Mississippi Agricultural News:
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Asian Economic Woes Not Hurting State AgBy Bonnie Coblentz MISSISSIPPI STATE -- Few areas of the financial world remained untouched by Asia's economic troubles that started in October, but Mississippi farmers are weathering it well. Agricultural markets were shaken when Asian stock markets plummeted last fall. Hardest hit were Indonesia, Korea, Thailand, Malaysia and Taiwan. These countries along the Pacific Rim have traditionally been strong consumers of American grain, cotton and poultry. Dr. Juan Batista, executive director of The Agribusiness Institute at Mississippi State University, said the economic problems in Pacific Rim countries has been reflected in a serious drop in the value of their currency. "The devaluation of their currency has basically doubled the cost of their imported goods," Batista said. "One general cause of devaluation is relative inflation, and inflation in their country means their own prices are going up." Dr. John Lee, agricultural economist at Mississippi State University, said the Asian market for grain is expected to weaken, but not as much as it will for commodities such as beef, pork and poultry. The Asian nations are fairly heavily involved in livestock production and rely on U.S. grain for feed. "The expectation is the Asian crisis will lead to a greater cut in exports of animal products than it will in grains and feeds," Lee said. "Poultry aside, Mississippi is not a major exporter of animal products, but pork and beef are especially susceptible to market downturns. The Asian crisis could work through the markets and have a negative impact on cattle and hog prices." Steve Nail, president of Farmers' Grain Terminal in Greenville, said corn and soybean exports to Asian nations have decreased slightly and prices dipped. Domestic demand stayed constant, but domestic prices dipped along with export prices. "We're still selling grain into Asia, but less than before," Nail said. "Selling grain to people who export is 90 percent of our market, and the domestic side has not picked up enough to offset the decrease in exports." Exporters are waiting now to see what prices will do and how Congress will respond to the proposed International Monetary Fund bailout, Nail said. Bob Anthony, chairman of American Poultry International in Jackson, said the Asian crisis had totally suspended his company's shipments of poultry to the Far East by the first of February. "The principle reason is a backlog of frozen poultry products in storage, transit and ports as a result of a significant slowdown in the economy and demand," Anthony said. "In addition, I think concern over the Hong Kong avian flu slowed the demand for all poultry." The entire poultry industry was affected by this turn of events, which reduced the market 10 to15 percent, Anthony said. Russia continues to be the biggest importer, and Hong Kong and China had been second. With the slowdown, poultry is finding its way into the other world markets and more plentifully in the U.S. market. Anthony said he anticipates the halt in poultry exports will be temporary, and pointed to recent increases in Asian stock markets as an indication of a coming turnaround. "Everything cycles, and I think the Pacific Basin will be the center of economic activity in the next 20 to 25 years," Anthony said. Dr. O.A. Cleveland, extension cotton marketing specialist, said Mississippi cotton markets should survive the Asian financial crisis basically untouched. "Even though Asian countries represent a major market for U.S. cotton exports, we anticipate the effect of their financial crisis on cotton will be minimal," Cleveland said. "In recent years, Central and South America have gone from being a non- market to the fastest growing market for U.S. cotton." The U.S. dollar is the main form of currency for the world textile market, and its stability protected the textile industry from being badly hurt when local currencies tumbled. The U.S. Department of Agriculture's GSM-102 export enhancement program also helped. "This longstanding program has been very successful boosting all U.S. ag exports, and there's never been a default on a GSM-102 loan to any country for any amount," Cleveland said. Because of these factors, U.S. exports of cotton have remained very strong in Asia, Cleveland said. "Weekly shipments and weekly new sales have both been strong," Cleveland said. "We're a bit on pins and needles, but every single week we have surprising sales to Asia and no default to date." Released:
Feb. 9, 1998 |
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