Are trade agreements like NAFTA a good thing for farmers?

January 19, 2018

Answer: Farmers benefit from trade agreements by exporting food to other countries. Large companies also benefit by providing jobs and generating revenue.

A hot topic of discussion these days is whether America should participate in new trade agreements like the Trans Pacific Partnership (TPP) or stay in current agreements such as the North American Free Trade Agreement (NAFTA).

Trade agreements are generally made between countries to reduce taxes and tariffs, help increase exports, and reduce the cost of imports. Exports have always been important to U.S. farmers and trade agreements further enhance exports.

American farmers are blessed with good soils, especially in the Midwest. We also have a thriving livestock industry able to produce high quality meat and dairy products at a low cost. Couple that with great infrastructure like roads, railways, and river systems with several ports around the country for efficiencies of trade.

We can provide plenty of food and fiber for our own country, but also are able to provide a large amount to the rest of the world. Trade agreements help move those products.

Trade agreements with other countries reduce or remove high tariffs on our products making them more affordable to consumers in those countries allowing us to move more products.

28% of pork, 28% of poultry and eggs, 25% of grains, 15% of beef and 10% of dairy in the U.S. is exported.

As farmers produce more products, more will need to be exported. Keep in mind that 95% of global food consumers live outside the U.S.

But it is not just farmers that benefit from trade with the rest of the world, large companies that provide good paying jobs to tens of thousands of employees like John Deere, CATERPILLAR, and ADM benefit as well. According to John Deere, nearly 40% of the company’s revenues come from sales outside the U.S. and Canada and 27% of products at their large equipment facilities here in Illinois and Iowa are exported. ADM not only owns processing plants producing ethanol, sweeteners and soybean meal, they help market grain from U.S. farmers to over 160 countries worldwide.

NAFTA means a great deal to Illinois farmers. Nearly one-third of Illinois ag exports go to NAFTA partners (Mexico & Canada).

It has been estimated that if the U.S. was to abandon NAFTA, Illinois farmers would receive $18.30 less per hog raised, $71.65 less per steer raised, 30 cents per bushel less of corn raised and 15 cents per bushel less of soybeans raised. Farmers are not the only ones who lose¸ Illinois ag exports to Canada and Mexico support over 34,000 jobs.

Agriculture has always been a large part of America’s economic engine. Good trade agreements can keep that engine running strong.

Carl Heide – Fourth generation hog and grain farmer, DeKalb

Sources: ERS and FAS/USDA, US Grains Council, US Meat Export Federation, US Poultry & Egg Council, Illinois Farm Bureau