed papers just didn’t move to the top of my list. I leave that to the “deep thinkers” to use intersecting lines to tell me how that’s a wonderful thing.

          6. Menzie Chinn Post author

            Moses Herzog: Remember, one observes the people losing jobs. One does not as readily observe those that get jobs as a consequence of imported inputs being cheaper than domestically produced ones. Nor does one know with certainty if a job is lost to trade competition, to productivity growth, or to changing preferences, or to all three (of which productivity growth is possibly caused by trade competition).

            As I noted elsewhere, even for the “China Shock”, it is unclear whether net job creation was negative — see this post.

          7. Barkley Rosser


            You “saw” hundreds of thousands of people lose their jobs? How many hundreds of thousands of people do you know? Did you meet all these people driving trucks? Wow, you have really gotten around a lot more than I thought.

          8. Barkley Rosser

            A further point on this is what happened when Trump came in. So we had all these people who lost jobs in the Rust Belt over several decades (auto manufacturing employment peaked in 1978 in the US) who had come to believe that this was largely due to foreign competition, with NAFTA an especially bad part of it. I know these people really believe it as I know quite a few personally.

            I also know a lot of people quite convinced that this last presidential election was stolen. Some of them are the same people, convinced that NAFTA was this big job killer. Trump was going to fix this, and both you and JohnH have expressed sympathy with this view, especially him. Heck, this is the centerpiece of his Dems Are Bad, Support Nameless Third Parties view.

            But Trump came in and started a trade war. Put up tariffs on various goods, including on steel, which hurt those auto workers out there voting for him, although many of them seem not to have figured that out. As it is, the evidence is pretty clear that his trade war did not gain any net jobs for the US, although employment was continuing to grow as it had been under Obama until the pandemic hit. Protecitionism has now become popular, and Biden is moving very slowly to undo it, if he does so at all. But the hard fact is that all these people who believed that NAFTA was this big job killer and if only we had a president willing to be protecitonist all those jobs would come flowing back have simply been proven wrong, even if they do not accept it any more than 70% of Republicans accept that this latest presidential election was not stolen and did not have lots of voter fraud i n it.

          9. JohnH

            Sorry, Barkley. I never thought Trump was going to fix anything. I know the difference between political posturing and policy intentions. What I find curious is that Republicans often state a problem correctly…then act to make it worse.

          1. Dr. Dysmalist

            I’m not going to look it up now (too late in the day, too tired, too lazy) but I thought one of the major take-aways of the Autor paper was that it wasn’t NAFTA, but China entering the WTO, that led to most manufacturing job losses (the other major take-away being that the aggregate losses didn’t look that bad but the losses were geographically clustered, therefore locally severe).

        2. JohnH

          If you look at the trade deficit, which Dean Baker uses as an indicator of opportunity cost for jobs, it went very negative after NAFTA, and the ver, very, very negative after China PNTR.

          Also, what ever happened to the “free” trade that economist have been advocating for decades? Massive subsidies for export industries totally flies in the face of any notion of “free” trade.

          Aren’t the economists simultaneously supporting “free” trade and a highly subsidized agriculture sector just revealing their hypocrisy?

          1. Menzie Chinn Post author

            JohnH: Yes, economists that simultaneously support free trade and highly subsidized ag are likely hypocritical. I do wonder how many of these “economists” are PhD credentialed.

          2. pgl

            “If you look at the trade deficit, which Dean Baker uses as an indicator of opportunity cost for jobs”

            The trade deficit is an indicator of the opportunity cost for jobs? I doubt Dean Baker is not THAT stupid – even though we know you are.

            Little experiment – suppose there is an investment led boom. Jobs are creating, imports rise, and the trade deficit goes up. When did this little experiment play out in the real world? Oh yea – the late 1990’s.

            Come on JohnH – if you wish to praise Dean Baker as a good economist (he is) do not associate him as endorsing such utter stupidity.

          3. pgl

            “Aren’t the economists simultaneously supporting “free” trade and a highly subsidized agriculture sector just revealing their hypocrisy?”

            And the list of economists who are doing both is??? Hint, Lawrence Kudlow is not an economist.

          4. pgl

            Let’s check with FRED about how US jobs plummeted after NAFTA as JohnH is suggesting here:


            Wait, wait. The employment to population ratio rose from 61.4% in Jan. 1993 to 64.7% by May 2020. That does not sound like a massive job loss to me.

            Of course JohnH has this weird habit where he often writes things that are grossly contradicted by the real world. But DAMN!

          5. Moses Herzog

            @ Menzie
            I shouldn’t say this, as you’ve been extraordinarily gracious and kind to me in the comments section lately replying to my questions (and really have been superbly kind to me in general). But as rude as pouring salt over an open wound is….. Menzie, you know it’s super hard to me to resist the smart aleck comment: You DO know at least ONE of these PhDs. Hint, he was caricatured in a Stephen Colbert cartoon.

            In a cheap attempt to get a pardon from our beneficent blog host and pay Catholic style indulgence to ease my way through purgatory for my just above semi-rude comment to one of my Economist heroes, I provide the following:

          6. JohnH

            Reposted from a few days ago… More from Dean Baker: “It is often said that the economy is too simple for economists to understand. This is clearly the story with the continuing weakness of the job market and the trade deficit…

            For some reason economists are reluctant to discuss the trade deficit as being a source of the economy’s weakness…

            But in a context where the economy is below full employment, the loss of demand to imports means that the economy is producing less than its potential and workers are needlessly going unemployed.” To my way of thinking, workers going needlessly unemployed is precisely an opportunity cost, pgl evidently considers is to be just dandy, thank you.”

            Of course, Clinton’s signing China PNTR and the ensuing massive trade deficits (not to mention job losses) couldn’t have been bad for the economy, could they? Of course not, because that would be tantamount to heresy—attacking “free” trade deals (actually managed deals designed to benefit the corporations who were insiders to the deals.

          7. JohnH

            Menzie: weren’t the trade deal of the past 30 years, virtually all of which allowed enormous US farm subsidies, backed by most prominent economists? I don’t recall much opposition, or even much in the way of publicly expressed reservations, except by a few outliers like Stliglitz, Josh Bivens, and Dean Baker.

          8. Menzie Chinn Post author

            JohnH: Most pro-free trade/pro-trade agreement economists opposed large ag subsidies, especially amber/red under WTO agreements. I really don’t know what world you’re in.

            Pretty sure my bona fides on opposing farm subsidies — going back to the 1980s as demonstrated by views espoused by Peter Navarro in The Policy Game — are strong. If you want, I can find the additional citations, but suspect there are plenty on Econbrowser. Remember the subsidies had been worked down (as share of GDP) since the 1980’s, but surged in the Trump trade war era.

          9. JohnH

            OK. I’ll concede that prominent economists may have opposed the US agriculture protections…very quietly. Despite their avid support for free trade, I don’t recall any instance where US’ anti-free trade agriculture protections represented enough of a poison pill for them to actually oppose the deals…or even support them with deep reservations, specifically calling out agriculture.

            Krugman is the easiest to check in this regard. In his 1993 Foreign Affairs endorsement of NAFTA he never mentioned agricultural subsidies. Ditto for his NY Times endorsement of China PNTR.

            At some point silence becomes complicity and tacit acceptance…and in this case hypocrisy.

          10. JohnH

            Here’s a NY Times article from 1993. It reported that “ When economists of every stripe agree on anything, it is noteworthy. So it is a sign of unusual accord that 300 economists, ranging from conservatives like James M. Buchanan and Milton Friedman to liberals including Paul A. Samuelson and James Tobin, recently signed a letter to President Clinton supporting the North American Free Trade Agreement.”

            No mention of any controversy about ag subsidies or even qualms or reservations. Silence.

            And, yes, agricultural subsidies led to dumping of subsidized agricultural products onto Mexican markets, a practice easily anticipated and widely glossed over in the rush to get on the NAFTA faux free trade agreement.

          11. Menzie Chinn Post author

            JohnH: When I sign a letter saying protectionism is bad, I don’t usually add caveats on other issues, like “and we need a carbon tax”, or “get rid of carried interest provisions”. On the other hand, a lot of those economists who worked on international trade actually worked a lot on ag subsidy restrictions (hence the language on green/amber/red boxes etc.). But I guess those folks don’t count as “prominent”. (Just a reminder – most of us economists aren’t “prominent”).

  4. pgl

    Interdependence of China, United States, and Brazil in Soybean Trade (Gale, Valdes, and Ash) has some great discussions of the cost of production in Brazil v. the US as well as the cost of transportation to China. It later does a nice job of describing the pricing of soybeans from the two sources post the tariff regime.

    Looking at their figure 18 in terms of transportation costs from Brazil to China, total costs including ocean freight was around $110 per metric ton in 2017, which is 5 cents per pound. Of course soybean prices hover around $440 per metric ton (20 cents per pound), which means transportation costs are an important element to these issues.

    Barkley has been noting that transportation costs were quite high in 2020. It would be interesting to see an update on their research.

  5. pgl

    Soybean production is expected to rise for the 2020/21 with China producing about 133 million metric tons but the US will produce less than 113 metric tons:

    Back in 2018, Brazil and the US both produced around 125 metric tons of soybeans. Brazil’s production has been growing while US production has fallen. Gee those MAGA hats should be MBGA hats – Make Brazil Great Again!

  6. Moses Herzog

    I appreciate the reply Menzie. I’m not being sarcastic, you are a super busy guy, your time is valuable, and I really kind of feel honored and flattered you take the time to answer. I’m not attempting humor in using those words~~I’m expressing genuine appreciation.

    It’s a topic that riles me pretty easily, so, I’m trying not to just look at the surface on these things. But, with the manufacturing base of America being hollowed out over the last 40 years, I’m trying to make out in my mind how we’re saying the losses can be measured but “the gains are just invisible, take our word on it”.

    I get the whole “downstream” thing, I do. And I get the whole “if you put cheaper imports as inputs into American products it lowers costs and helps American firms survive and possibly employ more”. But again, how long do you think any nation can take that tact?? Is there a “magic percentage” of foreign intermediate inputs that are going into American final products in which economists might say “Hey wait a second here, maybe we aren’t ‘gaining’ jobs here, maybe something else is going on here”. Is there ANY percentage there of foreign manufacturing (intermediate) inputs which might cause economists to worry??

    What I see is unions being destroyed and workers’ wages and protections being destroyed while economists are telling me foreign inputs are making us more “efficient”. “Efficient” for who???

    Think of the best foreign located economist professor/teacher you know Menzie, Ok, imagine this person in your mind, or the “top 5” economics teachers/profs located outside of America who speak at least passable English. You’re probably imaging maybe one person you know in Hong Kong maybe, and 5-6 folks who teach in Europe or Canada (Europe probably pays more than Canada, so better Economics instructors)?? If I told you they can teach THOUSANDS of American students on Zoom or Skype at a lower input cost per “unit” (student) than the Economics Dept on La Follette campus, are you ready to “sign up” for that efficiency?? After all, if La Follette can “lower their input costs with European based instructors” Maybe your Dean can keep his/her job a little longer, right?? And by “surviving” with cheaper foreign based inputs, your Dean and the administrative apparatus of UW-Madison got to keep their jobs. That sounds super sweet aye??

    1. pgl

      “with the manufacturing base of America being hollowed out over the last 40 years”

      40 years ago was the toxic mix of Reagan fiscal stimulus and Volcker’s tight money which did result in a massive dollar appreciation and a huge fall in net exports.

      Hint – that was NOT NAFTA.

      Just to update your rather shaky calendar.

      1. Moses Herzog

        As much of a bleeding heart liberal as I am certain I am viewed by this blog, I try to remain relatively neutral or clear-eyed on these issues. Those losses of jobs due to NAFTA and many other questionable trade policies have happened throughout both parties’ White House administrations. (including Bill Clinton’s, who I tended to be a fan of in a general sense). And I’d say a certain blog host might agree with me on that contention as well, but after being in pretty serious error playing mind reader farther on up in the thread, I’m going to avoid walking on thin ice for awhile. I have no idea what Menzie would say on job losses due to trade under Clinton and Obama. I suppose you could argue NAFTA was Clinton’s baby, so, maybe Menzie has already indirectly answered that.

  7. Moses Herzog

    @ Barkley Junior
    Many people “get around” in this world better than you imagine Junior. You’re a man who claims to be an expert on Russia, but can’t decipher that Ukraine is important to Europe’s security and therefor France’s national security, and you probably see the world as more disproportionately large than it actually is. HINT: It extends past JMU campus and past your favorite photos of your Confederate Army ancestors.

    But you keep interacting with those Virginia folks Barkley. Have you been down to a BLM protest lately?? You get down to one of those BLM protests near the JMU campus and tell them you’re upset about that white guy, Hans Christian Heg’s statue being taken down and that you’re all hot and bothered over it. Maybe some Black Mom whose teenage son got shot while showing his car insurance to the policeman will weep many tears for your personal loss related to the statue. It’ll be a way you can show how conscious and connected you are to the world around you:

    Either that or you can join pgl at one of these deals, defending New York Governor Andrew Cuomo. What did pgl call Andrew Cuomo?? Oh yeah, pgl called New York Governor Andrew Cuomo “the national leader” on Covid-19. I’m told New Yorkers are “tough”, “sophisticated”, and the part you’ll really love Junior~~”cosmopolitan”.

    BTW, based on your manner of “communicating”, even before the pandemic hit them hard, I wouldn’t be going to India anytime soon if they read Tyler Cowen over there:

    Then again, maybe a trip to India is what you need Barkley. Inculcating the character of many Asian Indians could be personal progression for you. Avinash Dixit (I think currently residing nearer to Princeton New Jersey than your intellectual coequal ConsultantKopits) could teach you how to act admirably towards colleagues, and not like a resentful and jealous infant.

    1. Barkley Rosser


      Wow, this is some of the most demented blathering we have seen out of you in some time. Did you hit the cheap wine bottles a bit too hard this Friday evening? Or is it getting upset about being caught dead wrong on a string of things from the relationship between France and Ukraine to the question of job losses associated with NAFTA?

      On the NAFTA matter, it was far from perfect, and I agree with JohnH on the point that the US corn industry got treated very well by it at the expense of the traditional and poor corn sector in Mexico, with the massive losses in the latter leading to major migration off the farms in Mexico with many of those people coming to the US. Mexican President Vicente Fox had good reason to lecture then US President George W. Bush on this matter when they met to discuss trade issues.

      I also note that I have long supported active labor management policies like we see in Sweden and Denmark. They were not that needed for NAFTA, but they would have been really useful for when China got into the WTO. I have previously analyzed here the unfortunate politics of how it has been that there has been so little support for such policies in the US. Sweden and Denmark are very open economies with pretty much full free trade, but they provide sufficient support for those who lose jobs due to imports that there remains strong political support for their free trade policies by pretty much all groups. We should have followed them, but we have not in the US.

      I hope your hangover is not too severe tomorrow.

  8. pgl

    Fred Bergsten’s PIIE piece that Moses provided us where Fred red lined (well red notes in the margin) some Navarro nonsense is really good. This line is something Uncle Moses should highlight for his BFF JohnH who is also consumed with the same nonsense:

    ‘Central to Navarro’s argument is the idea that other countries are responsible for the US global trade deficit. This is wrong. In fact, the president’s own 2018 Annual Economic Report of the President says the deficit is a result of macroeconomic conditions, not trade: “If a country invests more than it saves, or imports more than it exports, it finances the resulting deficit through foreign borrowing.” The report then states that policies that try to affect the trade balance without considering the overall savings and investment of the country “will be hard-pressed to succeed in the long run.”’

    As far as NAFTA destroying jobs in the 1990’s, I have already noted how the economy actually boomed with record employment as a share of population but that investment led boom did raise imports. Cause and effect – whoops, already beyond JohnH’s limited economic comprehension.

  9. pgl

    May 7, 2021 at 2:16 pm
    Reposted from a few days ago… More from Dean Baker: “It is often said that the economy is too simple for economists to understand. This is clearly the story with the continuing weakness of the job market and the trade deficit…

    For some reason economists are reluctant to discuss the trade deficit as being a source of the economy’s weakness…

    But in a context where the economy is below full employment, the loss of demand to imports means that the economy is producing less than its potential and workers are needlessly going unemployed.”

    So Dean Baker never equated trade deficits with your stupid “opportunity cost of jobs” word salad. Thought so. And yea the economy is too simple for simple minded fools like you to get.

    But please write this on your chalk board 500 times:

    “But in a context where the economy is below full employment”

    The economy during the late 1990’s was not below full employment. In fact we went to a rather depressed economy in the early 1990’s to a booming economy after NAFTA. I would ask what part of this do you not understand but of course you do not understand a damn thing.

  10. pgl

    JohnH has accused economists such as Paul Krugman of being unabashed supporters of free trade but also supporters of farm price supports. Neither accusation is true. Now has been Krugman been silent on farm price supports. Not quite:

    This is pretty good discussion even though JohnH will refuse to read it (like he would understand any of it if he did). But this is not the NYTimes so I guess it does not count according to Holier Than Thou JohnH!

  11. scarlett smith

    The global economy is expected to grow in the next 2 years, but recovery will be uneven across various countries and regions like UK, Canada, ASX today.
    Europe and the US continue to struggle with the second wave of COVID-19 infections halting the economic recovery, but they are projected to rebound gradually as the virus cases come under control.

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