Oregon Exports May
by Amy Hsuan, Associated Press
Two wrongs don't usually make a right, and two negatives don't usually add up to a positive.
But two typically unfavorable trends - a weak dollar and a worldwide shortage of wheat - have turned into good fortune for Oregonians during uncertain economic times.
The twin forces are driving Oregon's bustling exports business, which grew by 8 percent in 2007 to a record $16.5 billion and will likely continue climbing in 2008, according to the World Institute for Strategic Economic Research.
In the years to come, swift business with overseas markets could be a lifeline for Oregon, especially if sectors such as housing and manufacturing continue to sink.
"It's one of the only bright spots in the economy," said Dae Baek, deputy state economist. "There's no question that Oregon is benefiting from strong exports."
Oregon's wheat farmers have reaped the top benefits of a struggling dollar, which makes all U.S. products less expensive to buyers in countries with rising currency values. The wheat export boon also comes thanks to record prices and record demand for the commodity that's a staple in diets across the world.
Driven by a global shortage of grain, a record $2.2 billion dollars worth of agricultural products left the state in 2007 - nearly 48 percent more in value than the year before.
Tom Hammond, president of Portland-based Columbia Grain Inc., one of the world's leading grain exporters, said he expects business to slow down over the summer but to bounce back later in the year.
"The whole Pacific Northwest grain export industry is experiencing pretty high traffic," Hammond said. "Income from wheat should be outstanding."
Agricultural exports were so strong in 2007 that they overtook transportation equipment, which fell by 7 percent, and helped offset slight dips in other exports, including those in the high-tech industry. Computer and electronics, the state's most valuable export, fell by 3.8 percent to $6.3 billion in 2007, after two years of expansion.
Building booms in fast-developing Asian countries such as China have also helped machinery and primary metals exports, which together include construction equipment and raw materials, such as iron and steel. Machinery grew by 7.9 percent and primary metal manufacturing grew by 21 percent.
Still, it's mostly Oregon's agricultural goods - wheat, grass seed, cherries, pears and nursery products, for instance - that are expected to keep the economy chugging.
Economists forecast the dollar to stay weak, which means the state could sidestep the same degree of economic downturn and job losses that the rest of the country may face. The diving value of the dollar has been the strongest force behind the rise in demand for Oregon goods.
"Overall, things are going well for farmers," said Bill Conerly, an economist based in Lake Oswego. "And a good year in farming has a lot of spillover. They buy more equipment and services and transportation. It's good for food processors and on."
Most of the nation's wheat and grain leaves from shipping docks operated by the Port of Portland, which has seen a brisk enough volume of trade to create a shortage of shipping vessels, said Barry Horowitz, who oversees the Port's marine operations.
According to census estimates, more than 4,700 Oregon companies are involved in the export industry, employing roughly 150,000 in 2001, the latest estimate available.
Their livelihoods could depend on expanding business relations with Asian countries, which accounted for much of the jump in exports last year.
Exports to Japan grew by 18 percent, with increased shipments of agricultural, wood and food products.
Canada, now Oregon's largest export partner, inched up by 3.4 percent in 2007. And, while the Canadian dollar remains strong, economists say a downturn in the U.S. could likely weigh on that country, too.
That's why Oregon economists continue to watch China's expanding economy. While exports to China saw just a 3 percent jump to $1.43 billion in 2007, the country has quickly closed in on Japan as one of Oregon's best customers. In 2006, exports to China grew by nearly 73 percent.
China's growing middle class has huge implications for the economy - not only in Oregon but also across the globe, said Dalton Hobbs, assistant director of the Department of Agriculture.
"Generally speaking, for Oregon, all the indicators look very strong, driven by macro factors like the increasing prosperity in China," Hobbs said. "Knock on wood, I think we'll be well-positioned for the next two to three years."
World Institute for Strategic Economic Research
Columbia Grain Inc.
Oregon Department of Agriculture
Port of Portland
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