Vice President Pence touts trade plan to Hoosier farmers

"We're with you. The president and I are absolutely determined to see the USMCA completed and ratified by the Congress of the United States this spring," Pence told about 80 agriculture advocates during a visit to Lamb Farms near Lebanon.

Pence said there was "urgency" in helping farmers. 

"Indiana agriculture, American agriculture is feeling the strain of low commodity prices, people that are raising crops, people that are raising livestock, other challenges globally. We've got to take this first step forward and ratify the USMCA," the vice president said.

USMCA is a reworking by the Trump administration in renegotiation between the U.S. Mexico and Canada of the North American Free Trade Agreement. NAFTA, Pence said, is costing Indiana jobs, particularly in manufacturing jobs that headed south to Mexico.

ECONOMIC FOOTPRINT

Canada and Mexico are the first and third largest export markets for United States food and agricultural products, making up 28 percent of total food and agricultural exports in 2017. These exports support more than 325,000 American jobs, according to recent research by Purdue University.

In an October 2018 Farm Foundation/Purdue University analysis, an assessment estimated the possible impacts from different trade policies in a volatile trade policy context. That analysis concluded that the U.S. agriculture sector has benefited significantly from increasing market access in Canada and Mexico as a result of the formation of NAFTA some 25 years ago. The share of U.S. agricultural exports to these two countries has increased from 14.2 percent when the agreement was first signed to almost 30 percent currently.

The analysis predicted that if the USMCA is approved, if the trade war ends and if the United States rejoins the Trans-Pacific Partnership, U.S. agriculture could see not only the gains of the past decades reinforced, but could also realize the potential for additional trade gains.

"Our view is that it's pretty positive overall in the sense that it consolidates the gains that U.S. farmers have made over the last quarter century, which is a good thing. It provides investors, and farmers are investors of course, some degree of confidence in the future. But in actual gains for farmers, it's pretty small," said one of the Purdue researchers, Dominique van der Mensbrugghe.

"There are some gains for dairy farmers because Canada has agreed to open up a bit more of its dairy market to American exports and it's the same for poultry farmers, he added.

However, other scenarios were predicted in the analysis including:

• Comparing NAFTA with USMCA and ignoring other trade policy changes that have been made predicts a $454 million increase in U.S. net agricultural exports to Canada and Mexico concentrated in the dairy and poultry sectors.

• Adding steel and aluminum tariffs the U.S. imposed on Canada and Mexico and the retaliatory tariffs imposed by Canada and Mexico shows a net loss in U.S. agricultural exports of $1.8 billion.

• Including all other new U.S. tariffs and the retaliatory tariffs of other countries such as China, there could be a loss in U.S. agricultural exports of about $7.9 billion.

• Finally, if NAFTA were to go away; Congress did not approve USMCA and the president withdraws the U.S. from NAFTA, the U.S. agricultural export loss would amount to about $9.4 billion. 

SOME NOT HAPPY

During the Lebanon visit, Pence heard fair criticism from Indiana farmers.

"The U.S.pork industry had been counting on the opening of a lot of new markets from the Trans-Pacific Partnership," David Hardin, a Danville pork producer and soybean farmer, said. "And improvements to existing ones like Australia and Japan. When the president pulled us out of that agreement on his second day in office, we saw the plans that a lot of producers had made where they were expanding their production to fill those areas just dashed."

"We had a lot of excess capacity built into the U.S. pork system and nowhere to go with all that pork."

Retaliatory tariffs from Mexico and Canada last year also hurt farmers by reducing prices for pork and soybeans. Hardin estimates he had a 15 percent drop in his net income.

In addition to the tariffs, Madison County farmer Mike Shuter is concerned with an epidemic destroying about 40 percent of the sows in China, reducing the need for soybeans for feed.

"That's going to take a year to a year-and-a-half to solve that if they if they can get the swine fever under control," he said.

"China is still buying some beans but the tariffs are hurting us the most. I just see that what some of us maybe thought was a panacea, once the tariff thing was solved that they'd start buying a bunch of soybeans again. I don't know that they're going to be in the market for as many soybeans as we first thought they would because of the loss of swine," Shuter said.