Many agribusiness experts, including Jason Henderson, director of Purdue Cooperative Extension Service, agree that access to international markets for agricultural products will only become more important in years to come for American farmers.
That is why he and other experts at last week's Indiana Corn Growers Assn. and Soybean Alliance joint policy meeting expressed worry about the current American export situation, especially the re-negotiation of the North American Fair Trade Agreement (NAFTA).
Henderson explained that ag trade in the U.S. depends on more than just the quality of our products or the volume of our yields.
"The challenge for trade policy is this: If agriculture is a scarce resource, foreign countries will continue to pay for U.S. ag exports," he said. "I have full faith and confidence in our ag sector—that you're going to produce enough so that food will not be scarce. Therefore, you need trade policy, because you're going to have that food and need easy access to get food in and out, to make sure that we are the country of first choice—not just the reservation choice."
Experts at the meeting encouraged farmers to ask their respective government representatives to push for the U.S. to stay in NAFTA. If the U.S. exits NAFTA, there is concern that countries such as Mexico and Canada will turn to other sources for their grain. Last year, the value of exports to NAFTA were $3.2 billion and 25,000 U.S. jobs. In the past 50 years, agriculture has maintained a trade surplus—the value of our exports outweighing our imports—which has increased in the countries with which the U.S. has free trade agreements. Last year's surplus was $20 billion.
"Everyone has viewed the U.S. as the world's grain bin," Henderson stated. "But if Brazil gets to the level of production that the USDA is forecasting, are we going to be the world's grain bin? I don't know. That's something to think about."
Exports to Canada and Mexico are important to corn farmers; last year, Canada was our second largest ethanol market, bringing in $300 million in ethanol alone, and Mexico is our No. 1 buyer of corn. Overall, 14.4 percent of our corn is exported yearly. However, this somewhat pales in comparison to the 47 percent of soybeans that are exported.
Hanna Abou-El-Seoud, a government affairs representative of Gordley Associates, was another guest speaker at the meeting. She represents the American Soybean Assn. among other organizations at Gordley, which is a full-service government relations firm.
"We work with members of Congress and the administration to understand how to remedy different problems we're facing with soy exports," she explained. "The export of soy is extraordinarily important to American soy producers. Fifty percent of soy is sent abroad. The domestic market in the U.S. really cannot absorb the amount of soy produced in the U.S."
Abou-El-Seod said ASA has pushed hard for free trade agreements in the past, and is now making the positive resolution of NAFTA a priority.
"The reason that ASA pushed so hard for TTP was for access of soybeans into the Japanese and Vietnamese markets," she said. "Obviously, TTP would've been a gateway to Southeast Asia, and so it's one of the areas where the ASA is particularly engaged in trying to figure out what other avenues there might be to access those markets. The U.S. is not likely to re-enter TTP under this administration."
Like Henderson, Abou-El-Seod said the major concern with the renegotiation of NAFTA is the possibility that the U.S. will pull out of it entirely.
"We've heard the administration mention that the current version of NAFTA we have is unacceptable, and that a possible conclusion would be to remove the U.S. from the NAFTA agreement," Abou-El-Seod said. "This would be catastrophic for soy, as well as for any other commodity across the country. Ag exports to Mexico are greater than all the other countries we export to, combined. We would see ramifications basically across the ag industry, and possibly a loss of jobs across the U.S."
To sum up the meeting, attendees were instructed on how to talk about trade with their senators and congressmembers. Corn and soy farmers, as well as anyone else whose profession is dependent on the grain sector are encouraged to call or email their senator or congressmember to talk about NAFTA and its importance to Indiana and U.S. grain.