Trade Vital to Rebound of Ag Markets

tpp

To say farmers are feeling the pinch of poor crop prices would be a bit of an understatement. Grain prices are hitting rock bottom while inputs and operating costs remain largely unchanged. Beef prices haven’t kept pace with cattle prices and milk producers are facing record low payouts for their product. For farm families across the Midwest, positive yields on wheat and corn are helping to soften the financial blow but the decline in income is noticeable and albeit painful.

Kansas is one of many states largely dependent on the output of the farming sector, making up more than 43 percent of its total value. When farming income falls, the impact is felt across multiple industries and economic sectors. Recent reporting has indicated that farmers have already started backing off implement purchases and other non-essential farm additions are being put on hold. Local banks are seeing a rise in demand for gap funding to help farmers move from one harvest to another; and let’s not forget the truck dealers and ATV/off-road vehicle manufacturers who count on the agriculture industry for a large portion of their sales. There’s also the fertilizer, vaccine and feed manufacturers, all likewise feeling the impact of a downturn in farm income.

There is hope, however, for an uptick in prices and agriculture sales. This winter Congress is expected to revive talks of proposed trade agreements that would include improved international marketing opportunities for the agriculture industry. A total of 12 countries, including Japan and much of Southeast Asia, can all become new and bigger buyers of Kansas’ grain and American-grown products with the passage of the bi-lateral Trans Pacific Partnership (TPP). The American Farm Bureau Federation estimates that if the TPP were fully implemented, net farm income would increase by more than $4 billion, a direct effect of an additional $5.3 billion per year in agriculture exports.

The state of Kansas is estimated to realize $213.7 million in net exports, made up predominantly of soybeans and beef, which would translate into $303.7 million in new cash receipts for farmers and ranchers. Increased marketing opportunities and simplified export rules would create new markets for products already grown in the U.S. and translate to thousands of more jobs in the agriculture, and related sectors. Without the ratification of the TPP agreement, the U.S. will quickly be left behind as other countries negotiate trade deals to bypass American-made goods and products. That would likely further dampen prices and put a long-term lid on agriculture exports.

Nearly 95 percent of the agriculture industry’s consumers live outside of the U.S. so it is important that the government continue to look outside its own borders for new markets and end users. The President and federal negotiators have already laid the groundwork for the TPP but it is up to Congress to ratify the agreement and allow the proposal to move into reality. Trade is important to many sectors of the nation’s economy but few have the ripple effect and sizable impact of agriculture. Farmers across America work everyday to grow safe and affordable products to not only feed their family, friends and neighbors but to provide necessary and vital food products for millions of families across the globe.


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