Ag exports are too big for containers
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TESS VIGELAND: The country’s trade deficit soared in July, touching its highest level in 16 months — just over $62 billion.
The bright spot? Exports. They’re up 3.3 percent over last year. Agricultural products are one reason. But here’s the thing that’s driving American farmers batty: They could export even more, if not for a bottleneck on the shipping front. Marketplace’s Scott Tong reports from the farmland of eastern Maryland.
SCOTT TONG: For a fresh perspective on the global economy, here’s how it looks through the eyes of a chicken.
Life begins at a corporate hatchery, followed by seven weeks of feeding on corn and soybean meal. Then Joe or Jane Chicken then gets slaughtered. Its white meat sells in the U.S. Dark meat goes to Eastern Europe. And the fat sells to soapmakers. Chicken feet? Export to China.
CARLOS AYALA: Here in the U.S., not a lot of people like them. I do, but that’s not very popular here.
Carlos Ayala is vice president with Perdue chicken in eastern Maryland.
AYALA: So we export them over to China. And they love them. They’ll pay close to double the price for a chicken foot than they will for boneless breast meat.
China imports more than 1.2 billion chicken feet every month. That’s enough for one claw per person. They’re stewed, pickled, fried, breaded . . . but here’s the catch: Ayala can’t find enough shipping containers to send them over.
Ayala: It used to be a lot like a utility. If you pick up the phone you expect to hear a dial tone. Flip a light switch and the light turns on. We order a container, we’d get containers. That has changed.
What has changed is the number of containers coming in to U.S. ports. Three hours south in Norfolk, Va., ships still come and go. But they’re smaller than just a couple years ago, since struggling American consumers are buying less.
Smaller ships mean fewer containers. So when these vessels return to Asia, there’s less space for American exporters.
Peter Friedmann is executive director of the Agriculture Transportation Coalition.
Peter Friedmann: There’s no additional capacity from North America, U.S., Canada — East Coast, Gulf Coast or West Coast. The ships are full.
So these days, bags and bags of Perdue chicken get forklifted into a port freezer facility, where they wait like airline passengers on standby. Now, this problem ruffles feathers for all exporters — cotton farmers in the South, almond growers in California, and grain producers in the Midwest.
To be clear, the sky is not falling. U.S. agriculture exports rose 45 percent over last year, thanks to a weak dollar and healthy demand from Asia. But Friedmann thinks his members could export 20 percent more, if not for the shipping bottleneck. And when some orders take too long to get there . . .
Friedmann: You lose the customer. The customer says I need it fresh, I need it now. I’ve got to put it on market. I’ve run big advertisements here in Japan. I’m expecting it. And if you don’t deliver, I’m going to have to find a substitute. And if we cannot be a dependable source, they will go somewhere else.
Somewhere else like Turkey or Brazil. Frustrated American farmers blame the shipping carriers for cutting back their slow boats to China. But to economist Paul Bingham, this is just business. He’s with the forecasting firm Global Insight.
Paul Bingham: Many of these companies truly are global. And they’ve got options. They don’t need to just serve the U.S market. They’ve got business that has nothing to do with the United States.
In fact, carriers make more money sailing within Asia, or between Asia and the Middle East. Perhaps that reflects a new balance in the world economy. And if things stay that way, U.S. exporters like Perdue will keep counting their chickens they’re not selling.
In Salisbury, Md., I’m Scott Tong for Marketplace.
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