Asian crisis may take bite out of U.S. exports

Asian crisis may take bite out of U.S. exports

By Rob Lever

WASHINGTON (AFP): U.S. agricultural exporters, facing the prospect of sharp declines in orders from Asia, are scrambling to avoid losing markets in countries affected by the region's financial turmoil.

Asia accounts for 46 percent of the US$60 billion in U.S. agricultural exports, and U.S. producers are bracing for declines in exports of items such as beef to Japan and South Korea and cotton and apples to Southeast Asia.

U.S. Department of Agriculture officials say it is too soon to predict the impact of the Asian crisis, because it is not clear how long it will last and how painful it will be in the region in 1998.

But the agency in December forecast a $500 million decline in exports in 1998 to South Korea and the Southeast Asian countries most affected by the economic crisis.

The department Monday announced it was offering one billion dollars in credit guarantees for the Philippines, Indonesia, Malaysia, Thailand and Singapore, similar to a billion-dollar program announced last month for South Korea.

"This will guarantee repayment if foreign banks default," said agency spokeswoman Carolyn Harris.

Harris said the move, which ensures low-cost credit for importers, was aimed at maintaining U.S. presence is countries affected by the crisis, but acknowledged that the credit guarantees would not compensate for currency declines.

Some private analysts say there are sectors already feeling the pinch from the Asian turmoil.

World cotton prices are off 10 percent from a year ago, and industry officials say decreased demand from Asian manufacturers is a contributing factor.

The currency turmoil has spurred some textile makers to turn to other countries for raw cotton or to use synthetic fabrics that now cost less, said Allen Terharr, executive director of the Cotton Council International in Washington.

"We have been concerned," said Terharr. "We're working very hard to help the mills (in Asia) bring cotton in, process it and keep operating."

Fresh produce is another item affected by the turmoil, noted Jim Thomas of the Washington State Apple Commission.

"About 55 percent of our exports go to Southeast Asia and most of our major customers are hurting from the financial problems whether it's currency devaluation or financial instability," said Thomas.

"But it's not just the financial problems. Just the air of instability can affect our sales when it comes to perishable products, importers get delivery in three to four weeks, and if they think the currency will be devalued they're not going to order the fruit and pay 20 to 30 percent more for it" in local currency.

Thomas said sales in Indonesia -- the third largest market for U.S. apples behind Taiwan and Mexico -- were off 50 percent for the crop harvested as of Sept. 1, and many other Asian markets were also lower.

The beef industry is especially concerned about the situation, since three-fourths of $2 billion in exports go to Asia. Exports have been growing to Japan and South Korea, the two largest Asian markets, but that may change.

Julie Bousman of the National Cattlemen's Beef Association said the data on beef exports to Asia are not yet in, but anecdotal evidence suggests there may be steep declines.

"No new orders are being placed and some orders are being canceled" because of concerns about currency fluctuation and other financial problems, she said.

Ian Erridge, vice president for sales for California-based Blue Diamond Growers, said the crisis may hurt the group's almond exports, which have been growing in Japan and the rest of Asia.

"We're obviously watching it very closely because we are so dependent on exports," he said. "Two-thirds of everything we ship goes outside the U.S."

The Pacific Rim represents about 20 percent of the group's exports, and Japan is the second-largest market outside the United States.

"We haven't seen an immediate impact, but as each month goes by we'll see that increase," he said.