It's an understatement to say that the U.S. food and agriculture industry has faced its fair share of trials over the past few years. Reckless cost and personnel cuts by railroads eroded supply chain infrastructure, a problem made plain by COVID-19 pandemic disruptions and recent rail safety issues. Unreliable foreign suppliers and ocean freight systems were exposed. The war in Ukraine led to the largest commodity crisis since the 1970s. Generally, supply chain disruptions turned global enterprise on its head.
And yet, according to Feeding the Economy, a new report released today by 25 food and agriculture organizations, the sector is powerful and has bounced back impressively, increasing its economic output in all 50 states compared to one year earlier. Agriculture-related economic activity accounts for 20% of the U.S. economy, reaching far beyond the farmgate. For example, there are more than twice as many American jobs manufacturing agricultural products as manufacturing automobiles.
While U.S. agriculture is resilient, global challenges loom. Scientists argue that the effects of climate change could permanently impact agricultural productivity, international shipping routes, and supply chains, resulting in food insecurity on a global scale. Farmland availability is rapidly declining while global populations surge. As these pressures come to a head in the coming years, the U.S. will be called upon to lead – but today's policy landscape is preventing our industry from fully meeting the moment.
While other major economic powerhouses are working to bolster trade, the U.S. has paused pursuit of new tariff-reducing trade agreements. The U.S. has not entered into a new market-opening trade agreement in a decade. Meanwhile, since 2010, Japan has entered into seven new international trade agreements. Canada and the European Union have both entered into eight new agreements. China has entered ten.
Market-opening trade agreements like China's Regional Comprehensive Economic Partnership (the world's largest free trade agreement) and the Comprehensive and Progressive Trans-Pacific Partnership (which the U.S. initiated, then withdrew from, and which China and others are now seeking to join) are causing a shift in the global trade landscape. The U.S. is being left behind. In fact, the U.S. Department of Agriculture is forecasting a U.S. food and agriculture trade deficit of more than $14 billion in 2023.
Researchers have calculated the economic impact and our competitors are vastly outpacing the U.S. when it comes to benefitting from their trade policies. Based on United Nations data, from 2010 to 2020, China and the EU enjoyed an estimated $553 billion and $420 billion, respectively, in total trade under free trade agreements. The United States' $171 billion pales in comparison.
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The Biden Administration's commendable Indo-Pacific Economic Framework has the potential to address multiple non-tariff trade barriers. However, to remain competitive the U.S. must work to reduce non-tariff barriers while simultaneously and aggressively lowering tariffs. This includes enforcing current trade agreements, keeping markets open, honoring our trade obligations, and advancing rules-based trade. Additionally, more than a year has passed since the expiration of Trade Promotion Authority which outlines congressional guidance to the President on trade policy priorities and negotiating objectives but does not usurp Congress' role in approving or denying potential agreements. This must be rectified.
If the U.S. is to rise to the global challenges of the next century, we need policies that create new and more open market access. Within the next century, international agricultural trade will shift beyond the realm of economic opportunity and into the realm of societal necessity. The latest data shows that the U.S. exports more than $200 billion in food and agricultural products. Imagine how much more we could provide to the world in a more favorable trade environment.
John Bode is the President and CEO of the Corn Refiners Association. He has been an active leader in federal food and agriculture policy for the past four decades, including three presidential appointments at the U.S. Department of Agriculture, where he was responsible for over half of USDA's budget.
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