Big gains seen for Iowa ag exports under TPP trade deal
By tearing down entrenched trade barriers and leveling the playing field for American agricultural exports, the Trans-Pacific Partnership (TPP) will boost annual U.S. farm income by $4.4 billion, according to a new economic analysis from the American Farm Bureau Federation (AFBF).
Iowa, the AFBF report showed, would be a big winner if the TPP is approved by Congress and enacted. The state, a leader in pork, beef, corn and soybean production, would gain $632.8 million per year in cash receipts from exports spurred by the TPP, and would add $389.4 million per year in net exports, it showed.
The increased marketing opportunities for Iowa farmers from the TPP would also add 2,940 jobs to Iowa’s economy, the AFBF analysis showed.
Passage of the TPP is critical for the future of Iowa agriculture, said Craig Hill, Iowa Farm Bureau Federation president. "We really need the TPP more than ever now because of the tough markets that we are facing," Hill told Farm Bureau leaders recently at the Policy Information Conference in West Des Moines. "This will give us access to markets that we’ve never had much access to before."
The AFBF analysis on the TPP agreement is part of the organization’s strong push to gain Congressional passage of the agreement in 2016.
"TPP will mean a boat-load of expanded exports and increased demand for America’s agricultural products," AFBF President Zippy Duvall said. "American agriculture is a growth industry, and to continue that trend, we must expand our market opportunities."
The TPP, which was signed last fall but must still be ratified by Congress, would link the United States into a free trade block with 11 other countries on both sides of the Pacific Ocean, encompassing 40 percent of the world economy. The agreement, the AFBF analysis said, will significantly and positively affect U.S. agriculture by reducing barriers and leveling the playing field in established markets, such as Japan.
The trade pact will also open new markets to U.S. farmers, especially in the fast-growing Asian countries, such as Vietnam, the AFBF analysis said.
As the nation’s top hog producing state, Iowa would gain from increased pork exports to Asian countries in the TPP, the AFBF analysis said. It predicts a price gain of $2.45 per hundredweight on barrows and gilts sold, leading to an annual gain in cash receipts of $1.1 billion nationwide and a gain in Iowa cash receipts of nearly $328.5 million.
Under the TPP, Japan would eliminate 65 percent of its tariffs on pork imports over 11 years and 80 percent in 16 years. Japan will retain its "gate price" system that raises the price of imports to the higher domestic production price. But the TPP will still provide U.S. farmers better access to the market than competitors, such as the European Union, that don’t have free trade agreements, the AFBF analysis said.
U.S. pig farmers also have a clear opportunity the fast-growing Vietnam market if the TPP is passed, AFBF said. Vietnam’s tariffs on pork and pork product imports, 27 percent for fresh chilled cuts and 15 percent on frozen cuts, would largely be eliminated in 10 years under the TPP.
Passage of the TPP would also be a big win for U.S. cattle farmers, the AFBF analysis showed, with cash receipts rising $1.14 billion per year, and $67 million in Iowa.
Beef sales, like pork, will gain from lower import tariffs on U.S. beef going to Japan, the AFBF analysis showed. Those tariffs are expected to decline from the current 38.5 percent to 9 percent in 16 years.
The TPP would also drive price gains in dairy, with increased exports of butter, cheese and non-fat dry milk.
The trade pact’s effect on corn and soybean exports will be more muted because those products face much lower tariffs than meats, AFBF said. However, increased domestic livestock feeding to supply export market demand will, in turn, boost demand for corn and soybeans and raise prices, it said.
While passage of the TPP would bring significant gains for agriculture in Iowa and around the country, not approving the trade pact would put farmers at a disadvantage in world markets, said AFBF’s Duvall.
"Every day we delay means lost markets as other TPP countries implement the deal’s advantages with each other," he said. "We are already arriving at the party late because, right now, expanded trade due to the TPP is going on across the Pacific Rim — just without us."
A good example of that, AFBF said, is Australia’s bilateral agreement that reduces tariffs on beef exports to Japan and gives Australian farmers a leg up in the important market. Passage of the TPP would put American farmers back on a level playing field with their Australian counterparts, it said.
That type of situation is a clear indication that it’s important to pass the TPP in 2016, Duvall said. "The sooner the TPP is ratified, the better it will be for American agriculture," Duvall said.
For more information on the AFBF analysis on the TPP, and for state-by-state breakdowns, please go to bit.ly/1SRDLtk.
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