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Guest Author: Will Long Term Gains Outweigh Short Term Chaos Caused by Agricultural Trade Wars?

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[EDITOR’S NOTESean McBride is the founder of DSM Strategic Communications, a Washington, D.C., public relations, marketing and issues management firm specializing in food, nutrition and agriculture.]

McBride

American growers export $140 billion in agricultural products annually, helping to feed the world by moving excess crops from abundant markets to those in need. Through food exports, the U.S. also enabled countries like China, Russia and India to feed their rapidly growing middle class that seeks to spend increased disposable income on meat, dairy, fresh produce and grain-based foods.

While familiar commodities like corn, soybeans, beef and pork top the list of U.S. agricultural exports, American growers also export $4.7 billion worth of fresh fruit each year.

Because of a complex web of regulatory schemes in countries around the world, food export is a complicated business. Compliance takes forethought and expensive expertise. For instance, some countries ban importation of crops grown with the use of bioengineered technology. Others restrict the tonnage of imported crops annually to protect domestic growers. There can also be wide discrepancies about importing crops grown using certain pesticides.

Overseas Deals Are A Big Win

That is why it is a big win for American farms and agribusinesses that score long-term contracts to export their commodities overseas. Those deals promote stability and sustained, incremental revenue growth.

Enter the Trump Administration. U.S. growers have experienced more than two years of trade instability while the Administration seeks to tear up and re-negotiate trade deals with China, Mexico, Canada, the European Union (EU) and others.

There have been small victories along the way, such as the EU agreement on beef and modest changes to the U.S.-Korea trade agreement. But those wins pale in comparison to the disruption caused by the chaos surrounding the renegotiation of the North American Free Trade Agreement and China.

For instance, U.S. growers are having a harder time getting American and international trade authorities to address anti-dumping cases for produce and other goods while the “big picture” gets sorted out.

In the big scheme of things, trade disruption is taking its toll on American farms and farmers. Time reports U.S. agricultural exports to China dropped 50% in 2018 and farm income is down 16%. Now, China says it will shut off all agricultural imports from the U.S. in response to new trade tariffs on Chinese goods entering the U.S.

While Administration advocates believe American growers will obtain long-term benefits if the U.S. successfully negotiates new trade deals with China, Mexico, Canada and other markets, will those changes be enough to offset the loss of jobs and farm bankruptcies occurring now?

Separately, China and others now seem to be slow-walking the process, betting there will be another occupant in the White House in January 2021, who will be easier to negotiate-with than the current resident.

Government Ag Offsets Are Inadequate

In the meantime, government funding to farmers to offset depleted export markets is inconsistent and inadequate to compensate those entities negatively impacted by the ongoing trade wars.

In the largest sense, trade wars represent efforts by the U.S. and other markets to gain more control over their domestic economies and address growing income disparity. Will it work and how long will it take to get there?

What we should be asking ourselves is, “how much damage is being done to the American agriculture economy along the way?”

While the Administration’s long-term strategy could pay off, is it worth the current loss of thousands of jobs, reduced market share, and possible farm bankruptcy?

Agriculture is not alone in its role as pin cushion for the Administration’s trade strategy. Food manufacturers, processors and retailers are also negatively affected by trade disruption.

The most important thing growers and food companies can do it engage their elected officials. While the President negotiates trade deals and treaties, those agreements must be approved by Congress. While the vote is typically a straight “up-or-down” vote, Congress can pressure the Administration to make changes during the negotiations.

Simply stated, the U.S. agriculture sector is being held hostage by the Administration in the hope its hardline trade stance paves the way for a new landscape that benefits American growers. There are a lot of roadblocks on the way to that “nirvana,” and there is no certainty of success. But, let’s hope the future is brighter than the present, because the unintended consequences are hurting farms and farmers every step of the way.

 

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