NAFTA Renegotiation Formally Launched– Agricultural Perspectives

“Many farmers worry that Trump’s policies will jeopardize their exports just as they face weaker crop and livestock prices.”

The AP article added that, “But since it took effect in 1994 and eased tariffs, annual farm exports to Mexico have jumped nearly five-fold to about $18 billion. Mexico is the No. 3 market for U.S. agriculture, notably corn, soybeans and pork.”

Mr. Wiseman also pointed out in his article that, “The White House declined to comment on farmers’ fears that Trump’s trade policy stands to hurt them. But officials say they’ve sought to ease concerns, by, for example, having Agriculture Secretary Perdue announce a new undersecretary to oversee trade and foreign agricultural affairs.”

The AP article added that, “‘So much of the conversation in the campaign had been in Detroit or in Indiana’ and focused on manufacturing jobs, said Kathy Baylis, an economist at the University of Illinois. The importance of American farm exports ‘never made it into the rhetoric.'”

Meanwhile, in a statement on Thursday, Agriculture Secretary Sonny Perdue noted in part that:

When the rules are fair and the playing field is level, U.S. agriculture will succeed and lead the world. It’s why we recently announced the creation of an undersecretary for trade at USDA, because as world markets expand, we will be an unapologetic advocate for American agriculture. As I have often said, if our people continue to grow it, USDA will be there to sell it

In addition, USDA radio released a brief news overview on trade and NAFTA late last week.  To listen to this one minute audio summary, click on the link below.

House Agriculture Committee Chairman Mike Conaway (R., Tex.) also addressed NAFTA and ag related issues during a conversation with Mike Adams on the AgriTalk radio program on Thursday. (Note that a complete unofficial transcript of their wide ranging conversation is available here).

Chairman Conaway indicated that, “Well, we had conversations yesterday with our trade rep Lighthizer, and Wilbur Ross, Secretary of Commerce. Lighthizer wants to get it done quickly. He understands the turmoil that can be created as a result of the uncertainty associated with it. The document is 23 years old. All three economies are dramatically larger than they were when it was negotiated. The mix of what we do is much different. And so it is high time to have that renegotiation. There’s nothing wrong or fearful of that. I had an opportunity to express to them that do not throw ag under the bus, don’t swap out ag interests for something else and all those kind of conversations you’d think I would have with those guys.”

Chairman Conaway added that, “But Lighthizer wants to get into that quickly because the quicker it’s done, the shorter the time for uncertainty and the less anxiety among ourselves and our trading partners that would get created. We’ve already seen disruptions in the market with Mexico looking for corn from other sources and other things like that in retaliation to some of the language that has been used in our campaigns and that kind of stuff. So the quicker we can get NAFTA negotiated, which is an appropriate approach, the better.”

And more specifically on Mexico and U.S. corn exports, Cole Epley reported on the front page of the Money section in Wednesday’s Omaha World-Herald that, “Mexico is the top importer of corn grown in the U.S. No other country buys more corn from Nebraska farmers, who sold $287 million worth of the crop across the southern border in 2015. Mexico accounted for 29 percent of total corn exports of $987 million that same year.”

Wednesday’s article explained that, “In fact, some of [Felipe Basarte’s (who’s company every month imports into central Mexico thousands of tons of U.S.-grown corn )] associates trekked to Brazil last week to scout out potential new sources of grain imports as a contingency.”

And Reuters writer  Mitra Taj reported on Friday that, “Mexico expects to import a record amount of yellow corn from Brazil this year after its livestock producers secured lower prices in deals with suppliers on a recent visit to South America as NAFTA talks loom, a Mexican official said Thursday.

“Alejandro Vazquez, a government official who was part of a Mexican delegation that visited Brazil and Argentina last week, said Mexican livestock companies on the trip had negotiated directly with suppliers and cut out commodities traders such as Cargill Inc and Louis Dreyfus that normally arrange shipments.

“Following repeated threats by U.S. President Donald Trump to pull out of the North American Free Trade Agreement, Mexico, a net grains importer, has been eager to show the United States that it has options to trade elsewhere.”

The Reuters article noted that, “Vazquez, the head of Aserca, an agency in the Agriculture Ministry that promotes Mexican products, said the livestock companies chose to pay more for Brazilian yellow corn as an investment in case NAFTA unravels and disrupts the cheap access to U.S. corn they use for animal feed.”

Meanwhile, an Omaha World-Herald editorial in yesterday’s paper stated that, “Many factors have led to the ag-economy downturn, but it’s encouraging that an important one — the need to maintain and expand opportunities in overseas markets — has received strong attention in recent days.