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USDA making sure administration getting the message on NAFTAUSDA making sure administration getting the message on NAFTA

Global economic improvement could be impaired by trade disputes.

Forrest Laws 1

January 23, 2018

4 Min Read
George LaCour, left, producer from Morganza, La., talks with Robert Johansson, chief economist for the U.S. Department of Agriculture, following Johansson’s speech at the National Conservation Systems Cotton and Rice Conference in Memphis, Tenn.Forrest Laws

Trump administration officials should be aware of the importance of the North American Free Trade Agreement to U.S. producers who ship major quantities of corn, cotton, rice and soybeans to Canada and Mexico.

The question is whether the economic concerns of farmers will outweigh those of the manufacturing sector who believe NAFTA has given an unfair advantage to products such as auto parts made in Mexico.

“Certainly, the secretary has been clear on how important NAFTA has been to agriculture,” said Robert Johansson, chief economist at USDA, referring to Agriculture Secretary Sonny Perdue. “We’re hugely integrated with both Canada and Mexico whether we’re talking about the livestock markets or the commodity markets.”

Dr. Johansson, who spoke at an awards luncheon for the National Conservation Systems Cotton and Rice Conference in Memphis, Tenn., said the Office of the Chief Economist has provided detailed information on NAFTA’s importance to agriculture to the Office of the U.S. Trade Representative, which is leading the effort to renegotiate the trade deal with Canada and Mexico.

Ag Has Big Footprint

“Of course, trade negotiations as big as NAFTA are going to account for all commodity sectors and not just agriculture,” he said. “If you look at just straight value-added from production, it’s only 1 percent of U.S. GDP (gross domestic product). But when you account for all the food manufacturing and all those jobs, it has a much bigger footprint than primary ag production.

“We’ve been putting together a lot of statistics, so the negotiations are based on the best data available that reflect the importance of agriculture.” (The sixth round of negotiations between representatives of the U.S., Canada and Mexico were scheduled to begin in Montreal on Jan. 21.)

Farm organizations have become increasingly concerned about President Trump’s statements threatening to withdraw the United States from NAFTA, even though Mexico is one of the largest customers for U.S. corn, cotton, rice and soybeans.

On Jan. 18 more than 30 ag-related business groups created a new alliance called Americans for Farmers & Families, which will be aimed at stressing the importance of the North American Free Trade Agreement to the president and the Congress.

In an earlier speech at the National Conservation Systems Cotton and Rice Conference, U.S. Rice Producers Association President and CEO Dwight Roberts urged conference participants to talk to Dr. Johansson about the importance of preserving the agricultural provisions of the trade agreement.

“NAFTA we hafta,” said Roberts. “It’s that simple. The U.S. rice industry cannot afford to lose the favorable treatment given to our rice by the government of Mexico.”

Roberts said President Trump’s comments denigrating NAFTA in a speech before the American Farm Bureau Federation in Nashville, Tenn., earlier in the week, “scare me. There is nothing better going on for the commodities we grow than NAFTA. We are very fortunate that we are next door to Mexico, a country of 120 million people that buy so much of our commodities. For rice it is the No. 1 market in the world.”

Double Duty

Dr. Johansson has been doing double-duty at USDA, serving as acting deputy undersecretary of Farm Production and Conservation in addition to his role at the Ag Department’s chief economist. The administration’s choice to be undersecretary of Farm Production and Conservation, Bill Northey, Iowa’s secretary of agriculture, has been held up in the Senate by Sen. Ted Cruz, R-Texas, because of a disagreement over the Renewable Fuel Standard.

He said USDA economists have been providing information about how trade volumes with Canada and Mexico affect different states and regions of the country.

“Some of the states down South are big NAFTA traders, and we’ve made sure those numbers are reflected in that material, as well,” Dr. Johansson noted. “We’ve been very consistent in pointing out how good NAFTA has been for agriculture.”

USDA has also been pointing out how some Chinese price support programs have been harmful to different segments of U.S. agriculture. The People’s Republic of China has allowed the country’s reserve stocks of corn and cotton to build to levels that have had negative impacts on world prices for both crops. China’s auctions of reserve stocks have only recently begun to help U.S. cotton futures move closer to profitable levels for U.S. producers.

USDA economists are predicting increases in U.S. and world GDP as economic conditions improve. “What would help the outlook for commodity prices?” Johansson asked. “Any improvement in world economic activity. Of course, that could be offset by the uncertainty over trade agreements such as NAFTA.”

About the Author(s)

Forrest Laws 1

Director of Content, Farm Press

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