Ramstad: It's hard to accept, but America's dominance in global food trade is ending

America's dominating role in global food trade is ending.

While inevitable in many ways, it's hard to accept because leading is so ego-gratifying.

The latest sign is that Brazil exported more corn than the U.S. in the market year ended Aug. 31. That happened once before — in 2012 when U.S. production withered in drought.

This market year, Brazil's lead was bigger and it's likely to be permanent. That's partly because Brazil in late 2022 made a deal for its first sales of corn to China, the world's biggest buyer of it.

Farmer Tom Haag of Eden Valley, who is currently president of the National Corn Growers Association corn board, expressed some chagrin about the development during the Farmfest trade show near Redwood Falls last month.

"We have some competition down south, Brazil, who wants to take over as being the number one exporter of corn," Haag said. "That doesn't sit well with corn growers because we think here in the United States we are the ones who can grow the corn."

The displacement of U.S. agriculture by global competition is similar to what happened to the nation's consumer electronics and car industries in the 1970s, and to its steel and apparel sectors in the 1980s. In all those cases, other countries used cheap prices to overtake the U.S., then grow and become more innovative competitors.

For any country, the way to go from poverty to wealth is to make or grow more than you need — and sell the excess. The American economy got started because of surpluses of things that grow in the ground, first tobacco, then wheat and oats. For the last century, corn and soybeans dominated.

The U.S. remains the top producer of many farm goods. But on the global market, it long ago lost the lead in wheat exports to the European Union and Russia. It lost the soybean export crown to Brazil about a decade ago. Brazil is also a rising power in cotton, expected to soon surpass the U.S. in exports, too.

The U.S. is also the world's biggest economy and likely to remain so. But the development of other countries has always meant the U.S. would cede some of its economic standing. In the 1960s, the U.S. accounted for about 40% of the world's economic output; today it's a bit more than 20%.

While that erosion causes some pangs, or worse causes some people to turn protectionist, the growing prosperity of people in other countries is ultimately good for Americans.

Brazilian leaders in the 1960s poured money and people into provinces away from the coasts in the belief that producing a broad array of agricultural goods — not just tropical products like coffee, cacao and sugar — would make the country rich.

Today, Brazil is the second-largest food producer after the U.S. in the Western Hemisphere, and a top five producer globally for more than 30 crops, including corn and soybeans. It is the "B" in "BRICS," the grouping of fast-growing countries that have formed their own political bloc.

"You still hear about swings in the GDP or about poverty in Brazil, but agribusiness is in a pocket of the country where everything works just as well as in Minnesota," said Marc Muendler, an economist who specializes on Brazil at the University of California-San Diego.

Deforestation of the Amazon is an element in Brazil's agricultural development but not the biggest one. Muendler said, "Agribusiness in the interior has basically spilled its successes to the parts of the coastal area where they need it."

Most recently, that includes the northern coastal city of Sao Luis, where a still-new port terminal is saving time and money for exports.

Because agriculture has been so successful, Muendler said he senses some ambivalence among Brazilian leaders about rising up the traditional ladder of development to manufacturing and services.

"They say, 'Well, we can just be the food basket for the world. We have 9 billion people to feed. It's a good model,'" Muendler said. "That thinking shifts a bit with administrations. It shifts with the moves of the markets. But I think this is what will make Brazil thrive."

Meanwhile, the U.S. has done some things to hurt itself in global food trade. For two decades, Congress has not raised spending on the Market Access Program, or MAP, and the Foreign Market Development Program, or FMD. Both promote U.S. goods overseas and may get more help in the Farm Bill, which is expected to get its once-every-five-years update this fall.

"MAP and FMD has not been funded largely in the last couple of Farm Bills," Haag said. "We would like to see that increased to make sure our word is heard overseas."

When other countries retaliated on trade restrictions that the U.S. imposed in 2018, they hit agriculture hard. By 2019, the average tariff imposed on U.S. commodities was nearly 30%, up from around 8% before the trade war.

The U.S. is still negotiating to unwind those tariffs.