International trade has always been important to Nebraska agriculture. But in the past several years, as trade disputes with countries such as China have escalated, the importance of trade has become even more apparent. However, despite these disputes, the value of ag exports actually rose in 2018, according to Nebraska Farm Bureau's report, "Nebraska Agriculture and International Trade."
At the Nebraska Farm Bureau's annual convention, senior economist Jay Rempe highlighted some key findings from the report and noted some changes compared to 2017. The reports use USDA estimates to determine the effect of exports on Nebraska.
"Corn, beef and soybeans are the top commodities that we continue to export," Rempe said. "For 2018, Nebraska exports reached $6.8 billion, and that was actually an increase over 2017 by over $450 million, or a 7% increase."
Estimates are based on export data and USDA National Agricultural Statistics Service commodity production or animal inventory data. **Includes value of soybean meal, vegetable oil, ethanol, distillers dried grains, and hides and skins in per-unit value estimates. Source: Nebraska Farm Bureau.
There are a couple of reasons for the increase. One was a 20% increase in beef exports in 2018 — a record for Nebraska.
"We maintain good, friendly relationships with Japan and South Korea — our two largest beef markets," Rempe said. "And we saw record exports in 2018 for beef from the United States. Of course, Nebraska is the largest beef exporter in the country, and that was a benefit for us, too."
The other contributing factor was a 42% increase in corn exports.
"Japan imported a lot more corn in 2018," Rempe said. "Also, in some of the trade disputes we had, Mexico chose not to retaliate on corn going into their country, because corn is vitally important to Mexico and they rely on us. And fortunately for Nebraska, they chose not to retaliate."
Because of this, corn replaced soybeans as the top exported commodity from Nebraska in 2018. Meanwhile, soybeans dropped to third — a result of retaliatory tariffs by China on imports of U.S. soybeans. Nebraska lost $300 million worth of soybean exports in 2018.
This change also is reflected in the shift in top export commodities at the county level, with more counties showing an increase in corn and beef exports.
"Prior to 2018, there are 42 counties that soybeans were the top exported commodity," Rempe said. "That dropped down to 30 in 2018. We saw a major shift in what was more important to counties across the state from soybeans to corn."
Estimated top export commodity by county, 2018.
The report also breaks down the value of those exports to a per-unit value from 2016 to 2018. This is calculated by dividing export values for each commodity by the respective crop production or livestock inventory — and includes byproducts such as soybean meal and vegetable oil, ethanol and dried distillers grains, and hides and skins.
These numbers reflect changes in production in the state as well. For example, the per-unit value for beef exports from Nebraska was less on a per-head basis compared to 2017, despite record beef exports. Rempe said that's because there were more head of cattle in the state in 2018.
"What that tells me is but for those extra exports that we had, we would have seen a bigger reduction in the price of cattle than we saw [in 2018]," he said.
The study also breaks down export values at the county level. Unsurprisingly, counties with the highest value have high concentrations of corn and beef production. These include Custer County at more than $175 million, Cuming County at more than $167 million, and Platte County at more than $166 million.
These numbers are not meant to denote exact dollar amounts for county exports or per-farm value, and Rempe noted there are a number of caveats involved in calculating these amounts. However, he said, "It gives an indication of the magnitude of the importance of trade to our local communities."
Estimated top export commodity by county, 2017.
Trade policy 'to-dos'
The Farm Bureau also compiled a "to-do" list for national policy by the end of 2019 and the start of 2020:
Passage of the U.S.-Mexico-Canada Agreement. On Tuesday, Nebraska Farm Bureau and other ag organizations applauded the advancement of USMCA by the U.S. House of Representatives, and urged swift ratification of the trade agreement.
"You look at the new markets that will be available for U.S. dairy, wheat and poultry producers. You combine that with updating and adding in a new biotechnology title, and fixing some sanitary and phytosanitary issues," said Jordan Dux, director of national affairs at Nebraska Farm Bureau. "More importantly, the agreement preserves the free market access that we've had to two of our closest and most important trading partners."
Finalizing a trade deal with China. Earlier this fall, President Donald Trump announced "phase one" of a trade deal, in which China would commit to purchasing as much as $40 billion to $50 billion worth of U.S. agriculture exports. Phase one also would involve a pause in tariff escalation.
"As we continue to travel around and talk to farmers, time and again, they will tell you they understand this trade dispute with China is about a lot more than soybeans and hogs," Dux said. "It is about larger things, like intellectual property theft. It's how China deals with their trading partners. At the same time, it is about soybeans, and it is about hogs. It is about agricultural products, and it impacts farmers and ranchers. So what we'd like to see is a trade agreement passed and signed to put an end to the tariffs that are placed on U.S. agricultural products."
Continuing efforts to find new markets. "We are very thankful for the administration in getting an agreement with Japan. That is a big deal for Nebraska," Dux said. "It's a big deal for beef producers where our beef going into Japan was subject to a nearly 40% [38.5%] tariff. This puts us on an even playing field with some of our larger competitors as it comes to Japan. Australia and Canada had access to Japan via the new CPTPP [Comprehensive and Progressive Trans-Pacific Partnership] agreement."
The U.S.-Japan trade agreement brings the tariff down to 9% over a 15-year period.
However, beyond Japan, there's more the U.S. needs access to, Dux added. That includes other CPTPP member nations, the European Union and India.
Continuing a rules-based trading system like that of the World Trade Organization. On Dec. 10, two judges that serve on the appellate body, which works through the WTO's dispute settlement process, ended their terms — leaving the WTO without enough judges to rule on trade disputes. First the Obama administration, and now the Trump administration, has delayed appointing new judges to the appellate body until reforms take place.
Dux said several reforms are needed to the WTO system, including a quicker dispute settlement process, new rules that address trade issues with China, and reformed rules for how the WTO governs developing countries.
At the same time, Dux added, a rules-based system needs to continue.
"The dispute settlement process has been unbelievably beneficial to the United States, has been very beneficial to agriculture," he said. "The United States wins 80% to 90% of the cases we bring in front of the WTO. A lot of those are based in agriculture. Having rules and having everyone play by the same playbook is unbelievably important. That's why we need to see the WTO continue."