Trade is Back
As we all realize, global beef trade is vital in the beef business, and that makes it very important to ranchers across the country. The projected increasing number of cattle in the U.S. in the next few years makes it even more important.
The Trump administration is having conversations on two trade agreements at the moment – the North American Free Trade Agreement (NAFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPA-TPP). To say the U.S. meat industry, all the way down to the beef producer in the hills, is concerned and watching closely is putting it mildly. But in reality, all in the agriculture community are very concerned and watching the administration’s action very closely. The whole agriculture industry and its future depend on expansion of trade into foreign markets.
If one takes the entirety of the agriculture and food industry in America, they drive close to 20 percent of America’s economy. Now, you know not only are beef, lamb and pork important, all of agriculture is essential. Food and agriculture products support around 22.8 million jobs in the U.S., totaling over $763 billion in wages annually. And the most important part, agriculture exports over $146 billion of its products. Just the meat sector, including beef, pork, sheep and lamb and poultry, exports over $135 billion annually.
President Trump said he wants to negotiate trade agreements on a bilateral basis. That is, he wants one-on-one conversations with each individual country. I have no idea if that will work, but if it doesn’t, America will get left behind in terms of trade, with higher tariffs to pay to get our products into other countries. As technology improves practices in farming, the number of and bushels of corn, wheat, soybeans and others increase, and with the expected increase in beef, pork and lamb, we will have to export these products to keep prices up. Overseas and in Mexico, the middle class is growing. They like the taste of better proteins and can afford them. Other countries need to get these proteins from America.
With the U.S. out of the Trans-Pacific Partnership, the 11 remaining countries will have some sweet deals with each other, unless the U.S. can also reach a deal with those 11 countries individually. That could be a little tough, especially if China gets involved.
Just take the meat exports to Japan from the U.S. as an example. The U.S. is subject to quarterly safe-guards, while other countries with trade agreements only have an annual safe-guard mechanism and lower tariff rates.
A country everyone is looking at these days is Vietnam, whose middle class is growing fast, and its people are looking for something to eat instead of a bowl of rice and a fish. To show the importance of Vietnam, China is building a large highway through the middle of Vietnam straight up to China. We can’t just sit back and give the whole trade deal to China.
I, like you, hope all of these trade deals work out for the U.S., especially in the beef trade business. The demand for U.S. beef, not only around the world but also here at home, is a story not soon forgotten.
Always remember, opportunities are never lost. The other fellow will always take those that you misplace.
