Explaining U.S. Declines in Corn and Wheat Shipments

While the MENA region’s import demand for crop commodities has steadily grown, the role of U.S. exports in satisfying this demand has been mixed. This role can be analyzed in two dimensions:
(1) overall volume of U.S. shipments to the region; and (2) the U.S. share of MENA’s total imports.

In terms of volume, U.S. shipments of wheat and corn have dropped since the early 2000s. A different pattern has emerged for the market shares held by U.S. commodities in the MENA market. For corn, wheat, rice, and soy products, the shares have declined for almost two decades.

U.S. wheat and corn shipments to the MENA—and to many other markets around the world— have all fallen because of the competition from the European Union and the former Soviet Union has increased. Those competitors, owing to their much closer distance to MENA markets, enjoy significantly lower transportation costs and consequently can offer more competitive prices.

In addition to this natural advantage, overall trade costs with the MENA—which include logistics, tariffs, and non-tariff barriers—have declined faster for these regions than for the United States. To illustrate this, figure 1 presents an index of annual bilateral trade costs between the MENA and a sample of trading partners: France, Russia, Ukraine, and the United States.

Based on figure 1, recent years show that trade costs have fallen significantly for France, Russia, and Ukraine but not the United States, suggesting that additional trade advantages may have accrued to these competitors. Thus, while distance will continue to pose significant competitive obstacles to U.S. shipments, reducing other costs associated with trade could help U.S. producers regain competitiveness.