American farmers and ranchers are facing substantial difficulties this year, marked by low commodity prices and a record-setting agricultural trade deficit. According to the latest trade outlook released by the USDA at the end of August, the deficit for the 2024 fiscal year is projected to reach $30.5 billion, nearly double last year’s record deficit of $17.1 billion. The forecast for 2025 suggests an even larger deficit of $42.5 billion. These figures underscore the urgent need for enhanced focus on agricultural trade.
The current trade deficit reflects a challenge in value rather than volume. Low commodity prices contribute to this deficit, but U.S. farmers are also encountering competition from countries with more advantageous trade arrangements and fewer barriers. This situation highlights the necessity for new trade agreements that expand market access and create a more level playing field for American producers.
In recent years, the U.S. has seen a limited number of trade deals, while other nations have advanced their own agreements. A notable example is the trade with Vietnam. Prior to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), U.S. agricultural exports to Vietnam were growing at about 15% annually. However, since the implementation of the CPTPP, exports have declined by approximately 5% per year. U.S. ranchers have lost market share in the beef sector to countries such as Australia, New Zealand, and Canada, which benefit from zero tariffs under the CPTPP.
To address these issues, it is crucial to pursue new trade agreements to reduce barriers and open new market opportunities. Maintaining existing markets is equally important. For instance, the U.S. Farm Bureau supports the administration in addressing the ongoing GMO corn trade dispute with Mexico. The unscientific trade barriers imposed by Mexico are seen as detrimental to U.S. agricultural exports. A decision on this case is anticipated in November following a summer hearing.
Trade also involves importing products that are not domestically produced or are out of season. However, there has been a significant increase in fresh produce imports during the U.S. growing season. For example, blueberry imports from April to June have surged by nearly 3000% over the past 15 years. This influx of imports during the prime growing season poses challenges for American farmers. Rising labor and land costs further exacerbate these difficulties, with labor expenses accounting for 30 to 40% of fruit and vegetable production costs. Since 2000, U.S. fruit production has decreased by 10%, and vegetable production has fallen by 23%.
Robust agricultural trade is vital for food security and the overall health of the agricultural sector. Strengthening trade partnerships and opening new markets are essential for ensuring the sustainability and competitiveness of U.S. farming and ranching operations.
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