What does the Colombia Free Trade Agreement mean for U.S. farmers?

U.S. farmers and ranchers have been losing market share in Colombia to competitors who have trade agreements with the country. Colombia has duty-free access to the U.S. market, while U.S. products face excessive tariffs to sell to Colombia’s market.

When implemented, the Colombia Free Trade Agreement (FTA) will level the playing field for U.S. farmers and ranchers by eliminating these tariffs.

After months of negotiations, congressional talks about a free-trade deal with Colombia are now moving forward, setting the stage for lawmakers to move ahead with similar agreements with South Korea and Panama.

Yahoo News reports that in a letter to lawmakers, U.S. Trade Representative Ron Kirk said that while Colombia has more work to do, the country was effectively putting in place the initial phases of the labor agreements, therefore, the administration felt confident in starting talks with lawmakers.

While agreements have been settled with Korea and Panama for awhile, lawmakers threatened to block them unless the White House also finalized agreements with Colombia.

“The Colombia, South Korea and Panama agreements will create expanded markets for American farm and ranch products and boost the overall economy, said Bob Stallman, American Farm Bureau president. Together, the three agreements represent nearly $3 billion of additional agricultural exports from the United States and could generate as many as 27,000 new U.S. jobs.”

But what specifically does the Colombia FTA mean for U.S. farmers?

According to an article in Ohio’s Country Journal, the Colombia FTA will benefit soybean farmers immediately by eliminating soybean, soybean meal and soybean-flour tariffs ranging from 5 to 20 percent, as well as phase-out the 24 percent tariffs for crude soybean oil throughout 10 years and refined soybean oil throughout five years. The agreement will provide immediate duty-free access for crude soybean oil with a 31,200-ton quota with 4 percent annual growth.

The National Corn Growers Association states that the Colombia FTA would provide immediate access for U.S. corn growers to Colombia’s roughly 2.1 million metric-ton market for corn at 0 percent duty.

During the 2007-2008 marketing year, the U.S. exported 114 million bushels of corn to Colombia, with an estimated value of nearly $627 million. U.S. corn exports declined dramatically during the 2009-2010 marketing year, with only 36 million bushels exported, valued at $152 million. The decline in exports reflected a loss of $475 million to the U.S. economy.

As for wheat farmers, they face a potential loss of sales currently valued at about $100 million per year without the Colombia FTA.

These free-trade agreements have an obvious importance to the agriculture industry; it will be a great day for celebration when they are effective. What are your thoughts about these trade agreements? Will you or any farmers who you know benefit from the agreements?

Photo obtained from: csmonitor.com

No comments: