The most recent publication of MAP (in June)

Composition of agricultural trade of major WTO players 2 July 26 MAP - Brief Monitoring Agri-trade Policy European Commission Directorate-General for Agriculture and Rural Development The most recent publication of MAP (in June) highlighted the agricultural trade developments of major WTO players and focused specifically on their trade flows and trade balances with some reference of the main products involved. With this MAP-brief, we want to take a closer look at the structure and composition of these trade flows. Such a look requires a classification of agricultural trade statistics based on criteria that would allow international comparisons. This is why we have decided to adapt the classification of EU agricultural trade statistics to better reflect what is really happening in trade flows. In general terms the new classification follows the pattern of US and Canadian classifications of trade statistics, and divides the value of agricultural trade into three main aggregates - commodities, intermediate products& high value products. Further details about this change will come when the annual statistics on EU agricultural trade are published on the DG-AGRI website. As some readers have already remarked based on the June MAP, trade statistics are notoriously difficult to compare. EU (or US) trade statistics do not match WTO, FAO, or UN data because the desired level of details differs. We have opted, therefore, to use the UN-COMTRADE database and to express trade in US dollar terms as a basis for comparison. The structure of this comparison was kept the same for the major 1 players presented in this publication. Their agricultural trade for 1999-24, whether exports or imports, is classified in the three broad categories identified above (commodities, intermediate, high value products), and the share of each group in overall exports or imports is shown in the text. The annex presents the absolute value of trade both in tabular and graphical form. The presentation follows the same logic as the previous MAP. Five of the ten players presented here are both exporters and importers (EU, US, Canada, China and India), four are mainly exporters (Brazil, Australia, Argentina and New Zealand) and Japan is mainly an importer. For the latter ones, we have opted to focus on the part of their trade, exports or imports, that is most noticeable on world markets. Traders Starting with the EU (still the EU-15 for the period in question), the composition of its agricultural exports for 1999-24 indicates the dominance of high value products and the low share of commodities. % EU: composition of agricultural trade The share of the latter has dropped from 1 to 8%, while more than two thirds of EU agricultural exports consist of high value products. The pattern of import composition, also relatively stable for the whole period, has similar characteristics. This newsletter does not necessarily represent the official views of the European Commission Contact: DG Agriculture & Rural Development: Agricultural Trade Policy Analysis unit. Tel: +32-2-2991111/ email: agri-trade-analysis@ec.europa.eu. http://ec.europa.eu/agriculture/publi/map/index_en.htm European Communities, 26 Reproduction authorised provided the source is acknowledged

Although lower than the respective share of exports, the share of high value products in EU imports still represents more than half of the total import value, while commodities and intermediate products are relatively close. In absolute (dollar) terms, the EU increased its high value exports from 23 to 24 by almost 7 billion dollars (+14%), to a total of 53 billion dollars. And although part of this gain is due to the devaluation of the dollar, still the most impressive gain were for high value pork meat, whose export value jumped by 55% from 1.8 billion in 23 to 2.8 billion dollars in 24. s of high value products also increased by the same amount of 7 billion dollars over the same period, while in this group, the 8 billion dollars of imports of tropical fruits and spices represent 17% of all high value EU imports. Between 22 and 24, the value of EU intermediate product imports increased by 2%, mainly due to a huge increase of oilcakes imports, now reaching over 5.6 billion dollars and thus reaching almost 3% of all intermediate product imports. The composition of EU agricultural trade contrasts to that of the US in terms of structure, and explains to a large extent the opposing development of the agricultural trade balance. The slight decrease of the EU deficit over this period took place despite the unfavourable exchange rate developments for EU trade (dollar devaluation). US agricultural trade, on the other hand, despite facing a very favourable exchange rate, was characterised by a significant deterioration of the US agricultural trade surplus a development explained to a large extent by the weight of high value products in imports. In fact, US high value exports have been declining during the 1999-24 period and now stand at 42% of total US exports (down from 48%). While the export share of intermediate products has remained relatively stable at around 2%, the dependence of US agricultural exports on commodities (mainly grains, soybeans and cotton) has increased over the same period from one third to almost 4%. This development is the result of high commodity prices rather than any volume inroads of the US in world commodity markets. % US: composition of agricultural trade On the import side, the share of high value products is around, over 2% points more than the EU, but in deep contrast to the latter, the US import share of commodities is only around 8% (mainly tropical, such as cocoa). Among the high value products, most important US imports in value terms are those of tropical fruits and spices as well as wine. The composition of Canadian agricultural exports resembled that of the EU in 24. However, unlike the stability of the EU export share pattern, Canada increased its share of high value exports from in 1999 to 58% in 24. 2

The two main exported high value products, worth 3 billion dollars, are bovine meat and pork meat with a combined share within this product group of over. Canada s trade surplus now stands at just below 5 billion dollar in 24, the highest level of the 6 observed years. If the composition of Canadian exports looks like that of the EU, the composition of Canadian imports looks almost identical to that of the US, with around two third of its total agricultural imports consisting of high value products, a percentage that has remained rather constant since 1999. Interestingly enough, the main product aggregate within this group of high value products is cereal preparations (despite the fact that Canada is a major cereal exporter), with a value of more than 1.2 billion dollars and a share within this product group of more than 1%. % CANADA: composition of agricultural trade China makes headlines in agriculture by importing more and more agricultural products over the years, and has increased its imports threefold from 7 billion dollar in 1999 to over 25 billion dollar in 24. As a result, the Chinese agricultural trade balance turned negative in 23, and further deteriorated to reach 8.7 billion dollar in 24. s of commodities jumped from 8.6 billion dollars in 23 to almost 14.5 billion dollars in 24 (+67% in one year). Cotton increased from a meagre 15 million dollars in 1999 to over 3.4 billion dollars in 24, representing almost 14% of all Chinese agricultural imports. But China also exports agricultural produce. Such exports reached 16.4 billion dollars in 24, 69% of which were high value products. Vegetables (fresh, dried or chilled) were the main exported product category within this group, reaching over 2.5 billion dollar (or 22% of high value exports). % CHINA: composition of agricultural trade India is a big country and a big producer of agricultural products, but still is a relative minor player with respect to agricultural trade. In absolute terms both exports and imports are on the rise, and India s trade surplus increased from.8 billion dollars in 1999 to 2 billion dollars in 24. 3

% INDIA: composition of agricultural trade Around 4% of Indian exports consist of high value products, while 35% were commodity exports. In 24, rice (1.5 billion dollars) and the high value tropical products, fruits and spices (.9 billion dollar) were India s highest ranking export products. On the other hand, more than half of Indian imports are in intermediate products (87% are in the other animal fats and oils category, worth 2.5 billion dollars). exporters In recent years, the agricultural trade surplus of Brazil kept growing at an incredible pace. It nearly doubled between the years 1999 and 23, and surged from 17.5 billion dollar in 23 to over 24 billion dollar in 24, an increase of 4% in one year! Thus over a very short period of time, Brazil became the world s third largest agricultural exporter. Growth in exports is evident in each group of products, but in relative terms most of it comes from commodities, which increased their share in Brazilian exports from 32.5% in 1999 to 4% in 24. One product alone, soybeans, made up (5.4 billion dollars) of all commodity exports in 24. The share of intermediate product exports has remained rather stable around 2%, but the share of high value exports declined from 48.5% to just over 4% over the period in question (although in absolute terms high value exports still grew from 8.4 billion to 11.5 billion dollars just between 23 and 24). High value poultry meat exports jumped from 1.8 billion in 23 to 2.7 billion dollars in 24, an increase of in just one year. % BRAZIL: composition of agricultural trade With a trade surplus of over 15 billion dollar in 24, and hardly any imports (only.9 billion dollar), Argentina is also an impressive and growing player. The composition of its agricultural exports shows that almost half of its exports are made up of intermediate products, around 3% are commodities and the remainder (23%) are high value products. Interestingly, the difference in the composition of Argentinean exports with respect to those of Brazil is due to soybeans. But these leave Argentina crushed, with almost of its intermediate exports in 24 accounted for by oilcakes (3.7 billion dollars). In another product group, other animal or vegetable oils and fats, with exports above 3 billion dollars in 24, soybean oil exports represented almost. 4

When the latter is added to soybean cakes, soybeans and products combined almost half of all Argentinean agricultural exports for 24! ARGENTINA: composition of agricultural trade % The picture of major exporters is completed by two other players on the other side of the Southern Hemisphere. AUSTRALIA: composition of agricultural trade Another 3% of its exports stems from commodity products, with wheat and wool topping the list with respective values of 3.1 and 1.8 billion dollars (representing, the two combined, 73% of all commodity exports of Australia). On the other hand New Zealand, the second major exporter from Oceania, hardly exports any commodities (around the 5% of its agricultural exports for the last 4 years). The bulk of New Zealand exports come in the high value product group, and represent around 7% of all agricultural exports. In absolute terms, New Zealand s agricultural exports climbed from 8.5 billion dollar in 23 to 1.5 billion dollar in 24, an increase of 24% in just one year. NEW ZEALAND: composition of agricultural trade % % Australia had a total value of agricultural exports of over 2 billion dollars in 24. Over of it originated in high value products such as bovine meat (3.3 billion dollars), dairy products (1.3 billion dollars) and wine (almost 2 billion dollars). With minor agricultural imports, New Zealand is a major net exporter of agricultural products, and it saw its trade surplus reaching nearly 9 billion dollar in 24. In absolute terms, within high value products, sheep meat exports in 24 stood at 1.5 billion dollars, resulting in the highest share (14%) within all agricultural exports in 24, directly followed by bovine meat, with a share of nearly 12% (or 1.2 billion dollars). 5

and the importer Japan, already the third largest importer of agricultural products, imports 2 times more in value terms than what it exports, and saw its agricultural imports leap from 37.4 billion dollars in 23 to almost 42 billion dollar in 24. % JAPAN: composition of agricultural trade A distinction among the main players at the export level can be established on the basis of the rate of growth between 1999-2 and 23-24. Over this timeframe, both exporters from Oceania strengthened their specialisation in high value exports, with the value of the latter growing faster than the other categories. By contrast, the impressive export growth from both Brazil and Argentina mainly relied on the category of commodities, although their exports of intermediate goods also developed quickly. Source: UN - COMTRADE The share of high value imports remained stable throughout the years 1999 to 24, with close to two thirds of all agricultural imports falling within this group. The main product within the high value product group is pork meat, but with such a heavy dependence on imports, a wide range of products is found in Japan s import list. Conclusion As shown by graphs in the Annex, for each player agricultural trade significantly increased in 23 and 24. Part of this expansion is attributable to the depreciation of the US dollar. Nevertheless, some interesting conclusions can be drawn when comparing developments in trade by category of products. The increase in US imports was due to high value and intermediate products, while the highest growth was still achieved by exported commodities. In the EU, on the other hand, trade in intermediate products and high value products grew at similar rates, while exports of commodities increased at a much slower pace. In Canada, the highest growth was recorded for imported commodities, while on the export side it was high value products that grew the fastest. The situation is similar for China. The composition of Chinese trade clearly reflects its specialisation in labour-intensive products. In India on the other hand, it is imports of value added products and commodity exports that increased at the highest rate. 6

Annex: Graphs & Data 1. EU: Trade of agricultural products (Million $) 9 75 6 45 3 15 15 3 45 6 75 9 Trade Balance 2. US: Trade of agricultural products (Million $) 8 6 4 2 2 4 6 8 Trade Balance 7

3. CANADA: Trade of agricultural products (Million $) 21 14 7 7 14 21 Trade Balance 4. BRAZIL: Trade of agricultural products (Million $) 3. 25. 2. 15. 1. 5. 5. 1. 15. 2. 25. 3. Trade Balance 8

5. ARGENTINA: Trade of agricultural products (Million $) 18. 12. 6. 6. 12. 18. Trade Balance 6. AUSTRALIA: Trade of agricultural products (Million $) 21. 14. 7. 7. 14. 21. Trade Balance 9

7. NEW ZEALAND: Trade of agricultural products (Million $) 12 9 6 3 3 6 9 12 Trade Balance 8. JAPAN: Trade of agricultural products (Million $) 45 36 27 18 9 9 18 27 36 45 Trade Balance 1

9. CHINA: Trade of agricultural products (Million $) 3 25 2 15 1 5 5 1 15 2 25 3 Trade Balance 1. INDIA: Trade of agricultural products (Million $) 1 7 5 5 2 5 2 5 5 7 5 1 Trade Balance 11

million dollar million dollar Trade balance -6.69-3.5-4.887-2.892-3.47-4.52 Trade balance 8.936 1.74 1.83 6.497 7.117 3.893 Agricultural products -6.465-56.425-58.291-61.5-72.817-83.617 Agricultural products -43.964-45.783-46.437-49.248-55.13-62.172 Commodities -13.357-12.298-13.18-14.88-17.29-17.467 Commodities -4.31-3.69-3.844-3.899-4.369-4.415 Intermediate -13.125-12.875-13.472-13.889-16.1-19.29 Intermediate -7.33-7.79-7.774-7.745-8.723-1.787 High value -33.984-31.252-31.639-32.83-39.778-46.86 High value -32.629-34.384-34.82-37.64-42.38-46.97 Agricultural products 53.775 52.925 53.44 58.67 69.49 79.114 Agricultural products 52.899 56.487 57.24 55.745 62.247 66.65 Commodities 5.479 5.972 5.363 5.37 6.772 6.336 Commodities 17.61 18.516 19.13 19.368 23.388 25.914 Intermediate 12.628 12.181 12.26 13.188 15.991 19.431 Intermediate 9.999 1.537 11.494 11.695 12.94 12.499 High value 35.669 34.772 36.15 4.113 46.647 53.347 High value 25.29 27.434 26.733 24.682 26.766 27.652 Trade balance 3.68 4.5 4.959 3.525 2.986 4.971 Trade balance 9.545 8.611 12.727 13.566 17.469 24.396 Agricultural products -11.153-11.788-12.474-13.211-14.782-15.767 Agricultural products -4.475-4.335-3.588-3.534-3.842-3.553 Commodities -852-939 -1.2-1.31-1.479-1.368 Commodities -1.974-2.2-1.595-1.592-2.139-1.555 Intermediate -1.745-1.936-2.19-2.117-2.343-2.525 Intermediate -1.3-957 -811-885 -757-881 High value -8.556-8.912-9.255-9.792-1.961-11.874 High value -1.498-1.359-1.182-1.57-945 -1.117 Agricultural products 14.834 15.793 17.432 16.736 17.768 2.738 Agricultural products 14.2 12.946 16.316 17.1 21.311 27.949 Commodities 3.51 3.265 3.294 2.643 2.89 3.689 Commodities 4.573 4.387 6.735 6.656 8.362 1.91 Intermediate 4.27 4.213 4.851 4.695 4.637 5.37 Intermediate 2.651 2.461 3.83 3.571 4.549 5.54 High value 7.513 8.315 9.287 9.398 1.322 12.12 High value 6.796 6.98 6.498 6.873 8.399 11.58 Trade balance 9.664 9.662 9.862 1.751 13.265 15.65 Trade balance 1.83 11.756 12.459 12.665 1.816 15.86 Agricultural products -1.387-1.266-1.264-524 -757-98 Agricultural products -2.916-3.11-2.78-3.73-3.967-4.572 Commodities -182-147 -159-149 -246-299 Commodities -268-222 -196-277 -41-35 Intermediate -253-226 -194-19 -162-24 Intermediate -558-533 -447-553 -75-78 High value -952-894 -912-266 -349-44 High value -2.89-2.256-2.64-2.243-2.861-3.486 Agricultural products 11.51 1.928 11.126 11.275 14.22 15.973 Agricultural products 13.718 14.766 15.166 15.737 14.783 2.378 Commodities 3.12 3.482 4.14 3.527 4.45 4.746 Commodities 5.17 5.397 5.349 5.38 4.134 6.653 Intermediate 5.163 4.791 4.841 5.436 6.817 7.555 Intermediate 2.465 2.711 2.754 2.91 2.719 3.435 High value 2.876 2.655 2.272 2.312 2.8 3.672 High value 6.84 6.658 7.64 7.457 7.929 1.29 Trade balance 5.15 5.351 6.97 5.941 6.958 8.856 Trade balance -34.15-34.911-32.672-32.414-35.55-39.841 Agricultural products -1.154-1.19-1.147-1.331-1.563-1.718 Agricultural products -35.939-36.663-35.346-34.249-37.438-41.93 Commodities -154-138 -151-168 -179-21 Commodities -7.81-6.869-6.71-6.739-7.618-8.771 Intermediate -223-214 -228-263 -29-293 Intermediate -5.566-5.478-5.318-5.145-5.78-6.68 High value -777-756 -768-9 -1.94-1.214 High value -23.292-24.317-23.327-22.365-24.111-26.551 Agricultural products 6.169 6.46 7.244 7.272 8.521 1.574 Agricultural products 1.834 1.752 2.674 1.835 1.888 2.9 Commodities 391 46 356 393 452 489 Commodities 18 51 967 45 49 82 Intermediate 1.498 1.692 2.82 1.836 2.119 2.391 Intermediate 536 535 549 581 598 618 High value 4.28 4.362 4.86 5.43 5.949 7.693 High value 1.19 1.167 1.158 1.29 1.241 1.39 Trade balance 3.493 2.336 1.786 3.116-762 -8.711 Trade balance 755 2.188 1.365 1.582 1.723 2.23 Agricultural products -7.73-9.69-1.16-1.398-16.735-25.139 Agricultural products -3.961-2.874-3.714-4.21-4.895-5.188 Commodities -2.254-4.266-5.16-4.66-8.636-14.455 Commodities -1.23-533 -756-616 -735-856 Intermediate -3.335-3.383-2.986-3.559-5.342-7.522 Intermediate -2.247-1.651-1.738-2.122-2.872-2.831 High value -1.484-1.961-2.68-2.179-2.757-3.162 High value -691-691 -1.221-1.283-1.288-1.51 Agricultural products 1.566 11.946 11.946 13.514 15.973 16.428 Agricultural products 4.716 5.63 5.8 5.63 6.618 7.212 Commodities 2.186 2.78 1.866 2.68 3.484 1.625 Commodities 1.256 1.336 1.725 2.376 2.456 2.641 Intermediate 2.229 2.47 2.431 2.629 2.916 3.467 Intermediate 1.39 1.254 1.24 982 1.685 1.748 High value 6.151 6.767 7.649 8.277 9.573 11.336 High value 2.421 2.473 2.151 2.245 2.476 2.822 11. Trade of agricultural products - Main players EU15 CANADA ARGENTINA NEW ZEALAND CHINA USA BRAZIL AUSTRALIA JAPAN INDIA 12