- 7 weeks ago
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00:00This is a story about not making things worse.
00:03As the U.S., Mexico, and Canada negotiate over continuation of their three-way trade agreement,
00:08U.S. farmers look on with apprehension.
00:11They've already been hit hard by troubled export markets elsewhere in the world, particularly to China.
00:19Our farmers are true patriots.
00:24Because China and others have targeted China.
00:30Had others, remember this, have targeted our farmers.
00:34In rural Iowa, Stu Swanson has just planted his 34th and likely most challenging crop.
00:42Unfortunately, the clock is ticking on us.
00:45We're at this point where we need to get a plan going forward or the operation may come to an
00:50end.
00:51In my farming operation, I would do anything I had to keep it alive.
00:56I would go find another job.
00:58I would downsize or upsize or whatever I need to do.
01:02But the heritage and the sacrifices that my parents and grandparents made, I don't want to be the generation or
01:10the person that fails and lets them down.
01:13It's something I think about daily.
01:16It's something I think a lot about in the dark of night that keeps me up.
01:19We have to find a way going forward, and we've kind of been operating on hope the last few years.
01:25That hope is starting to dwindle.
01:29Swanson is a corn, soy and pig farmer and on the board of the Iowa Corn Growers Association.
01:35We met him a year ago on his farm amid a tough period for the agriculture industry.
01:41A lot of farms, I understand, are actually cash negative.
01:45Are you cash positive?
01:48I haven't ran a number to tell you today.
01:51Certainly, we know that over the last three years, we've seen about a 30 percent decline in commodity prices.
01:58I think over that same time, we've seen the nine major crops all be underwater.
02:06So we are producing at a loss on the nine major crops.
02:10In the years since, conditions appear only to have gotten worse, even after a $12 billion aid package from the
02:18Trump administration.
02:19It's been a tough winter and spring.
02:21We've lost farmers in our neighborhood and across the state that took their lives because of the struggles they've seen.
02:28We've seen farmers that weren't able to get financing for the 2026 crop.
02:32And so, unfortunately, when we have low returns, at some point, the financing dries up.
02:41If U.S. trade policy overall has been rough on farmers, the one bright spot has been the USMCA,
02:47which has shifted exports from declining Chinese business to growing business with Canada and Mexico.
02:53Since 2023, China has slipped from the top export market for U.S. agriculture to third, with Mexico now top
03:01and Canada second.
03:03Since NAFTA to today, since it was inception to today, U.S. ag exports to Mexico and Canada have grown
03:11about 600 percent.
03:14Tom Halverson is the CEO of CoBank, which operates as a farm credit bank.
03:19The most important thing I can say about that is, you know, this has been a massive trade liberalization success
03:26in the agricultural sector.
03:28I'm not going to speak to autos or other industries and so forth.
03:31But from an agricultural perspective, it's been a tremendous success.
03:35Does that mean every single agricultural producer and every nook and cranny of the United States has benefited from it?
03:39No, that's not the way economics works, right?
03:42You have winners, you have losers.
03:44But the biggest number of winners, the biggest incremental value creation has come from the liberalization of these markets.
03:52To me, moving backward would be to reverse that trend, increase tariffs, increase market barriers,
04:01drive our closest neighbors and colleagues in Canada or Mexico to retaliate against us in a way that would harm
04:07our access to those markets.
04:08Just remember, these are the two largest markets for American agricultural exports in the world.
04:14They happen to be our closest neighbors and where we have the greatest ability to incrementally grow our volume.
04:22The more successful and the more prosperous Canada and Mexico, the more prosperous and successful is the United States in
04:29general,
04:30but particularly American agricultural producers.
04:32It's why both Halverson and Swanson value stability over all else as the USMCA comes up for review.
04:39They favor a 16-year renewal instead of potential annual reviews.
04:44From the point of view of an American farmer, taking a look at this renegotiation of USMCA,
04:49what's the best they might hope for and what's the worst they might fear coming out of the negotiations?
04:54I think the best that we can hope for here is we keep all the benefits that we have of
05:01the liberalization we've accomplished over the last 30 years,
05:03and then we add a little bit to it, right?
05:06So that over the next 16 years, if we get a push out for 16 years of a renewal,
05:13that would provide a great deal of stability and confidence for our agricultural producers to say,
05:19hey, this is a framework of trade that's going to last and be stable,
05:24and I'm not going to have any unexpected negative consequences for quite some time.
05:28Therefore, I can have some confidence in making long-term investment decisions, right?
05:33Because one of the things we're having difficulties and challenges with in certain sectors right now because of trade uncertainty
05:38is people don't know they're delaying making investment decisions, right?
05:42Because they don't know if that investment decision is going to be wise or not.
05:46If tariffs and the changes in their costs and ability to sell their product are going to be meaningfully affected.
05:52That suggests perhaps almost as important as the terms is the duration.
05:57Yes.
05:58Because you need that certainty if you're a farmer.
06:01I think it's fair to say that if we got a continuation with a little bit of small L liberalization
06:08somewhere,
06:09some benefits in dairy or some other place, but it was only for a year,
06:13and we were all told, well, we're going to do this year after year after year and definitely into the
06:17future,
06:18that would not eliminate or mitigate the problem that we have of long-term uncertainty.
06:22Because we're not building power plants with a 40- or 50-year life here.
06:26We are making lots of long-term investments.
06:28And that is oftentimes very significantly impacted by the trade regime.
06:34Right now, about 20% of our agricultural product in total has to be exported.
06:40We have no population growth in the United States right now.
06:43So the more agricultural productivity and output we have, it's not hard to recognize it.
06:49It's got to go someplace, right?
06:51And we're not going to consume it here in the United States.
06:53So the long-term future for U.S. agriculture, it can be defined as exports, exports, and more exports.
07:00In corn, one of the destinations for those exports increasingly is Mexico.
07:05It is the largest export market for U.S. corn.
07:09According to USDA data, the U.S. exported almost 4 million tons of corn to Mexico in the first two
07:15months of the year,
07:16an increase of around 11% from the same period last year.
07:20It's like 6.5% of the total production goes to Mexico alone.
07:25The two countries combined, when you look at corn and corn products, it's about 1.8 billion bushels of corn,
07:33which is the entire production of the state of Minnesota or, again, that carryout that we have.
07:38So if we don't have this relationship of the three countries, we're looking at doubling our carryouts
07:45and then finding a situation where we just simply won't be able to dig ourselves out of that kind of
07:50a hole.
07:50So it's a really, really big deal.
07:52It's the gold standard in my mind.
07:54It's something that we could replicate across the world.
07:58But despite it being the gold standard for U.S. farmers,
08:02America does run a trade deficit in agriculture with both Mexico and Canada,
08:06which could have the potential to be a sticking point for the Trump administration.
08:11Which we've had for three or four years now,
08:13it's the natural aggregation of the market forces and decisions of American consumers.
08:19You probably do like I do, and most people we know want to have, you know,
08:23fruits and vegetables we used to not get in the wintertime.
08:25Now we want them 365 days a year.
08:28That means we have to buy them and import them from other places.
08:31And the result of that is even though we're exporting more and more agricultural volume,
08:36we're also importing more.
08:37That has resulted in our agricultural balance of trade going negative.
08:42President Trump has long talked up his support from and for farmers.
08:47And earlier this month, he traveled to Wisconsin to meet with them.
08:50As president, I fought for the American farmer like no one has ever fought before.
08:54Nobody's like, I'm up here today.
08:56I don't need this.
08:57I got elected.
08:57I don't know.
08:58What the hell do I have to be here for?
09:00My personal judgment, what I do and what I encourage customers and people I talk to to do
09:06with all politicians, quite frankly, is, you know, listen carefully to what people say,
09:10but watch what they do.
09:11Watch what the results of the policies are.
09:14Try and understand what the intended results are.
09:17And then always watch extremely carefully and closely for what always happens,
09:22which is the unintended consequences.
09:23Because it's often the unintended consequences that are the most consequential and come at you
09:29from an unexpected perspective.
09:32And I think, you know, one of the places to look always for unintended consequences is,
09:38you know, when you think you have a very strong negotiating position,
09:43when you, you know, put tariffs on somebody and don't expect them to retaliate,
09:48and then they do.
09:48So, right, the unintended consequence of that is, well, they did.
09:52And now that's costing, you know, our producers or our industry.
09:55Be it a trade dispute with China putting a halt to soybean orders
09:59or the war in Iran driving up fertilizer costs,
10:02farmers have felt the brunt of those unintended consequences.
10:06I'm excited that President Trump has initiated lots of trade talks.
10:12I would like to see more details, and I would like to see the boats loaded and product moving.
10:16Unfortunately, it's not moving as fast as I would like.
10:20I think all farmers, when we hear about a trade deal,
10:23we expect that tomorrow we'll see the price go up
10:25and we'll see the products moving in our carryout going down.
10:28But we haven't seen that yet now because I think we're at a crossroads
10:33where we might need to look at farm policy a lot different than we have in the past.
10:38And this might be the time where we change direction on some of these things,
10:43including subsidies and payments.
10:44If we can utilize the benefits of the government in terms of trade and investment
10:49into new domestic uses to help find new markets for us,
10:53I think that's the way we have long-term success.
10:56This is the end of the line here pretty quick.
10:59I think we've seen the start of the loss of farmers permanently one way or another.
11:06I think that we could increase the speed of the change of agriculture.
11:10For corn farmers like Stu Swanson, the change needed may not be in the USMCA at all.
11:17They've seen their exports rise to both Canada and Mexico.
11:21What they need are trade deals with the rest of the world
11:24to restore export markets that they've lost.
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