Demand For California Exports Falls Off

As the Agricultural Transportation Coalition prepares to convene in San Francisco for their annual convention next week, comes news that California ag exports are in decline.

According to an analysis by Beacon Economics, California’s exports of manufactured goods in April nudged up a nominal 0.6 percent from $8.44 billion to $8.49 billion, while non-manufactured exports (chiefly raw materials and agricultural products) fell by 3.7 percent from $1.65 billion to $1.59 billion. Re-exports, meanwhile, rose by 5.5 percent from $2.79 billion to $2.95 billion.

At this time last year, Walter Kemmsies, chief economist for transportation engineering company Moffatt & Nichol, told the AgTC that “agriculture was the fastest-growing segment of the next business cycle.”

This projection was not challenged by Beacon, however.

“If anything is remarkable it’s that the April numbers were not worse, ” said Beacon economist, Jock O’Connell, “It’s hardly a secret that Europe is in grave distress, that China’s slowing down, and that major economies like Brazil and India have begun going wobbly.”

Compounding the challenge for the estimated 60,000 California companies that ship goods to customers around world, the crisis of the euro has driven up the value of the dollar, effectively making U.S. products more expensive for foreign buyers.

Beacon Economics’ Founding Partner Christopher Thornberg said that with more uncertainty abroad, foreign capital tends to flow to the U.S., as a safe haven, thereby increasing the value of the dollar and making U.S. exports less competitive on global markets.

“While this trend is not expected to be permanent, the dollar could rise more vis-a-vis the euro until their banking issues are dealt with,” said Thornberg. “This could make it somewhat difficult to maintain the pace of export growth that we’ve enjoyed thus far in the recovery.”

The news is not unrelentingly dismal, however.

“Probably the best news lately is that our single largest export market, Mexico, remains on a more stable economic footing,” O’Connell said, noting that Mexico’s central bank had just last month updated the country’s economic growth outlook for 2012 to a range of 3.25 percent to 4.25 percent.

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