The nominee for Secretary of Agriculture, Sonny Perdue, is expected to be smoothly confirmed by the Senate next week. In his hearing, there was one common theme that both the Republicans and Democrats agreed on—trade. From dairy to grains, it was clear the committee was united in their concern for farmer income and for advancing US agricultural exports. At a time when commodity prices have continued to fall, there is widespread worry for the livelihoods of American farmers.
While trade conversations have typically been dominated by manufacturing, there is a real threat to farmers and producers should the Administration follow through on some of its more radical trade proposals. Canada and Mexico remain top agricultural export markets for US producers. Asia, especially East Asia, made up 43.5 percent of total agricultural exports in 2015. The Trans-Pacific Partnership, killed by the President upon his inauguration, was strongly supported by farmers. China is our number one export market for soybeans—in 2016 they accounted for 16 percent of all US agriculture exports. While the Administration’s trade agenda is still in its nascent stages, the agriculture community cannot be complacent when presented with an opportunity such as the WTO’s Trade Facilitation Agreement (TFA).
Recently brought into force, it is an agreement meant specifically to support emerging economies’ trading capacity. The US alone has already committed $260 million towards the effective execution of the agreement. But food and agriculture have been left behind in discussions. Both at the country level and in discussions of which counties to focus on, agriculture has not made its needs known. With the African food and agriculture market alone expected to reach $1 trillion by 2030, US producers cannot afford to ignore this critical agreement.
Despite the fact that we already possess the tools, technology, and capacity, moving food across borders, especially perishable food, remains a challenge in emerging markets. With this in mind, Andrea Durkin, a nonresident fellow with the Council, wrote a report on the importance of trade facilitation called Growing Markets, Growing Incomes: Trade Facilitation for Farmers. From food safety checks to long wait times, food and agriculture products are especially prone to losing value the longer they sit at the border. Traders and agribusinesses can control the majority of their own supply chain, ensuring a consistent cold chain for example, except at country borders. Facilitating the smooth, efficient, and safe movement of agricultural products through customs and border protection agencies is critical for US growth in these markets and for enhancing local agriculture and food trade. Ensuring TFA funding is directed towards agriculture and food trade will drastically improve outcomes for local, regional, and multilateral agribusiness. Sixty percent of leading trade firms cited border delays as the main trade problem when dealing with agro-food suppliers from developing countries.
As markets in the Western Hemisphere become more saturated, it is critical for the future of US agriculture to look to new and emerging economies as the next logical consumer base. Emerging markets, when counted together, currently make up 20 percent of US agriculture exports and that continues to grow. Rising incomes and increasing demand from a rapidly urbanizing population means there is huge potential. As populations move from incomes of $1 a day to $10, they shift from basic necessities to purchasing meat, dairy, and other high-value products. Farmers, producers, and agribusiness already know this and are working to support efforts that increase incomes in developing countries. However, there remains a gap between demand and the ability of US producers (and local producers for that matter) to meet it.
Increasing capacity, speed, and approvals of agriculture and food products at the border is greatly beneficial to US farmers, but it is even more critical for local producers. For those running slim profit margins where the loss of one shipment can be devastating, they quite literally cannot afford delays at the border that cause spoilage or a decrease in quality. Supporting trade capacity means that local producers are able to ease into larger regional markets and US farmers are able to better control their products at every stop on the value chain. It is a win-win for both agriculture communities. The US community holds extensive knowledge, technical expertise, and a legacy of productivity. It should be supportive of TFA and ensure that funds are maximized for food and agriculture trade capacity building.