How TPP May Affect Agriculture

How TPP May Affect Agriculture

As the two Presidential hopefuls went head to head in their first debate, trade was caught in the middle, specifically, the controversial Trans Pacific Partnership (TPP) yet to be approved by Congress.

“The facts are I did say I hoped it would be a good deal, but when it was negotiated, which I was not responsible for, I concluded it wasn’t,” Democratic Presidential nominee Hillary Clinton said in the first 2016 Presidential debate.

“Is it president Obama’s fault? Because he’s pushing it.” pressed GOP Nominee Donald Trump.

Although views differ on the campaign trail, to many in agriculture, trade is a main lifeline for agricultural goods.

“About 20% of the volume of all products grown in the United States are exported; about 30% by value,” says Veronica Nigh, Economist for American Farm Bureau Federation.

As more products are shipped, American Farm Bureau says it’s having a direct impact on the U.S. economy, with USDA’s calculations pointing to 7,500 jobs created for every $1 billion in trade. Trade may be a buzzword for some, but for corn growers, it’s something they see as essential and would like to see grow.

“If you look at the world, there are hundreds of trade agreements, and the U.S. is in about 20, and so we have very few trade agreements,” says Wesley Spurlock, Vice President of National Corn Growers Association (NCGA) and farmer in Stratford, Tex.

A pending trade deal for which many ag groups are rooting is the TPP. Farm groups are hopeful Congress will take up the issue in the lame-duck session, trying to beat the calendar before a new President is elected. However, booth chambers have nearly written off that idea, saying it won’t happen in 2016. That’s not stopping grower leaders from pushing the major trade deal.

“We’re very focused on TPP,” says John Weber, a farmer in Dysart, Iowa and Vice President of National Pork Producers Council (NPPC). “It would be huge for the U.S. pork industry.”

“We’ve estimated that it’ll add $4.4 billion to net farm income in the United States each year,” Nigh says.

TPP involves 12 countries lining the Pacific Rim, including the United States. While the U.S. already trades with some, Nigh says the agreement would help reduce hefty tariffs currently in place.

“Probably the biggest fish among those 11 is Japan, which is already our fourth largest export market, but there’s a lot of room to grow,” Nigh says. “Japan has a lot of high tariffs on a number of products that the U.S. specializes in.”

On that list is beef. Nigh says the U.S. currently faces a 39% tax on beef exports to Japan. Through TPP, that would drop to 9%. Meanwhile, as wheat prices hit 10-year lows, wheat growers say TPP could help give prices some life, opening up the door to key markets.

“It would allow us to gain better access into Korea with some tariffs that are in place now that are really stopping our ability to be a competitive exporter into that market,” says David Schemm, National Association of Wheat Growers (NAWG) Vice President and Kansas Wheat Grower.

Game changers?
But it’s more than just trade with the 11 other TPP countries that are attractive to agriculture. Rice groups also want access to more consumers hungry for U.S. rice.

“We need more demand,” says Johnny Sullivan of Producers Rice Mill in Stuttgart, Arkansas. “We have ample quality supply, and we don’t have the demand we need. That’s hurting us.”

Today, Mexico and central America are the top buyers of U.S. rice. Sullivan says countries like Cuba hold potential, and could virtually change the demand picture over night, but if China would start buying, that would be a game changer.

“China is a monster of a market,” he says. “The facts are based on consumption rates of rice in China, the short version is in 14 day period, they could eat the entire U.S. crop.”

It’s more than just rice looking to China to pick up demand. Pork producers say China’s shortage of pork products isn’t inhibiting them from keeping up with demand, which creates an opportunity for U.S. pork. For soybean growers, China is a top buyer, but balancing that demand is a concern moving forward.

“Twenty-five percent have to continue to be active in other markets globally to make sure that if that happens, we can still move our soybeans into the marketplace,” says Ron Moore, Vice President of American Soybean Association (ASA) and Iowa soybean farmer.

No matter the destination, many ag groups say the U.S. must grow demand to help farmers’ bottom lines.

“Our domestic consumption is strong but virtually flat,” says Becca Nepple, Vice President of International Marketing for the National Pork Board (NPB). “Even if our consumers were to consume two more pounds of pork product a year, that would not compensate for the amount of pork we will have on the market.”

“At one time, we were growing exports by 10 or 20% some years,” says Steve Meyer, Vice President of Pork Analysis for EMI Analytics. “That just isn’t happening anymore.”

Not everyone in agriculture is a fan of trade or these major trade deals, saying it’s a double-edged sword for certain commodities, including sugarbeets.

“We’re not exporting any sugar,” says Duane Maatz, Executive Director of Red River Sugarbeet Growers Association. “So for us, we would just assume temper all of these agreements, and if you ant to trade something with someone else, that’s fine, but you could leave us out and we’d be happy with that.”

Sugarbeet growers say they aren’t against current trade deals, knowing many areas of ag benefit. However, when other countries subsidize production, undercutting the U.S. price, that’s when groups like sugar and rice say some deals are unjust.

“We want to create a level playing field and anytime another country is allowed to subsidize and export, we know that’s not fair to our growers,” Maatz says.

By: Tyne Morgan

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