Most American farmers have supported the federal administration’s strategy to renegotiate trade pacts to promote both fairer and freer trade. In the countryside, the prevailing perception among farmers has been “we will have long-term gains from the short-term pain.” When it comes to the recently negotiated United States-Mexico-Canada Agreement (USMCA), farmers from coast to coast resoundingly want to end the “pain” and start the “gain.” We couldn’t agree more. Congress needs to approve the pending plan to replace the North American Free Trade Agreement (NAFTA).
The initial long-term gains would result from recapturing agricultural sales lost during the trade war ruckus as tariffs and counter tariffs sent buyers in search of more reasonably priced products. The more substantial long-term gains would result from re-establishing zero tariffs between the United States and Mexico on all agricultural products.
Tariff elimination is a big deal for U.S. dairy farmers, as our southern neighbor purchased $1.4 billion in dairy products last year. That impressive total accounted for 25 percent of all U.S. dairy exports. It’s a weighty number as America’s 9.4 million dairy cows produce milk for the export market one day each week. Building on that metric, all U.S. dairy cows collectively send their milk to Mexico one day each month.
Had USMCA been in effect last year, surely the $1.4 billion dairy product export figure to Mexico would have been higher. In fact, the U.S. International Trade Commission projects that USMCA will provide a $314 million-a-year boost to the dairy industry once it’s approved. That’s real money just as the July 2019 Class III milk price finally reached the highest level since January 2015.
For U.S. dairy, Canada holds less importance. While it’s true that our neighbor to the north imported 11 percent of all U.S. dairy exports last year, more importantly, USMCA resolves Canada’s unfair pricing strategies and other nontariff barriers. Those two issues, if resolved, will prevent Canada from artificially lowering skim milk powder and whey powder prices to offshore those products at bargain-basement prices. At the moment, those are truly damaging maneuvers for the European Union, New Zealand, and the United States dairy farmers that must sell products on the world market without propped up prices delivered by quota.
USMCA passage now sits at Capitol Hill. While neither Democrats or Republicans want to give each other a victory during these turbulent political times, both parties should be willing to give U.S. farmers a badly needed win. Our advice to elected leaders in Washington, D.C., is to pass USMCA without delay — pass USMCA today.