Colorado farmers finally see some certainty in their future after two major trade deals passed this week.
The U.S. Senate approved the new North American trade deal — the United States-Mexico-Canada Agreement — on Thursday and President Donald Trump signed an agreement with China a day earlier.
“It gives us assurances where we can go out and make investments in the future knowing that the trade deals are in place,” said Jeremy Fix, a corn and wheat farmer in Yuma County. “And it provides more customers for us.”
Yuma County farmers felt the pain of the trade war when China added tariffs to soybeans, even though it wasn’t a big crop for the region. The tariffs caused Midwestern farmers to switch from planting soybeans to corn, which is Yuma’s specialty. But China made up just 5% of Colorado’s agricultural exports in 2018.
It’s the United States-Mexico-Canada Agreement, which passed on a 89 to 10 vote in the Senate, that has much greater interest among local producers. Most of the state’s exports head to Mexico and Canada.
“The USMCA agreement also has a lot of really good language around biotech that we feel can be used in future trade agreements going forward, allowing agribusiness companies to further introduce technologies that will help in production whether it be boost yields or lower costs,” Fix said.
But as with any trade deal that lets imports come in just as easily as exports go out, rancher Steve Nein worries about the quality of the beef from Mexico. The USMCA doesn’t require country of origin labeling, or COOL.
“Now they can import beef into the country and if they process it here, then it is considered a United States product and that’s not right,” said Nein, who raises calves in Ovid, near the Nebraska border. “…They did not get that in there so that was a pretty big disappointment.”
According to the state Department of Agriculture, Colorado’s food and agricultural exports are off about 11% in the first 11 months of 2019, compared to the same period a year earlier. Total ag exports have hovered around $2 billion for the past couple of years with 2018 and 2019 seeing a decline.
But that’s after decades of growth. Exports, which include livestock, grains and beer, have quadrupled since the 1990s, according to the state agency.
Farmers and ranchers have been pushing for the USMCA’s adoption for the past year and found support in Congress, so passage of the agreement, which is expected to be signed by President Trump, wasn’t a surprise. But the agricultural community has already had to make plans to adapt to no agreement and a potential one, said Bob Kjelland, director of communications for the Rocky Mountain Farmers Union, a trade group representing 20,000 members in Colorado, Wyoming and New Mexico.
“Many have ‘hoped’ or ‘trusted’ that things will get back to normal. And, for many, they have few alternatives simply because their farm operations are largely locked in place in terms of acreage, crops, and markets,” Kjelland said in an email. “I suspect many of them are hopeful yet do not feel confidence, nor will they until China buys (and buys big rather than a token).”
The deal with China is just the first phase of a multi-step agreement to fix a dispute that started with U.S. accusations of intellectual property theft by China. The U.S. still has tariffs on about $370 billion in Chinese goods but is reducing some of them. China agreed to buy more agricultural items, including soybeans.
The USMCA replaces the 26-year-old North American Free Trade Agreement, with updated rules regarding environmental and labor standards in Mexico plus tougher requirements for the auto industry. It still provides tariff-free trading between the three countries.
“Colorado’s workforce stands to benefit from the USMCA, as roughly a quarter million jobs exist in the Centennial State because of our trade relationships with our North American neighbors,” said Sen. Cory Gardner in a statement.
Gardner and fellow Colorado Sen. Michael Bennet voted in favor of USMCA. But both felt the trade deal could have passed much sooner if the process hadn’t become so political.
“Going forward, we must do more to advance trade policies that put American businesses, producers, and consumers first,” Bennet said in a statement. “If the president’s superficial ‘Phase One’ agreement with China is any indication, he is clearly more focused on staging the next photo opportunity than delivering the long-term reforms needed to lift up American workers, farmers, ranchers, and businesses.”