A coalition of ag commodity groups has been on a mission this summer to build support for international trade.
But while the group’s Pennsylvania event underscored farmers’ reliance on foreign markets, it also showed why exports make people uneasy in the first place.
The Aug. 27 AgTalks web meeting — supported by the National Milk Producers Federation and National Corn Growers Association, among others — was ostensibly about the needs of farmers.
Yet much of the program focused on the concerns of major agribusinesses like Hershey and New Holland Agriculture.
“Tariffs put Kraft Heinz at a competitive disadvantage,” said Ross Siragusa, the head of global agriculture and seed at the company that produces cheese, ketchup and Oscar Mayer hot dogs.
On one hand, farmers and agribusinesses depend on each other. Processors rely on raw materials from farmers, and farmers need processors who have the scale and customer base to ship finished goods.
And while trade challenges like tariffs hit businesses first, they can have a ripple effect for farmers and end users. “It is disruptive, and so it ultimately costs consumers,” Siragusa said.
On the other hand, the goals of farmers and their customers aren’t necessarily aligned.
David Dayen, a critic of the power of large corporations, argued last month in The American Prospect that selling abroad mainly benefits massive processors at farmers’ expense.
“Export strategies force farmers into monoculture crops and overproduction, which pushes down prices. Add to that increasing input costs for seed and machinery and you squeeze working farmers, who must compete with industrial-sized Big Ag operations,” Dayen wrote.
The situation for farmers would likely be worse, though, if the United States backed away from exporting.
U.S. soybean prices tumbled as much as 24% after China imposed tariffs on American farm exports in 2018, according to researchers at the U.S. International Trade Commission.
It’s not just grain producers who rely on exports to avoid price-slashing and potential gluts.
“As we look at where we’re at right now in the hog industry, we’re already at a dependent level (on trade). One out of every four hogs we produce here in the United States must leave our borders,” said Chris Hoffman, vice president of the Pennsylvania Farm Bureau and a pig producer.
Pennsylvania dairy activist Mike Eby asked the panelists if cooperatives were right to export considering the product they often send abroad, milk powder, commands a relatively low price.
“Is this not the sole purpose of a milk cooperative, to achieve the highest price paid possible to its members, and is that not best done by matching supply of member milk with domestic profitable demand?” he said, according to the moderator’s reading of his written question.
Russell Redding, the state ag secretary, countered that exports already consume 17 to 18% of U.S. milk. If farmers want to keep increasing milk production, as they traditionally have, “you’ve got to find a place to put that product,” he said.
A Place in the World
With its vast heartland and high-yielding farm practices, the United States is able to produce far more of many staple foods than it can consume.
As a result, the U.S. is a net exporter of ag products, with projected foreign sales of over $140 billion next year, according to USDA.
“One of the reasons we started our farm is that we really wanted to feed the world, and feeding the world is all about trade,” Hoffman said.
Many other countries don’t grow enough food to feed their people, but that has varying implications for food security, according to Jennifer Clapp, a researcher at the University of Waterloo in Canada.
Some advanced economies, like Japan and Italy, have little trouble feeding themselves despite their small supply of arable land.
But in countries with a forbidding climate, poverty and unrest, more than a quarter of the people go hungry. Think Yemen or Haiti.
A 2015 United Nations report found that food self-sufficiency exists on a continuum. Nations often want to increase domestic production while still engaging in trade.
According to Clapp, all countries import some food, including North Korea, the country with policies that push the hardest for self-sufficiency.
Even the mighty United States is expected to import $136 billion in ag products in the next year. Key imports include tropical products like bananas and coffee, as well as fresh produce that stocks grocery shelves in February.
Calls to rely less on trade have intensified as a result of the COVID-19 pandemic, which has rearranged the distribution channels for everything from fluid milk to machinery components.
Brett Davis, the vice president of New Holland North America, thinks the current system is here to stay.
“I hear all kinds of people pontificating about, oh, we need to make major changes in the supply chain and this and that, unwind the global economy. That’s unrealistic,” Davis said. “This is a traumatic event. We all suffered from it, and we have to work through it.”
Even before the pandemic, demand for local food was incredibly robust. In Pennsylvania and the nation as a whole, direct-to-consumer food sales doubled between 2012 and 2017, USDA statistics show.
Still, Redding said, about 95% of the people in the world live outside the United States. American farmers want access to those people in other countries, both to improve farm profitability and to ensure that those people have food to eat.
“One of the great developments of agriculture is that we have grown to become an industry where the futures markets and the farmers markets are equally important to feeding a growing world,” Redding said.