By Jing Hagert, vice president of international sales, Milk Specialties Global
The White House’s top trade official visited Minneapolis last week to talk about how President Biden has expanded opportunities for U.S. farmers and exporters. There is no question that agricultural exports under President Biden have fared well for Minnesota and the rest of the country considering inflationary pressure, ongoing supply chain challenges, and a spate of natural and man-made disasters around the world that have threatened global food supplies. But beneath the headlines about steady agricultural exports is the confounding fact this Administration has done very little to expand trade during its first term and, in fact, has declined to pursue trade agreements even as competitor countries like China, the United Kingdom, and India gobble up preferential market access for their businesses.
“The traditional way we’ve done trade was very good for our farmers but really not for a lot of our industrial producers,” said White House Trade Ambassador Katherine Tai during a meeting with farmers.
For Minnesota’s farmers whose export value has more than doubled in the past 15 years, a lack of market opportunity is beginning to take a toll. In their latest trade forecast, the U.S. Department of Agriculture says American farm exports will decline as much as $3.5 billion this year. Through the first half of 2023, the volume of U.S. agricultural exports has fallen sharply by 17%. In the dairy sector—one of Minnesota’s most important farm exports—the value of exports is down 14% compared to this period last year. In a state that relies on farm exports to support more than 431,000 jobs, this sharp decline requires a real strategy.
This unfortunate turn of events for agricultural exports comes at a time when U.S. dairy has asserted itself as a global force. Dairy exports reached $9.5 billion last year, representing an 85% increase over the last 10 years. America’s dairy exports are seeing success in Mexico and Latin America, as well as in Southeast Asia, which includes countries like Indonesia, Philippines, Malaysia and Vietnam. In these competitive markets—coveted by the European Union, Australia, New Zealand, and even Canada—the United States has been able to offer a consistent, price-competitive supply of dairy ingredients. In many parts of the world, Minnesota-produced dairy ingredients and finished products are in high demand, known for their quality and consistency. But the dynamics related to supply, demand, and price are beginning to even out, quickly putting U.S. dairy farmers and processors at a price disadvantage against our competitors. Meanwhile, China—our nation’s biggest agricultural buyer—is buying less than a few years ago.
When we’ve hit similar economic walls in the past, preferential trade agreements with other nations have helped farmers and exporters stay afloat. America’s agricultural economy has evolved to meet the growing demands of international customers, pumping hundreds of billions of dollars into new food processing capacity here at home, in some cases with the sole purpose of shipping products to destinations around the world. These investments have supported millions of American jobs. Overall, the United States exports 18% of its dairy production, and there is room for growth considering a growing global population with higher wages. Instead of taking advantage of that growth, however, the Administration appears disinterested and is advancing policies that could lead Minnesota agricultural exporters into an irreversible period of contraction.
Outside of 2018’s United States-Mexico-Canada Agreement, dairy exporters have not seen a trade agreement finalized since 2012. Some attack trade deals for taking U.S. jobs. Yet, trade data showing the value of trade agreements to U.S. agricultural exporters is undisputable—U.S. agricultural exports to partner countries – and the jobs that support them – increase consistently and significantly over time as barriers and tariffs come down. Minnesota dairy exporters would much rather see those boosts to jobs and exports versus the contraction that is just beginning to show. How will this Administration’s agenda help Minnesota dairy exporters? That’s a great question that was not answered by the White House official visiting Minnesota this week. We encourage Ambassador Tai to begin a consistent conversation with farmers and food exporters about trade policies that prioritize tariff-reducing measures and preferential market access for U.S. exporters.