NAFTA concerns growing for agriculture

While President Donald Trump garnered significant support from agriculture in his election, there have been growing concerns about his position on trade agreements that have been extremely valuable to U.S. food and feed exports. These concerns have grown with reports that the White House has drafted plans to withdraw from the North American Free Trade Agreement (NAFTA).

Ambassador Darci Vetter, who served as the chief agriculture negotiator for the office of the U.S. Trade Representative in the Obama Administration, recently talked about the importance of NAFTA at the National Institute for Animal Agriculture meeting in Columbus.

“The North American agricultural market is largely integrated. Mexico gets 98% of its corn supply that it imports from the U.S. and has looked to us as the primary supplier for most of its feed grains and meats. But if in re-negotiating NAFTA, of which the Trump administration has called a priority, agriculture is on the table and even if Mexico just made a slight adjustment, if they re-impose tariffs on our products for example, or cause them to even move 10% of their purchases from 90% to 80% of their current supply coming from the U.S., that would have a devastating impact on prices here,” Vetter said. “We’re looking at billions of dollars of trade going south now, but a slight adjustment to that is a big deal. We need to work together as an ag community to make sure that however that negotiation is defined, that the Trump Administration understands the impact, that we are going to work with them to help them figure out how to keep that trade relationship intact, and we need to work with our partners in Mexico to let them know that despite some of their rhetoric we’ve heard about trade, that bedrock relationship we have is something we intend to preserve and see as a long term partner.”

With action on NAFTA last month in the White House, agriculture is speaking up.

“Mr. President, America’s corn farmers helped elect you. We are strong supporters of your administration and continue to stand ready to work with you to build a better farm economy. That begins with strong trade policy,” said Wesley Spurlock, National Corn Growers Association president. “Withdrawing from NAFTA would be disastrous for American agriculture. We cannot disrupt trade with two of our top trade partners and allies. This decision will cost America’s farmers and ranchers markets that we will never recover.

“NAFTA has been a huge win for American agriculture. Corn and corn product exports today account for 31 percent of farmer income. Mexico is the top export market for corn. Canada is also a top market for corn and ethanol. With a farm economy that is already weak, losing access to these markets will be a huge blow that will be felt throughout the ag value chain.”

The North American markets are also important to the livestock sector.

“Mexico and Canada are now our No. 2 and No. 4 markets, so we absolutely must not have any disruptions to U.S. pork exports there. Even a short-term interruption in our exports would have a significant negative economic impact on U.S. pork producers,” said Ken Maschhoff, National Pork Producers Council president. “Abandoning NAFTA and going back to pre-NAFTA tariffs would be financially devastating to U.S. pork producers. Tens of thousands of U.S. jobs dependent on those exports would be lost.”

At the same time, U.S. dairy sector and state agriculture officials urged President Trump to take immediate action against Canada’s perceived disregard for its trade obligations under NAFTA.

Most recently, Canada implemented a new national pricing policy that dairy groups contend blocks American dairy exports and will enable significant dumping of Canadian dairy products onto the world market. As a result, dozens of dairy farmers in the Midwest recently learned they must find new customers for their milk by May 1, which will cause considerable economic hardship and possibly force them to go out of business.

In a joint letter sent to President Trump, the International Dairy Foods Association (IDFA), the National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC) and the National Association of State Departments of Agriculture (NASDA) urged the administration to tell Canadian Prime Minister Justin Trudeau to halt the new pricing policy and restore imports of the blocked U.S. products, specifically ultra-filtered milk. They also asked President Trump to direct U.S. agencies to “examine a full range of tools that could be used immediately to impress upon Canada in a concrete way the importance of dependable two-way trade.”

“U.S. dairy exports support approximately 110,000 jobs across America, many of which are in farming and food manufacturing, as well as in supporting rural manufacturing and skilled farm service workers,” the organizations said in the letter. “However, for trade to yield its full potential and provide the maximum impact possible in supporting American jobs, our trading partners must hold up their end of the bargain as well.”

In the letter, the dairy and ag groups noted that this issue highlights the importance of gaining prompt approval of President Trump’s nominees for Secretary of Agriculture and U.S. Trade Representative.

Canadian officials, however, do not accept the contention that Canada’s dairy policies are the cause of financial loss for dairy farmers in the United States.

“The facts do not bear this out,” said David MacNaughton, Canadian Ambassador. “The Canada-U.S. partnership is a model to the world. Let’s keep it that way by working together, as we have so often in our history, to make it even better.”

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