USDA predicts that ag exports will hit a record high of $157 billion dollars this year.
During the USDA Agricultural Outlook Forum, agency leaders share the latest developments impacting trade. USDA’s Trade and Foreign Affairs Council explained why global markets are critical for agriculture.
According to the Council’s Jason Hafemeister, “The share of our production that goes overseas is quite large for some crops like wheat, soybeans, and rice. Half of what we export goes overseas. If we can’t sell it overseas, that product will sit on the domestic market, that will weigh down on the prices that our farmers receive, that will discourage investment, that will discourage production, that will have a negative economic effect on rural America. So, finding markets, growing markets, keeping them open is critical for the health of our sector.”
He says that China continues to be a key market, despite a lackluster purchase record under the Phase One agreement.
“When you see the effect that China has had on United States farmers, opening up the China market in the last 20 years has had. the biggest single effect that I can think of affecting profitability in U.S. agriculture,” he explains.
Hafemeister points to another Asian nation that could see potential for growth: “India is the first one that comes to mind. A billion people there, real challenges in terms of agricultural production, growing economy, lots of trade barriers, our current export performance there is relatively poor, but you could imagine if we had a straight shot to the Indian customer we would see another really big surge in demand for our product.”
The administration is also keeping an eye on non-tariff barriers that limit exports. He says that Mexico is one area of concern, despite being a top trading partner.
“There are a bunch of signs on the horizon that some change in domestic policy in Mexico could have large trade implications, and this gets to technology issues, things like crop protection, ability to use certain chemicals, ability to use bio-tech products, it gets to registration and product access issues, where sometimes Mexico is setting domestic standards in a way that it is making it hard for our product to get in, and turns out some of their product is still able to be sold,” he adds.
He goes on to say that climate policy could also impact trade agreements, and expects the Biden administration to work closely with WTO member countries to develop a global trade strategy.