Texas ag exports, economic gains revealed in CAFTA-Dominican Republic study

The 2006 economic impact of Texas agricultural exports from the Central American Free Trade Agreement-Dominican Republic has led to more than 2,400 jobs and $185 million in business activity, according to a new study.

Texas grains, cotton, beef, poultry, dairy and fruits and vegetables are benefiting the most from exports resulting from the agreement. Economic impact was measured by business activity, which includes the value of exports and all purchased inputs required to support the production of exports. Employment was measured by full-time equivalent jobs required to support exports.

The study was conducted by the Center for North American Studies, part of the Texas Agricultural Experiment Station, Texas Cooperative Extension and the Department of Agricultural Economics at Texas A&M University.

"In the future, however, as CAFTA-DR evolves into a more value-added product market, it's likely that exports of processed foods, snack foods, beverages and consumer-ready items will increase," said Dr. Parr Rosson, center director and Extension economist. "These exports will be important to Texas because additional business activity and employment will be needed to support production."

The U.S., along with Central America and the Dominican Republic, began implementing the agreement in 2006. The agreement includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.

Business activity resulted in a $73.9 million impact on non-agriculture sectors of the Texas economy, Rosson said. Those ranged from energy to wholesale trade to real estate to trucking.

The study indicates some 2,415 jobs were required to produce agricultural products exported to the trade agreement countries.

"Approximately 1,414 jobs were required for grain production, followed by 237 for cotton, 176 in all other agricultural products, and 167 for agricultural support activities," Rosson said.

An additional 588 jobs from the non-agricultural sectors of the Texas economy were required to support state exports, Rosson said.

Income from all sources of Texas exports to CAFTA-DR countries was estimated at $81.5 million with more than half in the non-agricultural sectors and the remainder concentrated in grains and cotton.

According to the American Farm Bureau Federation, its estimated that CAFTA-DR will increase the value of total U.S. agricultural exports by $1.6 billion after full phase-in, Rosson said.

At the end of the 20-year implementation period, increased sugar imports could reduce the U.S. net export gains attributed to the agreement by about $181 million, resulting in a net gain in U.S. agricultural exports to these countries of approximately $1.4 billion.

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