Agriculture Industry Can Be Thankful

For many, November is the month to celebrate those things for which you are most thankful for throughout the past year. Now, farmers have a bit more to be thankful for because President Obama signed three long-awaited free trade agreements (FTA) among the United States and South Korea, Colombia and Panama October 21.

“For America’s farmers, the trade agreements are an opportunity to strengthen U.S. agriculture,” says Tom Vilsack, agriculture secretary. “Farm exports help support more than 1 million American jobs. At this time next year, U.S. agricultural exports will be on track to reach new highs, leading to a trade surplus of more than $42 billion, eight times greater than five years ago.”

When implemented, it is estimated that the South Korea FTA will increase $1.9 billion in U.S. agriculture exports and eliminate two-thirds of its tariffs against U.S. agriculture products; the Colombia FTA will raise $370 million in agriculture exports and eliminate 80 percent of its tariffs; the Panama FTA will raise $46 million in agriculture exports and eliminate 50 percent of it tariffs.

How will these trade agreements specifically benefit crop farmers? An Ohio’s Country Journal article reports the following:

Colombia

• Corn: U.S. corn producers gain immediate access to the Colombian market for 2.1 million metric tons of corn at 0 percent duty-free

• Wheat: Primary market for U.S. wheat in South America

• Soybeans: Elimination of variable tariffs on soybean imports, which has imposed tariffs as much as 150 percent; Phases out the 24 percent tariff for refined soybean oil throughout the next five years

South Korea

• Corn: Third main U.S. corn market and a potentially important market for distillers grains; Imports of U.S. corn for feed enter duty-free

• Soybeans: Soybeans for use in cooking oil and livestock feed enter duty-free; The current tariff on soybeans imported for food uses like tofu and soymilk will be eliminated

Panama

• Corn: Decreases America’s duty charge to level the playing field

• Soybeans: 0 percent tariff treatment for soybeans, soybean meal and crude soybean oil will be locked immediately upon implementation; The 20 percent tariff on refined soybean oil will be phased out in 15 years

This legislation provides Ohio grain, in turn, Ohio farmers, with significant market export opportunities. Crop farmers will be able to more effectively compete on the international trade market and that is definitely something that we can be thankful for.

Photo obtained from: cipcol.org











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