I caught up with former USDA Sec. Mike Johanns recently by phone to discuss his outlook for U.S. trade opportunities in 2019. Here is his candid feedback to four of the questions I posed to him. --Rhonda Brooks
1) What can farmers expect to happen with exports once the trade tariffs with China are removed? I believe the first thing we’ll experience is a psychological boost followed by soybean price improvement. But then reality will set in with regard to the soybean arena. We had a remarkable crop in 2018, and we’re at a historic carry-out level—USDA says 955 million bushels. It’s going to take some time to work through those bushels, even with strong markets.
Once the trade barriers are removed, I believe we’ll also see a significant boost in pork exports to China, which would really benefit our producers. The other thing I would say is that even with the tariffs removed, it will take some time to regain trust between the U.S. and China and to fully reestablish these markets.
2) What’s your perspective on our new trade agreement with Canada and Mexico? Right now, we’re working to finalize the details for the U.S.-Mexico-Canada (USMCA) trade agreement, and we still need Congressional approval. I see three huge benefits to U.S. agriculture with this agreement:
First, we do just under $40 billion in agricultural trade with Canada and Mexico, so it’s very important to preserving our trade with both countries. Second, the agreement calls for a science-based framework for food safety issues, and that’s important to all three countries. Third, the agreement calls for a review of gene editing technologies, so they’re used in a more standardized way. That’s positive for the U.S., because it’s been difficult to get those technologies approved.
3) What trade priorities do you believe the U.S. should have, moving forward, with countries other than China, Canada and Mexico? First of all, I wouldn’t ignore any market that could be important for a given crop. It’s not that I would focus on those markets primarily, but I believe we have to continually look for even small opportunities and take advantage of them.
I believe Japan has the potential to be a better market for the U.S. than it has been historically. Though it’s improving, Japan still has high tariffs on a number of products, but I think the effort to try and build a better trade relationship with Japan is really the right thing to do.
I believe the European Union (EU) falls into that category, too. There are issues related to genetically modified products to resolve with them, but I don’t feel we can give up on the EU. The EU historically has been an ally to the U.S., and we need to continue working to open market opportunities in those countries.
There are also good opportunities in Africa, in countries such as South Africa, which has a strong economy, and in Ghana. Certainly, there’s still a lot of poverty in those countries, but there’s also a growing middle class that wants more protein in their diets.
The one other country I want to mention is India, which has a very large population that will overcome the size of China’s population before long. India represents an excellent opportunity for trade, though we will need to be both patient and determined to build good relationships with its government.
4) In closing, is there anything else you would want to share with American farmers? Trade is so important to the U.S. For instance, we exported roughly 2.63 billion pounds of beef in 2018, up 12.3% from 2017. In 2017, roughly 17% of our corn production was exported to more than 80 different countries. U.S. pork and pork variety meat exports totaled 5.399 billion pounds valued at $6.486 billion, up 6% and 9% respectively from 2016. Looking at these numbers is so compelling; they drive home that we have to stay focused on our trade opportunities.