“A look into the relationship between trade and American farmers”
By: Taylre Beaty, NAWG Spring/Summer 2018 Intern
This spring, Agri-Pulse published a five-part series, Export or Bust, that focuses on the importance of positive trade relationships and export markets to American farmers, ranchers, and agribusinesses. The series covers the impact that trade has on farm profitability, updates on trade negotiations, and shares the voices of agricultural groups who are working to make sure that U.S. farmers stay competitive in the global market. Below are summaries of each article in the series.
As the global population continues to grow around the world, U.S. producers are seeing an increase in the demand for agricultural products, both domestically and internationally. With these trends, there are also increases in economic growth due to several factors including advances in technology, increased infrastructure, and the expansion of the online global marketplace. The impact of trade negotiations on agricultural profitability continue to be a topic of concern for farmers, ranchers and producers across the U.S. Russia, the global leader in wheat exports, is expected to sell over 10 million more tons of wheat than they did last year in the global marketplace. Exports of additional U.S. agricultural products, including pork, poultry, nuts and fruits, are expected to grow this year as well.
Despite contentious trade conversations over the last decade, China has continued to buy U.S. agricultural products. As trade negotiations and talks of tariffs and barriers proceed, farmers and producers are preparing for what is to come. Any Chinese retaliation is expected to target U.S. agriculture, food and chemical products. Talks of retaliations have been coupled with fluctuations in prices and market uncertainty. While U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) are supportive of holding China accountable to World Trade Organization rules and policies, they are not supportive of any actions that may cause trade retaliation targeted toward producers. NAFTA negotiations are also on the horizon and plan to address some trade issues facing wheat growers. Wheat producers also fear that they may be missing out of the Japanese market for wheat products due to the U.S. not being a part of TPP.
Following the Trump Administration’s 2017 withdraw from TPP, U.S. agricultural organizations have pushed for the White House to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). NAWG and USW are supportive of the administrations interest in entering CPTPP, as it will help U.S. wheat producers compete on the same level with Canada and Australia. However, the CPTPP rules will continue the tariff of $150 per ton on U.S. wheat to Japan. Losses are expected to be sooner rather than later, as changes to these rules will be done in phases over a nine-year period. There are also conversations on the Hill about Market Access Program (MAP) and Foreign Market Development (FMD) funding. The latest version of the House Farm Bill combines the two programs into a $255 million per year fund that allocates $200 to fund MAP and $34.5 to fund FMD. The upcoming expiration of the 2014 Farm Bill would cause there to only be MAP funding following this year. Wheat producers across the country continue to push for trade negotiations that encourage a strong export market and support farmers and the rural economy.
Competition for grain exports continues to rise in South America, specifically in Brazil and Argentina. Growth in wheat and corn markets can be credited to advances in technology and enhanced infrastructure systems. Though the U.S. has stayed competitive, commodity groups believe that it will take even more advances in U.S. technology to remain competitive. Trade agreements in other countries could cause the U.S. to miss out on export opportunities in the global market for grain and other agricultural products. During the time that the U.S. has been renegotiating NAFTA and other agreements, the European Union has entered agreements with both Canada and Mexico. In addition, Brazil continues to purchase more wheat from Argentina instead of the U.S., causing American farmers to miss out on another market.
The Trump Administration continues trade negotiations with the three largest markets for American agriculture: China, Canada and Mexico. The current state of uncertainty about future exporting opportunities is pushing farmers to search for new markets. Currently, China is investigating trade relations with the U.S. over possible dumping of American sorghum and enhancing their inspections of U.S. meats and specialty crops. Agriculture groups continue to push the importance of MAP and FMD in helping provide competitive market opportunities for growers and producers.
*USW, NAWG, Washington Grain Commission, Idaho Wheat Commission and North Dakota Wheat Commission were co-sponsors of this article which includes a significant amount of background and quotes from USW and NAWG.