Weak dollar fuels growth in ag exportsby Dan Gunderson, Minnesota Public Radio
Amid fears of recession, one sector of the regional economy is booming. A weaker dollar is helping to fuel demand for U.S. agriculture products around the world. Some regional agriculture exporters see no signs of economic slowdown.
Moorhead, Minn. — A truck sits idling at the Sunopta soybean facility in Moorhead, while the freight container behind it is loaded with specialty soybeans headed for China or Japan. The company exports non-GMO and organic soybeans to Asian countries.
Manager Curt Petrich says the biggest challenge is finding enough non-GMO soybeans to meet demand. The company was built around exports of specialty beans to Japan, but the market is rapidly expanding.
"Nearly everything we do at this facility is exported, nearly everything went to Japan. Over the last five months we have expanded to where 35 to 40 percent of our business is in Japan and the balance is in other countries in Southeast Asia," says Petrich.
A weak dollar helps, and rapid inflating food prices in China make U.S. soybeans more competitive, according to Petrich who says his market analysis shows no sign of a slowdown.
Howard Dahl shares that optimistic outlook. Dahl owns a Fargo farm equipment manufacturing company. He's on a two-week sales trip in Ukraine and Kazakhstan.
"The weaker dollar helps us dramatically compete against our European competitors and even against our Canadian competitors. There's no question it has an impact, " says Dahl.
And there's plenty of money in the former Soviet Union countries thanks to high prices for crops like wheat and growing oil revenue. That's made them eager to increase agriculture production by replacing old inefficient farm equipment.
"All the companies that are in that market are realizing some tremendous sales right now," says Howard Dahl. "We're growing at about 30 percent a year, largely driven by that business."
Dahl says he's very bullish about farm machinery exports for at least the next two or three years.
That optomism runs deep across a wide range of regional businesses according to North Dakota Trade Office Director Susan Geib.
Between 2000 and 2006, the value of North Dakota's annual exports of merchandise grew to about $1.5 billion, a 141 percent increase.
Minnesota agriculture exports in 2006 were estimated at $2.98 billion.
Much of the export growth is in farm commodities and farm equipment manufacturing, but North Dakota is also exporting more software and aircraft parts. "The low dollar value has almost everything to do with the rapid expansion of exports in the nation as well as in North Dakota," says Geib. "We're now number five in the nation in terms of export growth. It's amazing."
Geib says many regional companies have built their reputations abroad and those connections are now paying off.
Farm machinery manufacturer Howard Dahl for example, has been selling equipment in Russia for 17 years.
Geib says whether it's tractors to Ukraine, or soybeans to China, there's still tremendous potential for export growth over the next decade.
"China is clearly one of the fastest growing civilizations since the Stone Age. Their population is still growing like crazy. They've got a long way to go," says Geib. "Frankly, so does Ukraine and Russia. It's going to be a while."
Geib predicts one of the biggest challenges of the next decade will be finding enough workers to satisfy the growth in manufacturing jobs in North Dakota.
Curt Petrich at Sunopta in Moorhead is also worried about supply. He wonders if there will be enough organic and non-GMO soybeans to satisfy the Asian demand, but he's not complaining.
Petrich says just a few years ago he worried U.S. agriculture products couldn't compete around the world.
"At one point I truly believed we were going to be a third world agriculture as we were becoming such a high cost producer," says Petrich. "Things have changed so dramatically over the past couple of years that farmers, people involved in agriculture have I think a very bright future."
U.S. farm exports reached a record level in 2007, and government analysts predict that record will be shattered this year.
- Morning Edition, 01/25/2008, 6:55 a.m.