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Concerns about the future of the North American Free Trade Agreement (NAFTA) have disrupted relationships with longstanding customers of U.S. grains and caused significant concern in farm country, U.S. Grains Council (USGC) Chairman Chip Councell testified Tuesday to a panel of government officials examining priorities ahead of NAFTA renegotiation talks.
Councell, a farmer from the Eastern Shore of Maryland, spoke at the hearing to provide information and offer personal insights into the impact of NAFTA changes to the U.S. corn, sorghum and barley industries.
He told panelists he has been to Mexico twice this year and helped to host a team of Mexican grain buyers visiting the United States to talk with farmers and policy makers. Through those conversations, he learned firsthand that buyers’ concerns are translating into dollars lost in farm country.
"Because our agriculture economies have grown to be so closely intertwined, this trade agreement in particular is critical to my business. The last several months have highlighted how important it is to maintain this strong, stable relationship if we are going to continue to grow," Councell said.
Councell told panelists that the Council has "strong but unconfirmed evidence" Mexico will purchase corn from South America later this year, and that he himself took a futures position for his entire 2017 corn crop when withdrawal talk began, fearing what might happen to markets as the new crop approached.
"What is happening now in our relationship with Mexican buyers will change how the Mexican industry invests in infrastructure, impact our demand for years to come and impact individual producers like myself financially," he said.
Councell said that rising demand for feed and food has created new opportunities for grain and oilseed exports to Canada and Mexico over the past three decades, which have been tariff-free thanks to NAFTA. Proximity and natural logistical advantages have led to efficiencies and integration on both sides of the border and helped dramatically expand U.S. farmers' exports to Mexico, in particular.
With these successes in mind, Councell urged panelists to ensure negotiators make every effort to do no harm to existing markets and avoid retaliation against U.S. agriculture. He also outlined improvements the Council would suggest for the agreement, including elements drawn from the Trans-Pacific Partnership (TPP) text as well as updated sanitary and phytosanitary, biotechnology synchronization and energy provisions.
The U.S. Grains Council is a private, non-profit organization that works to build demand and develop markets for U.S. corn, sorghum, barley and related products including ethanol, distiller’s dried grains with solubles (DDGS), and corn gluten feed and meal.
The Council hosts programs in Canada and Mexico and has strong relationships with the feed and livestock industries in both countries.
Canada was the ninth largest export market for U.S. corn; the seventh largest export market for U.S. DDGS; and the top export market for U.S. ethanol in the 2015/2016 marketing year.
Mexico was the top export market for U.S. corn in the 2015/2016 marketing year and is a steady and significant buyer of U.S. barley, sorghum and DDGS. The Council has maintained an office in Mexico for 35 years, helping the Mexican feed and livestock industry develop through training, information exchange, technology transfer and market development.