What Does Trade Mean to Your Bottom Line

What Does Trade Mean to Your Bottom Line

What Does Trade Mean to Your Bottom Line


Jason Henderson

The importance of trade to the bottom lines of Indiana farmers was the focus of policy meeting of Indiana corn and soybean growers on Thursday.  With negotiations to rewrite the North American Free Trade Agreement underway, corn and soybean producers are concerned about what might happen if those talks fail.  Dr. Jason Henderson, Director of Purdue Extension, told the group that without NAFTA corn prices would drop 30-50 cents per bushel and hog prices would decline about 5-10%. But he added the value of trade agreements is more than just keeping prices higher, “Trade agreements are really about formulating relationships between countries on how to move goods and services between nations.  The stronger trade deals you have the stronger the relationships and the level of trade you have.”

Henderson pointed out that, when ag exports increase, the farm economy does better, thus good trade deals are important to the economic prosperity of U.S. farmers. Yet, a good NAFTA deal is more than just continued tariff-free access to Canada and Mexico for U.S. corn and soybeans, “We are going to have some segments of U.S. agriculture like the poultry and dairy sectors, that are going to have a different perspective on trade with Canada and Mexico that corn and soybean growers.”  U.S. dairy and poultry producers say the current NAFTA deal is unfair to their industry.

Henderson also pointed out that U.S. farm exports are more than just bulk commodities like corn and soybeans. Today 40% of all U.S. ag exports are value-added products like meat, processed foods, DDGs, and Ethanol. He said this development is good for the U.S. since it creates jobs here at home while still providing demand for U.S. farm products.


Cary-Sifferath

One such area is ethanol and DDGs. Cary Sifferath, with the U.S. Grains Council, told the meeting ethanol and DDGs exports are growing fast, “U.S. ethanol is the cheapest octane in the world.” He said 70% of the world’s trade in ethanol comes from the U.S.

Henderson is optimistic that the world demand will continue to the U.S. for food exports and that farmers will be able to meet that demand in the coming decades.

 

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