International Trade Important to Agriculture

For every three acres that is planted in the U.S. one is going to trade, leaving our borders and going somewhere else, and ten percent of our beef production is exported to other countries. With trade playing such an important role for agricultural producers, it’s easy to understand why they’re keeping a close watch on trade negotiations. Joe Outlaw is Co-Director of the Agricultural and Food Policy Center at Texas A&M University.

“If we don’t have trade with our two biggest trading partners, Canada and Mexico, we will still sell our products. There’s no question about it. If Mexico turns to other countries to buy their corn instead of us, we will still sell our corn to someone else.

But Outlaw points out that producers would incur a lot more transaction costs.

“Where it’s easy to put it on a train and send it south, we’re going to have to put it on barges and boats to get it somewhere else. And the end result of all that is that we’re going to hurt the farmer because they’re going to get less for their commodities. And so agriculture is very nervous about the NAFTA negotiations as well they should be.”

David Anderson is a Professor and Texas A&M Agrilife Extension Economist and says that seventy-five percent of our beef exports go to four countries; Mexico, Canada, South Korea, and Japan.

“So three of them are at risk from what happens in these as we go forward. Do we stay in these free trade agreements or not, which gives us tariff free access to those countries’ markets to be able to sell into those countries? So I think that’s the biggest risk factor out there because we’re exporting enough beef that it matters for prices. So if all of the sudden we can’t export to those countries or we can’t export as much, we got a problem because that beef’s been produced already, right? It’s going to stay here.”

U.S. Ag producers continue to watch our trade negotiations closely.