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.