As the summer season begins full swing, we looked at the agriculture sector with two of our Atradius experts; Brandon Warren, a Risk Services Underwriter, and Tyler Darby, an Eastern Region Key Account Underwriter.
The overall outlook for the Agriculture industry remains good. The sector posted its best export year ever in 2022, with sales of U.S. farm and food products reaching $196 billion, an 11% increase year-over-year (USDA).
Top exporters in the agriculture industry in 2022 included corn, soybeans, beef, dairy, cotton, and tree nuts. Planted acreage for wheat, corn, and soybeans is expected to increase by about 3% to 228 million acres in 2023 according to the USDA outlook report. Dairy and Livestock subsectors are expecting stable to slightly lower output year-over-year, but the overall outlook remains positive.
In the comprehensive semi-annual risk report (CSRR) of 2022, the fruit and vegetable subsector risk outlook was downgraded to a fair risk level. There are still concerns moving forward as the industry will have to withstand the lingering impacts of the supply chain disruption, which resulted in inconsistent deliveries, and shortages of fertilizers.
The status of the sector has not changed much since the fall 2022 review, so the Fair Risk Outlook for the fruit and vegetables subsector is still accurate as we continue to monitor ongoing developments.
Inflationary and supply chain challenges on inputs like energy and fertilizer continue to affect the sector. The Russia-Ukraine war caused fertilizer prices to soar in 2022 due to Russia being a major exporter of fertilizer. These prices have improved from their highs in early 2022, but remain above historic levels. With macro-economic uncertainty, continued pressure on input costs, and lower commodity prices year-over-year, we would expect 2023 exports to be below the record 2022 levels. Despite this, overall sector performance should be stable.
Looking For a FREE Quote?
Obtaining a free Trade Credit Insurance quote or just some more information is fast and easy! Get in touch with us today.Get Started