LEXINGTON — The Council for Economic Development, CED, held a town hall meeting at Central Community College on Saturday, March 16 discussing international trade and how it effects Dawson County.
Among the items discussed, the United States-Mexico-Canada agreement, USMCA, was heavily focused on and the consequences of it not passing. The trade war and tariff impacts on local farmers was also touched on.
Andy Jobman, vice president of the Nebraska Corn Growers Association, was recently in Washington D.C. and spoke about his time there.
“The nuts and bolts for USMCA are all in place,” he said, “The goal is to try and pass this before August, there could be some really bad exposure between now and August, the stakes for agriculture couldn’t be higher.”
At the moment there is some uncertainty how the freshman in Congress will vote on this agreement. “None of them have ever been through a trade deal,” said Jobman.
Jobman said at the moment, with the steel and aluminum tariffs in place, the Democrats will likely not vote in favor of the USMCA. He added union and wage issues in Mexico may present further roadblocks to the passage of the agreement.
“If we lose NAFTA, it will be huge, monumental,” Jobman said about the uncertainty of the approval of the USMCA and the Trump administration’s willingness to get rid of the North American Free Trade Agreement, “everything trickles down from agriculture, if we don’t pass the USMCA, it will ripple down from there.”
Jobman himself farms in the Gothenburg area hopes the USMCA will pass, saying, “Don’t hang all these young people who have come back to farm out to dry by not passing the USMCA.”
Members of the CED spoke with Mayor John Fagot about the USMCA, Fagot said, “This will be the cornerstone of future trade agreements, if we can’t cut a deal, why should our neighbors or trade partners listen to us?”
Earl Lindeman, a member of the CED, said, “Personally I think it is important to get this agreement signed, the worst case scenario is for NAFTA to disintegrate.”
Jay Rempe a senior economist with the Nebraska Farm Bureau presented up to date numbers about the Dawson County ag economy, tariff impacts and the future for trade.
“There are counties which are powerhouses in ag,” said Rempe, “Dawson County is near the top, this is a county which is looked to when things need to get done.”
Rempe said the gross regional product for the Dawson County economy was $1.154 billion. Agriculture in the county totaled $441 million, 38 percent of the counties revenue. Ag also provided 29 percent of the labor force, he said.
In 2017 Nebraska goods exported netted $7.2 billion with the highest categories being processed foods, machinery, ag products, chemicals and transportation equipment. Rempe said the top five countries which were exported to were Canada, Mexico, Japan, China and South Korea.
Rempe pointed out the U.S. is currently having trade disputes with our largest trade partners, Canada and Mexico. This has been due to the Trump administration’s insistence on tariffs against these partners. “We’ve managed to stay out of the fray with Japan and South Korea,” said Rempe.
“Exports to Canada and Mexico add significant value to our local products,” said Earl Lindeman during his presentation, “this in turn makes our local economy stronger.”
Lindeman highlighted the fact 45 percent of Nebraska exports are sent to Canada and Mexico and Dawson County ranks seventh for exports to both countries.
Jobs tied to exports in Nebraska have grown over several years. In 2006, 42,527 jobs were supported by the state’s export goods, by 2016 this had climbed to 62,670. Nearly 51 percent of the jobs were supported by manufactured goods which were exported, Rempe said.
Dawson County was the seventh highest in the state when it came to exports, said Rempe. The continuation of tariffs and the uncertainty of the passage of USMCA could seriously hurt the economy of Dawson County in the near future.
Nebraska’s agriculture exports in 2017 surprised some who attended the meeting. Soybeans were the state’s largest ag export followed by beef, corn, feed, soybean meal, hides, pork and wheat.
Rempe said the country which imports the most soybeans is China, which the United States is currently engaged in a trade war with, thanks to the tariffs imposed by the current administration.
Rempe moved on to speaking about the future of trade and how it will impact Nebraska and Dawson County. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, CPTPP, would have made inroads for exports to countries in Southeast Asia and increased export dollars, he said.
President Barack Obama was going to enter the United States into the CPTPP said Rempe but President Donald Trump withdrew the country from this agreement in January 2017.
“The rest of the countries in the agreement have moved on without us,” Rempe said, “Our competitors have made inroads into the Japanese market and we are losing out on the market share there.”
The U.S. main export of Japan is beef and according to a University of Tennessee study which Rempe quoted, the United States has lost out on $143 million in beef exports to Japan, by 2023, this will have grown to $550 million.
Rempe said the USMCA agreement is the new NAFTA but warned, “The worst possible scenario is pulling out of NAFTA, we will lose 9.5 billion in exports.”
With the retaliatory tariffs put in place by other nations on the United States, it is costing ag producers of all stripes, who are usually the first and worst impacted in any trade war, said Rempe.
The cost on ag was highlighted in a Nebraska Farm Bureau December report. Tariffs are costing corn producers between $257 and $384 million, soybean producers have seen a larger loss of $327 to $531 million and pork producers are losing $111 million. “We are talking some serious money here,” Rempe said.
Ag producers are not the only ones affected. Tariffs on aluminum and steel have hurt manufacturers as well. Orthman Manufacturing president John McCoy was present at the meeting and said Orthman’s manufacturing costs have jumped up 50 percent thanks to the tariffs.
One of the largest issues is China, and their continued skirting and cheating of international law when it comes to copyrights, especially in technology. Rempe said a multi-national approach is needed to keep China on the straight and narrow.
“By going in alone we are taking it on the chin,” Rempe said about the trade war with China.
Rempe said the Nebraska Farm Bureau recommends, for ag to be successful into the future, Congress should pass the USMCA, eliminate tariffs on steel and aluminum, hash out a free trade agreement with Japan and the European Union and join the CPTPP.
Earl Lindeman spoke about 2019 corn and soybean planting intentions. Around 91 million acres are slated for corn, which is up 2.3 million from 2018. Production is estimated to be 15 billion bushels, which will be the second highest production ever.
Soybeans are expected to occupy 84 million acres, which is 5.9 million acres off the 2016 peak, Lindeman said. The production estimate is the smallest in four years. However with higher beginning stocks, the total supply of five billion bushels is a new record, he said.
“We acknowledge all the Nebraskans suffering because of the weather,” Lindeman said, “there is not a clear path forward, and with a lot of obstacles.”
Neil Moseman represented Senator Deb Fischer at the town hall meeting. Moseman said a rural crisis hotline is now up and running and mental health resources are available for ag producers. “The weather is always humbling,” he said.
Moseman said Fischer has spoken with the President several times about agriculture and keeps trying to shape policy in agriculture favor. “Farm states were very supportive of Trump,” Moseman said, “Senator Fischer is making sure he doesn’t forget that.”
Ginger Langemeier Wilson attended the meeting representing Senator Ben Sasse. She said Sasse spends a lot of time speaking with President Trump and Sasse says the President does want to know what is happening in farm country. Sasse usually presents anecdotal stories about what is happening here in Nebraska and how the trade negotiations affect ag producers, she said.
Wilson said China is cheating when it comes to the technology race, she says they have cornered other countries on the technology market. China has also forced U.S. companies to give up trade secrets and makes it difficult to get products approved.
Sallie Atkins represented Congresman Adrian Smith. She also mentioned the historic flooding and said the work ethic and hardiness of the Nebraska people will, “help us in these hundreds of situations across the state,” she said.
“He is such a good listener and passionate about the district,” Atkins said of Smith. The third congressional district, which Smith represents is number one in the nation for ag production, Smith said in a press release.
Atkins said Smith in cautiously optimistic about getting the USMCA passed and other trade deals. “He will always say tariffs are a tax and ag producers are hit the hardest, it is getting painful in the ag sector,” she said.
“The tariffs on aluminum and steel are painful,” Atkins said, “With these removed we stand a better chance of passing the USMCA.”
Atkins said “95 percent of the world’s population is outside the United States and exports are critically important, we need to keep this going.”