Perhaps no sector of the American economy is more dependent on trade than agriculture. It is the life blood of the heartland supporting over 15 million jobs throughout the United States. Our economy is so large, however, that the importance of agriculture is frequently overlooked. Americans take agriculture for granted because, as consumers, we spend less than 10% of our disposable income on food, the lowest in global history.
In 2015, however, according to the Economic Research Service at USDA (ERS), agriculture exports were $133 billion, accounting for a quarter of all production. The leading U.S. exports are grains/feeds, soybeans, livestock products, horticultural products, and – most predominantly – wheat, with half of the United States crop being exported annually. (See http://usda.mannlib.cornell.edu/usda/current/AES/AES-11-30-2016.pdf )
Therefore, it is entirely understandable that farmers become concerned when changes are proposed in trade agreements. At the end of January, President Trump signed an Executive Order pulling out of the Trans Pacific Partnership (TPP), saying: “it is the intention of my Administration to deal directly with individual countries on a one-on-one (or bilateral) basis in negotiating future trade deals…. and to begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.”
President Trump has also announced his intention to renegotiate the North American Free Trade Agreement, NAFTA, even though Canada and Mexico are our largest trading partners.
If NAFTA is renegotiated, it should be done in a way that does not provoke the ire of our next door neighbors. According to ERS: “…exports to China peaked in 2012 at $25.9 billion, then remained steady for 2 years before dropping by over $4 billion in 2015. Meanwhile, U.S. exports to Canada have been relatively stable, restoring Canada as the largest destination for U.S. agricultural products in 2015. The next largest markets are Mexico, the European Union, and Japan, all longstanding destinations for U.S. agricultural commodities.”
Let’s also recognize that commodities prices are low and net farm income is down. Farmers are trying to reduce their costs by using fewer inputs. Former Secretary of Agriculture Jack Block recently predicted that “in 2017, farmers will use less chemicals to control pests and weeds.” Farmers are businesspeople, too, and will do all they can to make a profit and stay on the land.
The bottom line is that both farmers and U.S. agriculture as a whole need the Trump Administration to strongly support farm exports. We have seen too many deals where agriculture gets traded away to other sectors of the economy. With only 1% of the U.S. population actively engaged in farming, they often get overlooked. Remember, the entire rural economy depends on farm exports and net farm income. The local banks, implement dealers and even coffee shops all depend on farm exports.
The President has expressed a preference for bilateral trade agreements. No matter whether our trade agreements are bilateral or multilateral, agriculture must be a priority and not traded away to other, better organized sectors of the economy. To do so would break the back of the American farmer.
The United States is the leader in production agriculture; we are also the leader in agriculture research and extension services. Our farmers drive air conditioned tractors with GPS and are connected to the Chicago markets. Furthermore, our agriculture surpluses are our best form of foreign aid. The McGovern-Dole school feeding program provides a school lunch to millions of children in the poorest villages of the world. The bags designated “From the American People” are a source of pride to all farmers, reminding those receiving aid of America’s dedication to fighting global hunger. And as Chairman of the Senate Agriculture Committee Pat Roberts always reminds us, food security is important to national security.
We must not trade all of this away as we renegotiate trade agreements. If agriculture exports decrease, demand will decrease and prices will fall. Our agriculture leadership in the world will be forfeited and lost.
When it comes to agriculture trade, the old expression still applies…“If it ain’t broke, don’t fix it”. Let’s craft trade agreements that ensure our farmers and ranchers have access to fair and open export markets while guaranteeing that our domestic markets are protected from unfair competition. We believe that is a philosophy President Trump can stand by.
Former Senator Bob Dole is Special Counsel at Alston and Bird. Contact: bob.dole@alston.com Marshall Matz is at OFW Law. mmatz@ofwlaw.com
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