By Brooks Johnson.
Star Tribune (via TNS)
When Land O’Lakes CEO Beth Ford urged the Biden administration to help boost ag exports last fall, the country was headed for its worst agricultural trade deficit on record.
It got worse.
The U.S. imported $20 billion more in agricultural goods than it exported last year, a striking reversal from a longstanding trade surplus as the fallout from President Trump’s trade war with China continues to hurt American farmers. Brazil continues to gain market share selling corn and soybeans to China, and global trade alliances shifted during years of supply chain troubles.
Pandemic disruption may be partly to blame for the lost exports, but the trade war caused lasting damage to America’s trade relationships.
“In addition to the loss of billions suffered by American farmers and higher food prices in China, the trade war has altered production and trade structure of soybean and other agricultural products,” according to a 2022 review in the Georgetown Journal of International Affairs. Minnesota produced $4.3 billion of soybeans last year.
The U.S. Department of Agriculture predicts an even larger trade deficit this year — $30 billion — as exports fall and imports continue to climb.
“Alarm bells are going off,” said Tina May, Land O’Lakes chief of staff.
Ford, a member of the President’s Export Council that advises the executive branch on international trade, pitched four ideas backed by dozens of ag trade groups to rejuvenate exports.
“In total, the food and agriculture sector exports about 20% of production,” she told the council in November. “This proposal puts us in position to reclaim and retain our lead. These recommendations focus on a continuation of the United States’ leadership amid a dynamic and disrupted global environment.”
The export council unanimously approved the four recommendations, which includes greater federal collaboration to encourage domestic production of crop inputs like fertilizers; creation of an ag trade agenda aimed at expanding promotion of various goods while eliminating tariffs and trade barriers; enforce existing trade agreements and improve the process for resolving disputes; and to lead on international sustainability and climate efforts that emphasize “voluntary, incentive-based programs.”
May spoke with the Star Tribune about the importance of boosting farm and food exports. The conversation was edited for length.
Q: The U.S. agricultural trade deficit exploded last year. What happened?
A: Put simply, we imported more than we exported. Ag trade has been plateauing. For the first time in the last 10 years, we have an ag trade deficit, and it’s now topping over $30 billion.
Some of this stems from supply chain challenges during (the COVID-19 pandemic), when some of the supply chains got reset. And what you see is some trading partners stepping in where they didn’t historically. So for example, the United States lost our status as the top exporter on a couple of big commodities to China. Brazil overtook us, and that is going to be hard to get back.
Q: What is so important about making sure we export more than we import?
A: One in four rows of corn, one in three rows of soybeans, 18% of domestic milk production and 27% of pork production is exported. And 95% of consumers are outside of the United States. That’s fundamentally why this issue is so important: So United States farmers have market access for the goods that they may grow.
Q: The plan has some pretty high-level policy priorities. Can you give an example or two of what this can look like in practice?
A: This allows USDA to have a bigger seat at the table when it comes to talking about trade, negotiating trade deals. And we felt like that was critically important. Now, USDA has done a good job, they’ve taken steps where they can on trade promotion. But some of this is around the edges. We need both Congress and the administration to work together on market access for agriculture.
One of the things that is a bit of a bright spot is how the Minnesota delegation is working together on this issue. It’s very bipartisan.
There are a couple of trade promotions included in the farm bill — we need to get the farm bill done.
Q: When it comes to Land O’Lakes, how much of your business depends on international trade? And what members and parts of the cooperative are most impacted?
A: It’s about market access for all growers. If you talk to local co-ops, they’re constantly thinking about export markets. You’ve got local co-ops that built infrastructure to get commodities to the export market, to get grain to the river for barge, to build a shuttle loader to get 111 rail cars to a port to get on a ship. It matters more than folks think.
For Land O’Lakes we don’t invest in infrastructure like that, like CHS does, for example. But for us, it’s about positioning our farmer-owner-members to allow them to have that market access. Land O’Lakes was started in 1921 by 100 farmers that got together here in the Upper Midwest, for the purpose of market access to population centers on the East Coast. You know, here we are 102 years later, and it’s the same issue.
Q: Food prices are top of mind for most consumers coming off some pretty wild inflation. How does trade policy affect the cost of food at the grocery store?
A: Both imports and exports, it all matters so much, and we saw during COVID how those supply chains getting reset impacted everything — and how these additional costs go into the price of food on the shelf.
Sen. Amy Klobuchar had our trade ambassador in Minnesota for the State Fair, and they talked about inflation while eating corn dogs and how trade was so important to that.
Q: Anything else to add?
A: The importance of this issue is in national security. Some of those trading partners have really shifted in the past couple of years, which is why this deficit is increasing and so important. With the United States now not being the largest trading partner to some of these countries, who is? And what does that mean for relationships globally? And if we’re not stepping in, it’s leaving the playing field open for another country or another actor to step in and provide that economic opportunity to that country. And what does that mean more broadly?
©2024 StarTribune. Visit at startribune.com. Distributed by Tribune Content Agency, LLC.
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Tags: Small Business
