Governor Schweitzer Announces All Time Record $2 Billion High for Montana’s Commodity Exports

Governor Brian Schweitzer http://governor.mt.gov/ today announced Montana’s commodity exports increased by 17.9 percent to reach a new record high of $2.06 billion in 20081. This marks Montana’s fifth consecutive year of export growth and its fourth consecutive year of record sales.

“Montana’s exports have shown exceptional growth and our products are in high demand,” said Governor Schweitzer. “From our Montana Main Streets – to our neighbors to the north, to Japan, Taiwan and everywhere in between – Montana is open for business.”

“The Montana Department of Commerce http://commerce.mt.gov/ is proud to announce another record setting year for Montana exports,” said Anthony Preite, Director of the Montana Department of Commerce. “These export figures play an important in the health of our economy and they prove Montana is a contender in the world marketplace.”

Montana’s U.S. Senators Max Baucus and Jon Tester applauded the 2008 export numbers and the efforts of Montana’s export industry. Both senators pledged their continued strong support to expand Montana’s export markets.

In the agricultural sector, bulk shipments of wheat led all commodity exports with $670 million in sales, an increase of nearly $57 million over 20072. Shipments of prepared cereal, flour, starch and milk witnessed a 67 percent increase to top $24 million, an increase of nearly $9.7 million. Fertilizer exports rose by 215 percent for the year to reach $10.3 million, while shipments of live animals jumped by 27 percent to equal $4.65 million.

Many manufactured products commodity groupings also set records. Shipments of inorganic chemicals increased by 31 percent in 2008, to nearly $345 million for the year, an increase of almost $81 million from the previous year. Minerals and ores essentially doubled to reach $213 million. Organic chemical (petroleum based fuels) exports jumped by 90 percent to reach $45.9 million, while miscellaneous chemical products rose by 66.5 percent to total $40.3 million.

Other commodities experiencing strong increases included optical fibers and medical instruments which rose 25.6 percent to reach $34.4 million. Electric machinery totaled $21.5 million, an increase of nearly 38 percent over 2007. Hand tools witnessed a greater than threefold increase to exceed $3 million.

Several commodity groups posted sales declines for the year. Exports of mineral fuels dropped to $52 million, a decline of a mere 8 percent from 2007 levels. Pharmaceutical product shipments and aircraft exports both witnessed a 34 percent decline to reach $16.6 and $15.4 million, respectively. Finally, copper shipments fell by 77 percent to $2.6 million, a difference of $8.5 million from 2007.

Excluding exports of Montana-origin wheat made in bulk from west coast grain handling facilities, Canada remained as the number one export destination for Montana products with purchases of $696 million, an increase of 18.6 percent over 2007. Japan is the second largest export market with $130.8 million in sales, an increase of 28.5 percent, based largely on increased shipments of inorganic chemicals and machinery. Taiwan is in third place purchasing nearly $75 million of Montana products. Sales to the Republic of Korea3 increased by 70.5 percent, which kept it as Montana’s fourth largest export market with $67 million in shipments. Rounding out the state’s top five foreign markets, exports to mainland China rose by 40.6 percent to reach $61 million in export sales.

Other important export markets in rank order include the Netherlands which increased 291 percent with $54 million in exports, largely on the strength of increased sales of ores to that country-making it the state’s sixth largest export market. Exports to Mexico and the United Kingdom grew in 2008 with Mexico reaching $36 million and the United Kingdom attaining $34 million leaving them in seventh and eighth position. Singapore and Germany ranked as the ninth and tenth largest export markets for the state with shipments totaling $27 million and $22.9 million, respectively.

In 2008, Montana dispatched 81.9 million bushels of wheat to exporting facilities on the U.S. west coast. According to the Montana Wheat and Barley Committee, the bulk of these shipments are sent to Japan with secondary markets being Taiwan, South Korea, the Philippines, and Indonesia. It is important to note that the country export rankings listed above do not include these bulk shipments.

For a more details on Montana’s export performance, please refer to the following notes and the 2008 Montana Export Profile as published on the department’s website: http://www.exportmontana.com.

Notes

1. The State of Montana calculates the total value of all Montana products exported to foreign (non-U.S.) destinations using data from the following three reports.

“State of Montana, All Commodity Exports by Origin of Movement series,” World Institute for Strategic Economic Research (WISER)

“All Wheat: Recorded Movement by Destination & Calendar Year, Montana,” Montana Agricultural Statistics Service (MASS)

“All Wheat: Prices Received by Farmers, Monthly and Marketing Year Average, Montana,” Montana Agricultural Statistics Service

WISER’s Origin of Movement data series track exports by the state of origin for all shipments sent out of the United States and are compiled from export records that are filed with the federal government by the companies and individuals that make those shipments. While WISER’s Origin of Movement data series accurately record most commodity exports with a high degree of reliability, they do not accurately record the true value of bulk shipments of grain and coal from the producing states – largely owing to those industries’ commodity handling practices at the port of export.

To compensate for the Origin of Movement data series’ shortcoming in the tracking of bulk wheat exports from Montana, the state utilizes MASS statistics to generate a more accurate picture of all Montana grain exports and, accordingly, a more accurate total value of all commodities exported from the state.

The two MASS data tables noted above track shipments of Montana wheat by destination and prices paid to farmers for wheat sold throughout the calendar year. Using these two data series, the State of Montana computes a value for all Montana wheat that is exported overseas via Pacific Northwest bulk grain export terminals. In the Export Summary, these wheat exports are identified as “bulk shipments” to distinguish them from rail, truck, or containerized shipments of wheat that are recorded by WISER’s Origin of Movement data series.

2. On an annual basis, roughly 70-80 percent of all wheat grown in Montana is shipped to Pacific Northwest grain handling facilities for subsequent export to Asia. When the wheat arrives at a grain handling facility it is stored in silos until a contract for wheat has been fixed between the seller and the buyer. Because Montana wheat is high in protein, it is typically blended with lower-protein content wheat from other states to meet the specified protein content in the purchase contract. This process of blending high and low-protein wheat to achieve a specified protein content renders the task of identifying the state of origin for the lot of wheat sold virtually impossible. Thus, the industry practice is to report bulk shipments of wheat as originating in the state where the grain handling facility is located.

While an aggregate value for all bulk exports of Montana wheat can be deduced, no national-level purchasing information is made available to the State. Thus the values of individual shipments made to specific destinations cannot be tracked. Nonetheless, industry sources indicate that roughly 30 percent of all wheat shipped to Pacific Northwest grain handling facilities is exported to Japan.

3. Taiwan and South Korea’s rankings in terms of their importance to the state as a market for Montana goods is quite likely rather dramatically understated. Like Japan, Taiwan and South Korea are major purchasers of Montana wheat.