Trade issues Logan Hawkes
Trade issues and appointment of a Secretary of Agriculture concern U.S. farmers.

Trade worries dim optimism for the new year

Trade and Secretary of Agriculture appointment remain concerns as President-elect Trump gets closer to Inauguration Day. Trans Pacific Partnership and North American Free Trade Agreements are key trade deals concerning farmers who depend on export markets.

 As the inauguration of President-elect Donald Trump gets closer, a few farmers and farm groups are quietly voicing concern over two escalating issues.

One is who will eventually be nominated as the new secretary of agriculture. While a number of names have been suggested and a few potential appointees vetted for the position, the fact that the position remains one of the Cabinet appointments still undecided has a few concerned, some wondering if agriculture is a priority for the incoming president.

Said to be in the recent running are a few familiar and even a few prominent names, including  former Georgia Gov. Sonny Perdue, Texas Agriculture Commissioner Sid Miller, three-term Idaho Gov. Butch Otter, Democratic Sen. Heidi Heitkamp (now considered a long shot), Kansas Gov. Sam Brownback, former Nebraska Gov. Dave Heineman, and Cuban-born Elsa Murano, former President of Texas A&M University (TAMU) who also served as USDA Under Secretary for Food Safety for the George W. Bush administration (2001-2004).

WORTHY CHOICE

Over the weekend, a Beaumont Enterprise editorial lauded the consideration of Murano as a qualified and worthy choice, but blasted the possibility that first time State Ag Commissioner Miller was even being considered for the post. The newspaper noted that before Murano was named TAMU's 23rd president, she served as A&M's Vice Chancellor of Agriculture and Life Sciences and then Dean of Agriculture and Life Sciences. Murano is expected to meet with Trump in New York later this week.

Regardless who ends up being nominated for the post, farmers say Trump's selection should provide a glimpse into what direction the new president will take concerning agriculture.  

"We don’t know who will be selected as the next secretary of agriculture. Although the secretary serves the president, this appointment will tell us something about the inclinations and directions likely to be pursued," said Andrew Novakovic, a professor of agricultural economics at Cornell University. "For example, the next secretary will likely be more focused on conventional, commercial agriculture, but it is hard to judge the balance between...large-scale and small-scale farms."

But of equal if not of more concern of who will be the next U.S. secretary of agriculture is an issue even closer to the hearts and pocketbooks of farmers and ranchers across the nation—the unstable future of critical trade agreements like the North American Free Tree Trade Agreement and the proposed Trans-Pacific Trade Agreement, which appears destined to fall by the wayside for lack of support by lawmakers and the incoming administration.

TRADE CONCERNS

It's no secret that most farmers and ranchers depend heavily on international trade to keep their operations stable. In spite of overall trade deficits, agricultural trade is the one area where the U.S. maintains a surplus. Over the last fiscal year for example, the U.S. exported nearly $130 billion in agriculture products while importing slightly more than $113 billion from trading partners.

What's more, U.S. ag exports are expected to continue to rise in FY 2017, this at a time when overall agricultural trade is expected to slow slightly internationally. While during the course of the new year almost every area of U.S. farming and ranching production is expected to benefit from trade increases, positioned to benefit the most are corn, wheat and soybean growers.

But like a pebble that can strike a windshield and cause a small ding that eventually shatters the glass, potential trade disputes can fester and grow and eventually lead to trade wars, even among significant and loyal trading partners. That could lead U.S. ag producers into a financial crisis. Producers could be forced to curtail production, even sell off land and assets in extreme cases, and refocus their marketing efforts to domestic markets.

While the likelihood of such a radical change seems remote, even renegotiating the North American Free Trade Agreement (NAFTA) with trading partners Canada and Mexico could have a devastating effect on the U.S. ag industry. And with campaign promises by president-elect Trump that NAFTA would be revisited if he were elected, concern among ag groups and producers is growing.

RISKY BUSINESS

Canada and Mexico represent the United States’ No. 1 one and No. 3 largest agricultural trade partners. U.S. ag exports to Mexico alone are expected reach $18.3 billion this year under the current NAFTA agreement. U.S. ag exports to Canada will top $21 billion in 2017, an expected $500 million jump over last year.

Renegotiating NAFTA could waylay those expectations if terms of the agreement are changed, and perhaps even if they are not. Even rumors of renegotiating the terms of the agreement could cause trade relations to become unstable, which in turn could cause a negative impact to U.S. producers. Hardest hit would be the U.S. beef, pork and poultry industries, and corn and soybean growers as well. In addition, exports of oilseeds, fresh vegetables and fresh fruits could suffer.

Of greater concern, perhaps, would be trade disruptions with China, who is expected to be become the largest U.S. trade partner in 2017. USDA projects U.S. ag exports to China will soar to new highs this year. But China has already expressed concerns over how president-elect Trump's policies will affect U.S.-China relations. Even before being sworn in, Trump has aggravated Chines officials with a telephone call to Taiwan and comments over the seizure of a U.S. underwater drone.

Analysts speculate that China's wait-and-see position on the Trump administration will include a close examination of his trade policy intentions.

Farmers and farm groups will also be watching.

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