Editor’s note: Several Iowa farm groups recently sent a letter to President Donald Trump and his administration asking officials to maintain and expand upon the ag sector gains achieved in the North American market, specifically with the North American Free Trade Agreement.Over the past two decades since NAFTA was put into place, U.S. agricultural exports to Canada and Mexico tripled and quintupled, respectively, according to the U.S. Chamber of Commerce. Iowa farmers want to continue to serve this important international customer base and further expand their export opportunities. Trump says he intends to renegotiate NAFTA and other trade agreements the U.S. has with foreign nations.
The following letter was sent to Trump by the Iowa Corn Growers Association, Iowa Soybean Association, Iowa Pork Producers Association, Iowa Cattlemen’s Association and Iowa Farm Bureau.
Dear President Trump:
First, we would like to congratulate you on your recent inauguration. We look forward to working with you and your administration in the coming years to ensure that rural America, and in particular the farmers of Iowa, are economically viable and globally competitive. For Iowa agriculture to thrive, we need trade agreements that recognize how important it is that the U.S. meat and grain industries, including beef, pork, corn, soybeans and biofuels, have market access at a competitive level in North America and across the globe. As organizations, we are committed to working with you and your administration going forward on ways to both preserve and expand upon agriculture sector gains achieved in the North American market.
Since its passage more than two decades ago, the North American Free Trade Agreement (NAFTA) has profoundly changed North American agriculture. NAFTA has eliminated nearly all tariff and quota restrictions in agriculture resulting in an integrated system between Canada, Mexico and the United States. This has propelled these countries to the top of the U.S. list in importance for agricultural trade.
• Mexico is the No. 1 market for U.S. corn and the No. 2 market for U.S. distillers dried grains with solubles (DDGS). Canada ranks as our ninth-largest customer for U.S. corn, DDGS and ethanol. All told, U.S. exports of corn to Mexico and Canada totaled more than 14 million metric tons in the 2015-16 marketing year: a value of $2.68 billion. Exports of DDGS to Mexico and Canada have risen exponentially in the tenure of NAFTA from 55,000 metric tons (valued at $7.8 million) in 1993-94 to 2.4 million metric tons (valued at $456.2 million) in marketing year 2015-16. In the recent marketing year, Canada remained the top market for U.S. ethanol, while Mexico was the 10th largest customer. Exports of ethanol to Mexico and Canada have risen substantially from 3.5 million gallons (valued at $6.9 million) in 1993-94 to 263.5 million gallons (valued at $654.6 million) in marketing year 2015-16.
• Mexico is the No. 1 market for U.S. soybean meal and oil, and the second-largest market for U.S. whole soybeans. During the 2015-16 year, Mexico imported 5.991 million metric tons of soybean products (including soybeans, soybean meal and soybean oil), valued at over $2.4 billion. According to the U.S. Soybean Export Council, Mexico is a growing soybean meal and oil market for the U.S. and will continue to be dependent on imports of oil seed products. Canada is the third-largest import market for U.S. soybean meal and in the top 10 for soybean oil imports. The absence of these markets would put significant downward pressure on soybean prices, which would in turn negatively affect income farmers would have to spend on manufactured goods, such as trucks, tractors, combines, implements, etc.
• Exports are vital to pork producers and to the financial health of the U.S. pork industry, totaling over $5.5 billion in 2015. Through the elimination of tariff and non-tariff barriers, pork exports to Canada have increased by more than 20 times since the implementation of the U.S.-Canada Free Trade Agreement in 1989. Pork exports to Mexico have increased more than 12 times since the implementation of NAFTA in 1994. The U.S. exported more than 718,000 metric tons of pork and pork products to Mexico in 2015, making it the largest volume market for U.S. pork exports. It is an especially important market for pork hams: by far the largest international ham market. Exports contribute significantly to the bottom line of all U.S. pork producers, adding more than $48 to the value of each hog marketed in 2015. Mexico and Canada are the industry's second- and third-largest foreign markets for pork, in terms of value, with U.S. exports totaling $1.26 billion and $778 million, respectively in 2015. Furthermore, pork exports to Mexico and Canada support more than 25,000 U.S. jobs. Disruption of the Mexican and Canadian markets would cause severe economic consequences for U.S. pork producers.
• For beef, Mexico and Canada are the U.S.'s second- and third-largest customers, respectively, in 2015, valued at $2 billion. It is a critical destination for rounds and other underutilized muscle cuts. We also ship large volumes of tripe, livers and other beef variety meat to Mexico, and if we cannot export these items, producers will receive little or no return on them in the U.S.
To give a specific example of how NAFTA has benefited the corn sector, prior to the agreement, Mexico maintained strict controls on grains via licensing requirements and provided guaranteed prices to their domestic producers of many field crops, including corn. Under NAFTA, Mexico transitioned to a system featuring duty-free trade with the U.S. and Canada, and rising demand for feed and food has created new opportunities for intraregional trade in grains.
Over the past 20 years, U.S. agricultural exports to Canada and Mexico tripled and quintupled, respectively. One in every 10 acres on American farms is planted to feed our neighbors to the north and south. And with the U.S. farmer's productivity on the rise, outpacing domestic demand, we are dependent that these markets continue to grow, or even harder economic times await Iowa farmers. Based on a U.S. Department of Agriculture estimate, for every $1 of agricultural exports, another $1.22 is generated in business activity. In 2015, U.S. agricultural exports to Mexico and Canada supported $47 billion in additional business activity.
As NAFTA is modernized, it is critical for the U.S. to defend this level of market access and maintain our duty-free access for U.S. grain and meat products. The U.S. ag sector is dependent on our North American intraregional system of trade. Iowa farmers want to continue to serve this important international customer base and further expand our export opportunities. We look forward to working with you and your administration to preserve and expand our competitive edge in agriculture as you improve this vital agreement.
Kurt Hora, President, Iowa Corn Growers Association
Rolland Schnell, President, Iowa Soybean Association
Curtis Meier, President, Iowa Pork Producers Association
Mike Cline, President, Iowa Cattlemen's Association
Craig Hill, President, Iowa Farm Bureau Federation
cc: Gov. Terry Branstad, Sen. Chuck Grassley, Sen. Joni Ernst; Congressman Rod Blum; Congressman Dave Loebsack; Congressman David Young; Congressman Steve King