Shane Commentary

      

Agricultural Community Concerned Over NAFTA

Apr 26, 2017

    

An article in the April 3rd edition of the New York Times by Kirk Semple highlighted the concern expressed by grain farmers over possible changes to NAFTA.

In 2016, the U.S. exported 13.8 million tons of corn to Mexico valued at $2.6 billion representing a unit price of $5.27 per bushel, far in excess of the CME domestic price.

  

Total agricultural exports to Mexico now exceed $18 billion annually including grains, dairy, poultry, beef and hogs. Tom Sleight, president and CEO of the U.S. Grains Consult noted “Soup to nuts:  corn, dairy, meat, specialty products, fruit – they are all pretty much gathered together.”  He added “the U.S. Grains Council and producers are seeking to remind the Administration of the importance of trade and specifically Mexico to Agriculture’s bottom line.” His concern was reinforced by the statement of Barbara Patterson, Government Relations Director for the National Farmers Union who opined “shutting off our borders or losing access to trading partners has farmers concerned.”

The NYT article quoted Todd Hultman a grains analyst at DTN as stating “It’s really hard to track with this President, the campaign rhetoric has really been over the top. But what actions are really going to come from the White House is still a mystery.”

The agricultural community still hopes that Businessman Trump rather than Idealist Trump will emerge as the predominant factor in renegotiating NAFTA. The farming community would endorse an approach to modify the Agreement, to produce a mutually acceptable update.

There is also concern in Mexico relating to sourcing grains. This has resulted in evaluation of alternative suppliers including Brazil and Argentina although this could prove even more expensive than sourcing form the U. S. An alternative approach would be to increase domestic production although this would require a profound change in land tenure an almost impossible objective. Domestic livestock production has been impacted by the cost of U.S. grain which is subject to an import duty benefitting the Government of Mexico to the detriment of consumers.