A letter sent to US President Donald Trump last week by 130 ag associations and food companies touted the benefits of the North American Free Trade Agreement (NAFTA) as tensions flare with Mexico.
The letter comes in response to Trump’s pledge last month to renegotiate the trade deal between the US, Mexico and Canada, as well as his floating of up to a 35 percent border tax on goods coming from Mexico.
US food and agriculture exports to Mexico and Canada have more than quadrupled since the implementation of NAFTA, growing from $8.9 billion in 1993 to $38.6 billion in 2015, according to the letter, which came from companies including Cargill and Tyson Foods, and industry bodies representing a range of crops, grains, dairy products and meats.
“Although some important gaps in US export access still remain, increased market access under NAFTA has been a windfall for US farmers, ranchers and food processors,” the organizations wrote.
As tensions escalate, fear may be growing among US ag groups that Mexico will retaliate by imposing tariffs and other sanctions that could stunt exports to the US’s southern neighbor. This comes amid Trump’s ongoing attempts to force Mexico to pay for a border wall and follows his previous suggestions that the country is pushing its “criminals, drug dealers, rapists” into the US.
Exports are particularly crucial for US farmers following a global slump in crop prices, which has pushed incomes down considerably. Net cash farm income and net farm income declined in 2016 – by an expected 14.6 percent to $90.1 billion and 17.2 percent to $66.9 billion, respectively – for the third consecutive year, according to USDA numbers.
The latest outlook on agricultural trade from the US Department of Agriculture forecast a nearly 30 percent jump in the US agricultural trade surplus from $16.6 billion in fiscal year 2016 to $21.5 billion in 2017. The organizations behind the letter seem intent on keeping that way, noting that US food and agricultural exports have produced a trade surplus for nearly 50 years.
“Consistent growth over this period resulted in over $130 billion worth of exports, which created $423 billion in US economic activity in 2015,” they wrote. “These growing exports have increasingly become a vital share and important source of value to US production.”