By DOUG SCHMITZ
Iowa Correspondent

MILWAUKEE, Wis. — U.S. agricultural equipment exports rose 4 percent compared to January-June 2009 figures, increasing each quarter of 2010 with mid-year shipments totaling $4.9 billion, according to the Assoc. of Equipment Manufacturers (AEM).

“Over the past decade, exports have become a very significant source of business growth for many agricultural equipment manufacturers, and these positive numbers are welcome after the double-digit declines the industry experienced last year,” said Charlie O’Brien, AEM vice president, agricultural sector.

“However, while some economies are rebounding faster than the United States, there is still uncertainty in some regions.”

In 2009, exports of U.S. farm machinery plummeted 23 percent in sales compared to 2008, with the largest declines in business to Europe and South America.

“Our manufacturers operate in a global marketplace, and the farm equipment sector as well has been adversely affected by this worldwide recession, after several years of strong export growth,” said AEM President Dennis Slater. Prior to 2009, the export market for ag equipment had been expanding with double-digit increases since 2004, he added.

Headquartered in Milwaukee, the AEM off-road equipment manufacturing trade group consolidates data from the U.S. Commerce Department with other sources into global trend reports for members.

Mark Hanna, Iowa State University extension agricultural engineer, said the reason for the 4 percent increase could be “a relatively weak U.S. dollar” in comparison to a number of foreign currencies in recent months, as well as “economies in the developing world generally advancing at a quicker pace in the last year, than economies in the developed world.”

He said another reason is the relative strength of agriculture generally, compared to some other business sectors.

“Emerging economies have kept demand for major feed grains relatively high with rising standards of living,” he said. “We produce excellent farm equipment in North America, but I think macroeconomic trends have really been adding a tailwind to sales.”

The AEM said U.S. exports to Central America and Asia showed the most growth – a gain of 44 percent for Central America, with export purchases totaling $466 million, and an increase of 29 percent to Asia, for its export purchases of $426 million. While the Central America Free Trade Agreement (CAFTA) has gone into effect, Hanna added that exports to Central America should be increasing.

O’Brien said because countries around the world are currently negotiating free trade agreements with each other and without the U.S., U.S. farmers and businesses would be the big losers.

“Today, the U.S. is engaged in less than 25 percent of these trade agreements, which ultimately mean a loss of American jobs,” he added.

But O’Brien said global trade helps farmers and agricultural-related firms stay in business.

“There is a growing world to feed and clothe, and free trade provides more opportunities,” he said.

“That’s why it’s vital for Congress to get engaged and work to take up the signed free trade agreements with Colombia, Panama and Korea.”

The report also said exports to Europe dropped 19 percent to $1.4 billion, and exports to Africa decreased 13 percent to $116 million.

In addition, South America took delivery of $370 million worth of U.S.-made agricultural equipment, an increase of 18 percent, according to the AEM.

Exports to Canada went up by 15 percent and totaled $1.8 billion. Australia/ Oceania’s purchases of $377 million represented a 3 percent increase.

Chris Hurt, Purdue University extension agricultural economist, said world economic income growth is in recovery this year, with the International Monetary Fund (IMF) suggesting a 4.6 percent growth in 2010 versus a 6 percent recession in 2009.

Moreover, the strongest income growth areas will be in developing Asia and parts of South America, Hurt said, with the U.S., Canada and the European Union experiencing slower recoveries.

But the high income growth of countries like Brazil, with a 7.1 percent IMF expected income growth in 2010 as an example, Hurt said, generally have seen their currencies appreciate relative to the U.S. dollar.

“A strong domestic currency relative to the U.S. means they can buy more in the U.S.,” he said. “For the (Brazilian) real as an example, it has appreciated about 35 percent since early 2009. That means one unit of their currency will buy 35 percent more in the U.S. than it would have in early 2009.”

This is also why there’s a general attitude in the world right now that world food demand will outpace the ability of the world to meet that growth in coming years, Hurt said.

“This means an overall positive attitude about the future, which gives rise to a stronger willingness to make capital purchases in machinery – they are investing in their long-run optimism,” he said.