Crops of Alabama in the Shipping News

The number of farms in Alabama may be dwindling — the state was home to only 43, 000 farms in 2007, down from 56, 678 in 1974, according to the U.S. Department of Agriculture — but agricultural products contribute $70.4 billion annually to the state’s economy and account for 22 percent of the workforce, according to a recent study by the Alabama Agribusiness Council. Many of those agricultural products are exported from Alabama to international customers.

Leading Exports
Alabama’s leading agricultural export products are poultry and forest products, says Jimmy Lyons, CEO of the Alabama State Port Authority. The Port of Mobile is the largest break bulk forest products port in the United States. According to the Alabama Forestry Association, the state exports 1.2 million tons of forest products each year. Exact numbers are unavailable, because forest products that are transported in containers, such as wood pulp, are not tracked by the ton but by the box, Lyons says.

Forest products are shipped from Alabama to destinations worldwide, “with the bulk moving to Northern Europe, Asia, Caribbean and Mediterranean, ” says Judith Adams, vice president of marketing for the Port Authority.

Poultry is a close second to forest products as the largest agricultural export product from Alabama. Approximately $387 million worth of poultry is exported from Alabama each year, says Ray Hilburn, membership director at the Alabama Poultry and Egg Association. The exact tonnage is difficult to track, because most Alabama poultry producers do not sell directly to international customers, Hilburn says. Instead, they sell to brokers in Ohio, Miami or other locations, who purchase poultry from many producers in various states and sell it to international customers.

Most of the exported poultry goes to Northern Europe, especially the Ukraine and Russia, as well as China, Mexico, Cuba and India, Hilburn says. In recent years, Alabama poultry producers have seen an increase in demand, especially from India and other developing countries. “As developing countries grow in their middle class, there is a bigger demand for protein, and poultry is the cheapest protein available, ” Hilburn says. “We think that the next few years will be very good for our poultry industry, if grain prices stabilize.”

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Exports of wood pulp known as fluff pulp, used in disposable diapers, continues to grow.

As members of the middle classes in developing countries are more able to afford it, the demand for white meat has increased recently, Hilburn says. “But demand for dark meat has remained steady and may have even increased some.”

While brokers deal directly with export customers, an ongoing challenge for Alabama poultry producers is the changing demands of international buyers. For instance, some buyers may suddenly decide “they don’t want to purchase chicken from plants that use chlorine in their water, ” which they all use, Hilburn says.

Frequently, these changing demands are politically motivated. “If [the United States] puts a tariff on their steel, they’ll try to find some reason not to buy chicken from us, ” Hilburn says. “But they can’t produce it as cheaply or as safely as we do, so they continue to buy it from us.”

The largest competitors for poultry exports are Brazil and Argentina, where the climate allows growth of two or three corn crops each year, providing cheaper grain to feed the chickens. “Brazil and Argentina have cheaper grain, cheaper labor, and less environmental and animal welfare regulation, which gives them a huge advantage in costs, ” Hilburn says. “They are not subject to the same regulatory requirements that we are. We have always worked with our regulatory personnel to do all that we can to provide the safest and cheapest food products available, and we think we have accomplished that. We are proud of our integrated system, products and our care for our animals and the environment.” However, even as this South American competition has grown in recent years, poultry prices have remained steady, he adds.

As the poultry and forest products industries remain strong, the Port Authority has seen “tremendous growth” in the shipping of poultry in containers, Adams says.

In forest products, exports of wood pulp, also known as fluff pulp, are growing as “regional manufacturers are upgrading their mills to serve fluff pulp demand, ” Adams adds.

Soybeans are an important export crop, too, says Lyons, but Alabama farmers grow only a tenth of the 2 million tons exported through the Port of Mobile.

Recent Trends
Poultry, timber and soybeans have long been important export products for Alabama, but other agricultural products have recently joined the action. Peanuts, traditionally grown mainly to meet domestic demand, have been exported this year in record numbers, mainly because of a failed peanut crop in India.

“China traditionally imports peanuts from India, but, because they had a bad crop last year, China purchased 300, 000 tons from the United States in 2012, ” says Randy Griggs, executive director of the Alabama Peanut Producers Association. “There is discussion that they may purchase additional peanuts this year, as well.”

Traditionally, the United States exports about 350, 000 tons of peanuts, so the orders from China almost doubled the typical export business. The new business came at a good time for Alabama peanut farmers, as they experienced a record crop in 2012, Grigg says. Indian peanuts have “a lot of quality problems, ” Griggs says. And after experiencing the high quality of peanuts produced in the United States, specifically in the Southeast, Griggs and others in the industry expect that China may continue to order American-grown peanuts even if India’s crop returns.

“We hope the purchases from China will become a trend, ” Griggs says. “They have been a big boost to the industry. Hopefully they will find out what good quality peanuts we have and become long-term customers.”

As Alabama has exported more peanuts, it has begun importing corn in response to last year’s drought in the Midwest. Agrex, which leases the Alabama State Port Authority’s grain elevator to export soybeans, began using it to import corn this year. “Corn imports are rare and new to our port, ” Adams says. “They are a direct result of drought that hit the mid-American corn growers, industry reports of 30 percent increases in U.S. corn prices, and thinning inventories last year have driven corn consumers to look to markets outside the United States.”

But the corn imports are not expected to continue. The U.S. Department of Agriculture has reported that the outlook is good for a rebound in corn crop yields by this fall, Adams says.

Planning for Growth
In 2010, the Port Authority announced that it would spend $360 million over the next five years for infrastructure improvements, including land acquisition, cargo terminal improvements and enhancements, new warehouses and new rail and intermodal yards. The port’s new container facility, for instance, has made the port better equipped to ship more poultry, Griggs says.

By 2015, the Authority’s new intermodal rail line will be available, which will allow trains to bring in containerized goods that are “beyond trucking reach, ” Adams says. “When we have intermodal rail, that will open up the Memphis, Chattanooga and Chicago markets. Farmers in those areas would never truck their products to Mobile, but they may send it via train. It just becomes a matter of competitive pricing.”

Nancy Mann Jackson is a Huntsville freelancer for Business Alabama.

Text By Nancy Mann Jackson

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