When Agriculture Suffers, The Consequences Go Beyond The Farm
Recent Trade Negotiations & Tariff Retaliation Impact Supply Chain Getting Food From Farm To Table
It is no secret American agriculture is taking a hard hit as negotiations on the North American Free Trade Agreement (NAFTA) stall and costly tariffs take hold. U.S. farmers export more than $43 billion in products, while the food and agriculture industry supports millions of jobs. Trade agreements have bolstered economic activity in this sector. With talk of disbanding NAFTA and implementing further tariffs on American goods, farmers are facing an increasingly tough road ahead.
But U.S. agriculture isn’t alone in this fight. A hit to this sector impacts nearly every other industry responsible for getting food from the farm to your table. When the farm economy is down, so is that of the local grain elevator operator, equipment manufacturer and construction contractor. With less sales for farmers, the transportation industry will not need to allocate as many rails, trucks and barges to ship products across the country and deliver them to our foreign neighbors, decreasing their profits as well. Lower farm prices and profits put a strain on the financial companies serving rural America. In fact, 2017 saw more farm bankruptcies than any year since 2012, according to the Farm Bureau. When farmers suffer, there is also less demand for the scientific and biomedical community that works to control disease and pests, and improve crop and animal yields. Even value-added agriculture could take a hit, as less raw product is produced and available in order to be made into other goods like ethanol and biomaterials. Lastly, retailers, restaurants and consumers who make up the end of the supply chain are also impacted, facing shortages of goods and higher-priced products.
Supply chains in some states are already feeling these negative effects. In Cedar Rapids, Iowa, 175,000 jobs are directly or indirectly supported by the food and agriculture industry. The single greatest threat to these jobs is the possibility of closing the markets where they sell and move goods as tariffs make U.S. products less competitive in foreign markets. Similarly, in Western Indiana, where the food and agriculture industry supports more than 100,000 jobs, farmers and transportation workers are facing increasing struggles to make a profit as the threat of more tariffs looms.
Since its implementation in 1994, NAFTA has led to strong job growth, higher wages and low prices, while reducing tariffs and bolstering American trade. U.S. food and agriculture now supports 43 million jobs across the country. Further, NAFTA contributes an additional $127 billion annually to the economy. To avoid any further impact to our global supply chains in the agriculture sector, lawmakers should pursue efforts to preserve and modernize NAFTA as soon as possible to ensure a fair and balanced trade market that benefits Americans.
In 2016, The U.S. Exported $43 Billion In Agricultural Products To Mexico And Canada. (Chase Purdy, “Here’s The Full $43 Billion List Of US Food Makers Angry At Trump’s NAFTA Threats,” Quartz, 11/9/17)
According To A Farm Bureau Report, 2017 Had More Farm Bankruptcies Than In Any Year Since 2012 And The Trend In Bankruptcies Is Expected To Climb. “From the Northeast, into the western Corn Belt and Upper Midwest, down into the Southwest and into the West, farm bankruptcies are higher than year-ago levels. Of the 116 filings in the first quarter of 2018, nearly 70 percent of the bankruptcies were in farm country, i.e. dairy, corn, cotton, soybean and wheat producing areas.” (“Bankruptcies Higher Across Farm Country,” Farm Bureau, 5/15/18)
In Cedar Rapids, IA, 175,000 Jobs Are Supported By The Food And Agriculture Industry. (“Economic Impact Of The Food And Ag Industries Iowa Congressional District 1,” Feeding The Economy, Accessed 7/20/18)
In Western Indiana, More Than 100,000 Jobs Are Supported By The Food And Agriculture Industry. (“Economic Impact Of The Food And Ag Industries Indiana Congressional District 4,” Feeding The Economy, Accessed 7/20/18)
NAFTA Has Allowed The U.S. Food And Agriculture Industries To Flourish, And Those Industries Now Support More Than 43 Million Jobs Throughout The Country. (Feeding The Economy, Accessed 1/13/18)
Since Its Implementation, NAFTA Has Contributed An Additional $127 Billion Dollars Annually To The U.S. Economy. (“Top NAFTA Facts,” Bipartisan Policy Center, Accessed 1/13/18)