A Third of Farmers Believe U.S. Will Withdraw From NAFTA
There is tremendous uncertainty in farm country about the future of NAFTA, with one third of producers responding to a Purdue survey saying they believe it is likely the U.S. will withdraw from the free trade agreement. Early this week, U.S. trade representative Robert Lighthizer said NAFTA negotiations were moving too slowly and said “we are prepared to move on a bilateral basis” if Canada, Mexico, and the U.S. cannot agree on a new NAFTA.
Despite farmers’ concerns about NAFTA, Purdue’s monthly Ag Economy Barometer said an overwhelming majority of producers – 87% – believe U.S. agriculture exports will remain strong over the next five years. USDA says exports generate 20% of farm income. Exports are forecast at $139.5 billion this year, a marginal decline from 2017.
When asked about the likelihood of U.S. withdrawal from NAFTA, 34% said it was likely and 29% saw it as unlikely, with 34% neutral on the question. Canada and Mexico account for one third of U.S. food and agriculture trade.
“Responses suggest there is a tremendous amount of uncertainty among producers regarding the future of NAFTA,” wrote three Purdue economists in a summary. “Despite that uncertainty and notwithstanding the importance of U.S. exports to both Mexico and Canada, producers remain relatively optimistic about long-run prospects for U.S. ag exports.”
The barometer is based on monthly polling of 400 farmers and ranchers.
Last fall, the Purdue survey found 59% of respondents rated NAFTA as good for U.S. agriculture vs. 41% who saw it as bad. However, 20% of survey participants declined to answer the question. That followed an early-summer poll by Purdue that said 83% of producers supported renegotiaton and 61% believed the new NAFTA would benefit U.S. agriculture.
The eighth round of NAFTA negotiations is expected in early April in Washington. The seventh round, which ended on Monday in Mexico City, was clouded by President Trump’s announcement that he would impose high tariffs on imports of steel and aluminum. Agriculture is one of the unresolved topics in NAFTA talks. The White House wants Canada to phase out its supply-management system for dairy, poultry, and eggs. U.S. farm groups say the new NAFTA must preserve duty-free access to Canada and Mexico.
Negotiators have completed six of the roughly 30 chapters under discussion, said Lighthizer. “We continue to stress the need to move quickly.” The election season will begin within weeks, he said, which could delay work for months. “As President Trump has said, we hope for a successful completion of these talks, and we would prefer a three-way, tripartite agreement. If that proves impossible, we are prepared to move on a bilateral basis, if agreement can be made.”
On other topics, the Ag Barometer said growers expect soybeans will be more profitable than corn this year, but 81% say they will not increase their soybean plantings. The USDA has projected corn and soybean plantings this year that are roughly the same as in 2017. Producer confidence rose for the second month in a row and is now at its second-highest level since the barometer began polling in October 2015.