KEARNEY — Retaliations against U.S. steel and aluminum tariffs have cost Nebraska farmers up to $1.026 billion in lower commodity prices, while the state has seen additional labor income losses of up to $242 million.
Those findings are in a new report, “A Path Forward on Trade — Retaliatory Tariffs and Nebraska Agriculture” by Nebraska Farm Bureau Senior Economist Jay Rempe and Director of National Affairs Jordan Dux, that was released Monday at the organization’s annual convention in Kearney.
Rempe put the total economic losses of $1.2 billion into perspective by saying every person in Nebraska would need to contribute $632 to cover the lost dollars. “That’s a significant hit to our state’s economy,” he said.
“International trade is critical to agriculture,” Nebraska Farm Bureau President Steve Nelson of Axtell said at a press conference. “In most years, the value of agriculture exports will equal roughly 30 percent of the total agriculture commodity receipts or sales for the state of Nebraska.”
During his annual address to Farm Bureau members earlier Monday, Nelson said, “There are plenty of competitors in the global market looking to displace American agriculture, and lost markets are difficult to recover. It can take years to do so, if it can be done at all.”
He added that international trade is the key to Nebraska agriculture’s future because 95 percent of the world’s population lives outside the United States. Many of those people have rising incomes and appetites for U.S.- and Nebraska-grown food.
“For Nebraska agriculture to be successful, we must develop new markets, lower trade barriers, encourage beneficial trade agreements, and capitalize on new opportunities by building trust and being engaged in markets that matter,” Nelson said. “Unfortunately, few things create more uncertainty and downward price pressure in agriculture than trade disruption.”
Doing the math
Rempe said the report isn’t the “definitive answer” on tariffs because there are effects to the ag economy not included and the numbers focus on market losses for three commodities: corn, soybeans and pork.
Beef normally would be the protein included in such a study because corn, beef and soybeans make up 90 percent of total Nebraska agriculture receipts, he said.
Beef was not used in the Farm Bureau analysis because U.S. exports are expected to exceed a value of $8 billion in 2018, a record high. Rempe said that’s because major U.S. beef customers, particularly South Korea and Japan, haven’t been included in U.S. steel and aluminum tariffs, so they haven’t imposed retaliatory ag tariffs.
Corn and soybean prices were trending up in June, he said. Then in early July, China placed tariffs on U.S. soybeans and the U.S. Department of Agriculture forecast record corn and soybean production.
Dollar losses attributed to retaliatory tariffs by the study are: corn, 14-21 cents per bushel; soybeans, 95 cents-$1.54 per bushel; and pork, $17.81-$18.8 per head.
Rempe said losses for each of those commodities, based on crop production and hog inventory estimates, are: corn, $257 million-$327 million; soybeans, $384 million-$531 million; and pork, approximately $111 million.
The total loss to Nebraska farm revenues is $695 million-$1.026 billion.
Additional losses to the Nebraska economy are $164 million-$242 million in labor income and 4,068-5,997 jobs.
“For every $1 loss to farm receipts, it’s another 23-cent loss in other parts of the state (economy),” Rempe said.
Nelson said there is a positive message in the report. The opposite side of the numbers show opportunities for agriculture in the future.
Six key actions
The study’s second part has six recommendations to move forward on trade. “What do we want to see? What ... the president and Congress should do,” Dux said.
First, finalize the U.S., Mexico, Canada Agreement — renegotiated North American Free Trade Agreement — that was signed Friday by the leaders of the three countries at the G20 summit in Argentina.
It still requires approval by Congress, which Dux said will be a rocky road. He hopes pro-trade Democrats will join pro-trade Republicans in getting the USMCA approved.
Nelson cautioned that U.S. steel and aluminum tariffs remain an issue for that trade agreement, which is another reason eliminating all such tariffs is second on the Nebraska Farm Bureau recommendations list.
The next three recommendations are to move forward on free trade agreements with Japan and the European Union, and either join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or secure bilateral agreements with the 11 member nations. President Trump withdrew the United States from the original TPP as one of his first acts in office.
Finally, the United States should work with its trade partners on a multi-national approach to address trade issues with China, including intellectual property thefts and China’s failure to meet World Trade Organization standards and rules.
A small positive step was taken at the G20 summit when Trump and Chinese President Xi Jinping agreed to a 90-day negotiating period during which tariffs would not be raised.
When asked if Nebraska ag producers who are struggling economically can hold on while waiting for trade issues to be fixed, Nelson said the focus on trade is important because it is a difficult, lengthy process.
“We’re dealing with people’s livelihoods here,” he added. “It’s not just an academic discussion.”