Farm Bureau Leaders Hail Trade Progress
Published: Friday, January 24, 2020
Farm Bureau leaders from Indiana and Michigan were pleased with progress on the two major trade deals week.
Last Wednesday, the United States and China signed a "Phase One" trade agreement that both countries say will lead to increased purchases of U.S. agricultural products by China.
"The phase one agreement is great news for Hoosier farmers, since China is one of Indiana's top trading partners," said Randy Kron, Indiana Farm Bureau president. "Strengthening our relationships with trading partners from around the world will bring certainty to the market for many of our farm families and the agricultural industry as a whole. Indiana Farm Bureau remains optimistic and looks forward to the ongoing discussions with China."
Michigan Farm Bureau President Carl Bednarski, who invited to witness the signing ceremony, called the opportunity to attend the event and represent MFB members an honor, adding that the formal signing of a Phase One agreement is widely viewed as an essential first-step to rebuilding a struggling U.S. farm economy.
"Michigan farmers are eager to get back to business in global trade—restoring our ability to be competitive in China is definitely welcomed news," Bednarski said, adding that Michigan farmers are ready to put the trade war and retaliatory tariffs in the rearview mirror. "We encourage the Trump administration to continue building on the success of this Phase One agreement and aggressively pursue a full trade agreement with China."
The deal, reached in December, reportedly calls for China to buy $40 billion to $50 billion worth of U.S. agricultural products and a total of $200 billion of U.S. goods annually, over the next two years.
Those purchase requirements, Bednarski said, could be particularly good news for Michigan agriculture, known for its diversity.
"China's top five imports from the world, in order, include soybeans, followed by dairy products, fruit, beef and prepared foods," he said.
The agreement takes effect in 30 days.
Last Thursday, the U.S. Senate passed the U.S.-Mexico-Canada trade agreement by a vote of 89-10 (see related article). According to the American Farm Bureau Federation, the USMCA is expected to result in a $65 billion increase in gross domestic product. Canada will increase quotas on U.S. dairy products, benefitting American dairy farmers by $242 million. Canada will also treat wheat imports the same as domestic wheat for grading and pricing.
"Today's passage of USMCA is welcomed news for Hoosier farmers, especially considering how challenging 2019 was for agriculture," said Randy Kron, Indiana Farm Bureau president. "The trade deal benefits family farms because it brings certainty to Indiana's trade relationship with our North American partners."
Michigan Farm Bureau's Ernie Birchmeier, dairy and livestock specialist, said every dollar in export activity from Michigan generates another $2.87 in economic activity.
Birchmeier noted Michigan's dairy farmers will have new market opportunities in Canada for a wide variety of dairy products, as Canada has agreed to eliminate the Class 7 milk pricing program that allowed its farmers to undersell U.S. producers, along with self-imposing export surcharges on dairy products that exceed established thresholds.
"Finalization of USMCA is great for Michigan agriculture and is a positive upgrade from the previous North American Free Trade Agreement," said Birchmeier. "NAFTA has been in existence for over a quarter century and an upgrade was certainly needed. Our farmers don't farm the way they did 25 years ago, we produce different products than we did back then, and technologies have changed dramatically.
"Nearly a third of U.S. ag exports go to our neighbors in Canada and Mexico and it's critical we operate on a level playing field where trade is truly free and fair between the three countries. Ninety-five percent of the world's population lives outside of the U.S. and access to those customers is imperative to a strong ag economy. Given the proximity of Canada and Mexico to the U.S., it only makes good business sense that we have trade agreements that are current and allow for strong trade relationships. We are excited about the final passage and the opportunities that exist."
President Trump is expected to sign the USMCA soon after returning home from a trip to Europe.
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