Imagine checking your retirement account and seeing it soar by 20% one year, then plunge by 15% the next. Most of us would be on the phone to our financial advisor right away. Few would ignore that kind of rollercoaster in a 401(k). Yet U.S. agricultural exports have been on just such a ride: hitting a record $152 billion in 2014, then falling 8% in 2015 and another 7% in 2016. Maybe you thought that kind of volatility only happened during the COVID-19 pandemic or a trade war? You’d be wrong.
If that were your nest egg shrinking two years in a row, you’d take action. It’s time we do the same for our export strategy by more fully embracing a principle the investment community knows well: diversification.
The volatility gap is striking. A typical balanced portfolio is designed to smooth out risk, with the primary goal not to maximize short-term return but to achieve stable results while minimizing the impact of market shocks. In investing, diversification reduces both the severity of large swings. By contrast, U.S. agricultural exports have experienced much greater variability. Over the past two decades, the size of the year-to-year swings, relative to the average level of change, has been far higher than in a classic 60/40 portfolio. In statistical terms, the coefficient of variation for agricultural exports (the standard deviation of annual changes divided by the average change) is clearly higher, meaning we take on more volatility per unit of growth. In plain language, our export performance behaves like a high-risk stock without delivering the high returns.
One major reason for this volatility is concentration risk, or having too many eggs in a few baskets. A handful of foreign markets (USMCA markets, EU, and China) dominate our export sales, with just five countries accounting for 61 percent of U.S. agricultural exports. It is like investing most of your retirement savings in five stocks, where your fortune rises or falls on their performance. When one big customer slows down, our exporters feel it immediately. Last year, exports to China, our third-largest market, fell by 15 percent amid increased competition, pulling down overall totals. At the same time, Mexico, now our top market, grew 7 percent to a record $30.3 billion, offsetting much of China’s decline. It was a real-world example of diversification at work, but also a close call. Without Mexico and a few others stepping up, the year’s downturn could have been much worse. Beyond those top five buyers, there is significant untapped opportunity. It’s a big world out there, ninety-five percent of the world’s consumers live outside the United States. It shouldn’t surprise anyone that India is being viewed as potentially a critical partner for ag exports in the years to come.
The good news is that diversification is not only a way to reduce risk; it is also a growth strategy. Countries like Vietnam, the Philippines, Indonesia, and India are among the fastest-growing economies, with expanding middle classes hungry for more and better food products. These emerging markets are the untapped asset classes of our export portfolio, offering high-growth potential while buffering against downturns elsewhere. By expanding into regions such as Africa, South Asia, and Southeast Asia, we position ourselves to capture new demand while reducing vulnerability to trade friction with any one partner. A well-diversified export mix smooths out the peaks and valleys, delivering more consistent growth and fewer sleepless nights over the next policy shock or supply chain disruption.
Of course, comparing agricultural exports to an investment portfolio has limits. We cannot simply “sell” underperforming markets or “buy” more of the fast growers overnight. Trade flows are shaped by logistics, geopolitics, infrastructure, and consumer demand in ways that do not map perfectly to finance theory. Still, the core lesson holds: when too much depends on a few volatile positions, the whole portfolio is more exposed to shocks, and diversification remains an important tool in the toolkit.
We have a 2030 strategic plan that I will be drawing from in these columns, and one priority is clear: diversification is essential, and we have more work ahead to strengthen our export portfolio. In the past few years we secured our first-ever representation in a core series of African markets, which has allowed us to bring buyer groups to the U.S. and take U.S. companies into those opportunities. We also returned to India this year after a long break, with new funding that allows us to maintain and grow our global presence. The plan calls for targeting first-time sales in these and other high-potential markets such as Indonesia, with a bias toward action even if the returns are slow in the first year, because these are “when” markets, not “if” markets. We will also work closely with our cost-share reimbursement teams to track the diversity of markets in Branded Program claims and help companies expand their reach. Many firms simply need more awareness, support, and connections. With our 20-plus In-Market Representatives, expanded coverage, and Export Navigators, we have a team focused on getting new products onto new shelves in a way that is both cost-effective and risk-controlled.
Diversification builds resilience and agility, the same qualities that define a future-ready organization. No business would bet its future on one customer, and we cannot bet our economies on one country or one product category. By broadening our portfolio, we give U.S. food and agricultural exports the stability of a well-balanced investment plan: steady growth, reduced risk, and a future built to last. The next time you rebalance your retirement account, think about how we “rebalance” our export strategy here at Food Export or in your own firm. The principle is the same. Smart diversification ensures we draw strength from many sources, not just a few.
Brendan Wilson
CEO, Food Export-Midwest & Food Export-Northeast
Your Input Matters: If there is a topic you wish for me to discuss in this space, let me know. You can reach me at info@foodexport.org. Just put Attn: Brendan Wilson in the subject line.