USDA Trade Data; NAFTA Perspectives: Lawmakers, Ag Secretary, Farmers, and Mexico

And Catherine Boudreau reported last week at Politico that, “Agriculture Secretary Sonny Perdue said Wednesday that he was working with Trump administration officials and Congress on a plan to protect farmers and ranchers from the potential market effects of the U.S. withdrawing from NAFTA.

“‘We’re talking with the administration and Congress about some mitigation efforts if that were to occur; about how we could protect our producers with that [farm] safety net based on prices that may respond negatively to any kind of NAFTA withdrawal,’ Perdue told reporters after a USDA ceremony honoring veterans [related audio here].”

Following this news, Donnelle Eller reported on the front page of Saturday’s Des Moines Register that, “U.S. Ag Secretary Sonny Perdue on Friday downplayed reports earlier this week that the Agriculture Department is working on contingency plans for U.S. withdrawal from the North American Free Trade Agreement.

Perdue said he was probably premature to publicly discuss possible contingency plans. ‘I think it’s my responsibility to think about what-if scenarios,’ he said.

The Register article added that, “‘I wanted to make the administration aware there could be some devastating price changes if NAFTA is not renegotiated,’ said the former Georgia governor, who has suggested farmers would need ‘safety nets’ if they lost the NAFTA agreement.

“He declined on Friday to elaborate what the safety nets would encompass.”

(Note also that Mississippi State University agricultural economist Keith Coble pointed out on Wednesday that, “So here is the question. To what extent would our current farm safety net mitigate a sudden shock to crop prices due to a trade disruption?…Ultimately, our farm safety net is not designed for such a shock. Maintaining trade flows and reducing barriers to trade has a strong economic justification. There are clear benefits to consumers and agricultural producers.”)

Saturday’s Des Moines Register article added that, “U.S. threats to pull out of longstanding trade agreements with Mexico and Canada could drag Iowa’s ag industry into another depression, some state farm leaders say.

‘We’re not doing that well now, so any more bad news could push us over the edge,’ said Dermot Hayes, an Iowa State University economist.”

Trade Perspectives: Farmers

Politico writer Adam Behsudi reported on Thursday that, “‘I’ve come to believe this administration is determined to end NAFTA,’ said Gordon Stoner, a fourth-generation Montana wheat farmer who leads the National Association of Wheat Growers.

“The fearful tone now coming from many of the nation’s farm groups has only amplified as America’s agriculture sector confronts the loss of its main profit driver — foreign exports.”

The Politico article explained that, “There’s also a growing recognition that the agriculture industry, while united on the importance of NAFTA, may have failed to coordinate an effective strategy to counter the threat that Trump posed to the trade pact since his first day in office.”

Jim Spencer reported early last week at the Minneapolis Star-Tribune Online that, “[Randy Spronk], a hog farmer who also raises corn and soy beans, did not mince words in describing the impact he and others in the Minnesota agricultural sector will feel if the president’s rhetoric blows up the 23-year-old trade deal between the U.S., Mexico and Canada.

“‘It will be,’ Spronk told [a forum at the U.S. Chamber of Commerce headquarters], ‘a financial catastrophe. I’m not sure if everyone in the administration understands that.'”

Trade Perspectives: Mexico

Jude Webber reported on Monday at The Financial Times Online that, “While [Mexico] is heavily dependent on the US for both imports and exports, it has imported more yellow corn from Brazil and Argentina in September than in the whole of 2016.

“‘Uncertainty is going to play into the decisions of companies — if they no longer have a reliable source of imports, they’re going to look for one,’ said one senior government official who asked not to be named. ‘The numbers are small so far but this is just a little taster of what they could do.’

“Mexico bought 100,800 tonnes of yellow corn from Brazil in September and 41,000 from Argentina — a drop in the ocean compared with the 10.5m tonnes bought from the US.

But so far this year, it has bought 11 per cent more of the commodity from the two South American countries than in all of 2016, according to government data.