America’s farmers and ranchers received a second round of good news this week with Senate approval of the U.S.-Mexico-Canada Agreement (USMCA), a victory hailed by agricultural groups following the 89-10 Senate vote Thursday in favor of the trade agreement.
President Donald Trump is expected to sign the agreement next week. Mexico has already ratified the deal. Canada will be the last nation to consider the agreement when its Parliament returns from winter break on Jan. 27, 2020.
Canada and Mexico are the first- and second-largest export markets for U.S. food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018. These exports support more than 325,000 American jobs.
All food and agricultural products that had zero tariffs under the North American Free Trade Agreement (NAFTA) will remain at zero tariffs. Since the original NAFTA did not eliminate all tariffs on agricultural trade between the U.S. and Canada, USMCA will create new market access opportunities for U.S. exports to Canada of dairy, poultry and eggs, and in exchange, the U.S. will provide new access to Canada for some dairy and peanut products and a limited amount of sugar and sugar-containing products.
“This trade agreement comes at a critical time for farmers and ranchers, increasing optimism that we’ll turn the corner in 2020,” American Farm Bureau president Zippy Duvall said. “USMCA is an important step toward restoring the competitiveness of America’s farmers and ranchers, strengthening our trade relationships in North America and setting an example for agreements with other important trading partners.”
Poultry: “The U.S. meat and poultry industry exports $5.5 billion annually in products to Canada and Mexico,” North American Meat Institute (NAMI) president and chief executive officer Julie Anna Potts said. “This agreement is critical to meat and poultry processors and the millions of U.S. farmers, ranchers, allied manufacturers and transportation companies in the food supply chain.”
In 2018, the last full year for which data are available, Mexico was a $517 million market for U.S. chicken exports, with Canada totaling $352 million, the National Chicken Council said, with president Mike Brown noting in a statement, “USMCA will maintain or improve market access for chicken exports in our top two valued markets: Mexico and Canada.”
The National Turkey Federation added, “Mexico is the largest export market for U.S. turkey products, and securing this trade relationship is a leading priority for American turkey farmers and processors.”
Pork: NAMI noted that since NAFTA entered into force in 1994, pork exports increased in value from $322 million to more than $2.3 billion over the course of the agreement. In terms of volume, Canada and Mexico imported nearly 40% of all U.S. pork exports in 2017, which was prior to retaliatory tariffs. The National Pork Producers Council (NPPC) said a similar volume is expected in 2019. U.S. pork exports to Canada and Mexico support 16,000 U.S. jobs, NPPC added.
"USMCA provides U.S. pork producers with certainty in two of our largest export markets. It received strong support in both chambers of Congress, and we look forward to seeing President Trump sign it into law," said NPPC president David Herring, a hog farmer from Lillington, N.C.
Beef: Mexico and Canada are among the top four destinations for U.S. beef and pork. NAMI reported that under NAFTA, U.S. beef exports to Canada and Mexico grew from $656 million in 1994 to more than $1.7 billion in 2017. In terms of volume, Canada and Mexico imported nearly 30% of total U.S. beef exports.
In a prepared statement, National Cattlemen’s Beef Assn. (NCBA) president Jennifer Houston said, "The ratification of USMCA is a crucial win for all U.S. beef producers and a reassurance that U.S. beef will continue to have unrestricted, duty-free access to Canada and Mexico. NCBA has been a strong supporter of USMCA since day one, and we believe that today’s vote sends a strong message to the rest of the world that the United States believes in free and fair trade.”
The U.S. Meat Export Federation reported that shipments to Mexico and Canada in 2019 totaled about 1.25 million metric tons at a value of $3.8 billion, and the U.S. red meat industry looks forward to many years of further growth.
Dairy: U.S. dairy exports are projected to increase by more than $314 million a year, according to the International Trade Commission. For dairy, USMCA preserves the Mexican market, eliminates Canada’s Class 7 pricing program, increases market access to the Canadian market and strengthens provisions to protect common cheese names. U.S. dairy exports to Mexico and Canada totaled more than $2.1 billion in 2018, or roughly 40% of total U.S. dairy exports, the International Dairy Foods Assn. (IDFA) said in a statement.
“The new USMCA deal delivers peace of mind for our businesses, removing the handcuffs of uncertainty that have constrained business decisions over the past two years as the deal was negotiated. The USMCA deal is a major win that levels the playing field with our largest trading partners,” IDFA president and CEO Dr. Michael Dykes said.
Jim Mulhern, president and CEO of National Milk Producers Federation, added, “America’s dairy farmers are celebrating today’s bipartisan vote as a win. Under President Trump’s leadership, [the U.S. Trade Representative and the U.S. Department of Agriculture] negotiated an agreement that will deliver a more certain future for our dairy farmers and rural economy. The U.S. must now remain diligent and proactively work with Canada and Mexico to implement USMCA in both letter and spirit. Full compliance is essential to achieving more fair trade with Canada and protecting American-made cheeses in Mexico.”
"Mexico is our top dairy export country, and this trade agreement allows for that relationship to continue to flourish,” said Jeff Lyon, general manager of FarmFirst Dairy Cooperative. ““There is still work to be done. We are grateful for the hard-fought details that are part of this agreement; however, we would be remiss to not monitor implementation of this agreement to ensure it is being enforced in full and that U.S. dairy is reaping the full benefits.”
Grains: The National Association of Wheat Growers and U.S. Wheat Associates (USW) welcomed the agreement. USMCA retains tariff-free access to imported U.S. wheat for longtime flour milling customers in Mexico -- a crucial step toward rebuilding trust in the U.S. as a reliable supplier in this important neighboring market. In addition, USMCA makes important progress towards more open commerce for U.S. wheat farmers near the Canadian border by allowing U.S. varieties registered in Canada to receive reciprocal grading treatment.
Other measures that benefit the wheat industry include the agreement’s language surrounding agricultural biotechnology that supports 21st-century innovations in agriculture and new language to strengthen disciplines for science-based sanitary and phytosanitary measures.
“Mexico continues to be our top importing country,” USW chairman and Paulding, Ohio, farmer Doug Goyings said. “Wheat farmers are relieved to see the agreement moving on to the President, and I think the Mexican millers who want our wheat are relieved, too.”
Trade with Mexico and Canada is a vital part of the market for corn, with both countries making up 25-30% of corn sales leaving the country.
For U.S. corn, Mexico and Canada have served as the industry’s largest and most reliable markets, and American Coalition for Ethanol CEO Brian Jennings said this agreement keeps the door open for related commodities, like ethanol and distillers grains. “Although USMCA doesn’t set ethanol-specific trade provisions, its ratification positively reaffirms this long-standing relationship with markets next door as we enter into this new decade of market growth,” Jennings said.
Oilseeds: Mexico is the number-two market for whole soybeans, meal and oil, and Canada is the number-four buyer of meal and number-seven buyer of oil from U.S. soybean farmers, making the trade agreement essential to sustaining the growth realized in those two countries under NAFTA. U.S. soybean sales to Mexico quadrupled under NAFTA, and sales to Canada doubled, the American Soybean Assn. said in a news release.
“In addition to securing the Mexican market as the second-largest importer of U.S. soybeans, the terms agreed to by Canada will increase U.S. poultry and dairy exports, which is also a positive for our industry,” American Soybean Assn. vice president Bill Gordon said.