New trade agreements with Mexico, Canada and China have lifted the spirits of Nebraska farmers and ag leaders after a year of destructive weather, high property taxes, low commodity prices and government payments to make up for the loss of markets because of trade disputes.
On Thursday, the Senate passed the trade agreement between Mexico, Canada and the United States. The state’s corn organizations, one of the biggest beneficiaries of improved trade relations, applauded the Senate passage.
“Ever since President Trump announced his intent to withdraw from NAFTA, one of our top priorities has been a modernized agreement that continues to have a positive impact on Nebraska agriculture,” said Dan Nerud, president of the Nebraska Corn Growers Association and farmer from Dorchester.
David Bruntz, chair of the Nebraska Corn Board and farmer from Friend, said because of the trade agreement, “Nebraska’s corn farmers and ethanol producers will continue to have access to our biggest and most dependable markets.”
Mexico and Canada are Nebraska’s two largest trading partners and account for nearly 45% of all exports from the state in 2018.
According to the Nebraska Department of Agriculture, Nebraska’s total ag exports to Canada and Mexico equate to $1.46 billion, with corn exports totaling more than $402 million, ethanol at $96 million and distillers grains at $27 million. Mexico leads the way as the single country that imports the most U.S. corn and distillers grains. Canada is the No. 2 customer for ethanol and distillers grains.
Gov. Pete Ricketts said the approval of the trade agreement “ensures Nebraska will have the opportunity to grow our relationship with Canada and Mexico, two of the most important markets for our ag products.”
Sen. Ben Sasse said the trade agreement is a “huge win for Nebraska agriculture.”
“We’ve fought long and hard to get here,” he said. “This trade deal is going to help provide the stability to go strong. With the USMCA, our state is open for business. Nebraska is going to keep feeding the world.”
Sen. Deb Fischer, a member of Senate Agriculture Committee, said, “Nebraska’s families, ag producers, and manufacturers depend on access to Canada and Mexico, our state’s two largest export markets. I am happy that Congress got this deal done and look forward to President Trump signing it, securing great opportunities for Nebraska.”
When including both Nebraska agricultural and manufacturing trade, Fischer said. the value of total Nebraska exports to Mexico and Canada in 2018 was $3.5 billion as more than 300 Nebraska manufacturing firms depend on exports to Mexico and Canada. In 2018, Nebraska exported $2.2 billion in manufacturing goods to Mexico and Canada.
The U.S. and China has also reached the first phase of a trade agreement with China. Steve Nelson, Nebraska Farm Bureau president, said the agreement is a “critical step forward in stopping escalation of the trade dispute with what has been one of our largest trading partners and purchasers of Nebraska agricultural commodities; particularly Nebraska soybeans.”
Nelson said the deal opens the door for the U.S. to regain a foothold in Chinese markets.
“Make no mistake, there’s a lot of ground for the U.S. to make up,” he said. “Our diminished access created cracks allowing many of our global competitors to make inroads into China. While we’re still learning about the full provisions, there appears to be much promise in this deal for agriculture. We are extremely hopeful the excitement around the agreement is validated by the Chinese in the form of significantly increased purchases of U.S. and Nebraska agricultural commodities and products moving forward.”
According to Nebraska Farm Bureau:
— Chinese purchases of U.S. agricultural products average just over $25 billion per year between 2014-2017, with Nebraska agriculture exports to China averaging just under $1 billion between 2015-2017 (i.e. the years prior to the start of trade disruptions).
— In 2018, Chinese purchases of U.S. agricultural products fell to $13 billion and through November 2019 equaled $15 billion.
— According to the American Farm Bureau, the U.S. lost agricultural export sales to China over the last two years of nearly $16 billion. The two-year decline in soybeans and oilseed products accounted for more than $11 billion of the losses followed by grains and animal feed losses of nearly $2 billion.
According to the National Farmers Union, as the result of the agreement with China, China will increase its purchases of American goods and services by at least $200 billion over the next two years. This includes $32 billion worth of agricultural products over an established 2017 baseline of $24 billion, bringing the annual average to roughly $40 billion.
Under the agreement, China will make a number of changes to facilitate these purchases. It has removed barriers that have previously hindered the importation of American products like beef, pork, poultry, seafood, dairy, rice, potatoes, blueberries, barley, avocados, alfalfa, hay, distillers grain, infant formula, and pet food. Additionally, the country will accelerate its approval of agricultural biotechnology traits, which currently takes between five to sevent years. Under new regulations, the process will be shortened to about two years.
Rep. Adrian Smith, said that the first phase agreement with China is a “positive first step toward addressing one of our biggest trade challenges.”
“We must be vigilant in ensuring China follows this agreement, as we continue to fight for free and fair treatment of Nebraska products,” he said.