Trade is critical for America, particularly for Agriculture.

7 August 2017

Jason HafemeisterUSDA Trade and Foreign Agricultural Affairs202.720.3111jason.hafemeister1@osec.usda.gov

U.S. Ag Exports in ContextU.S. Agriculture is Competitive and Trade Dependent

Agreements Increase Demand and Reduce Barriers

The Trade AgendaProblems: barriers, subsidies, technical standards

Markets: Canada, Mexico, Japan, China …..

Tools: negotiation and litigation

0

50

100

150

200

250

300

350

400

450

500

1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Farm-

related

income

Government payments

Livestock cash receipts

Crop cash receipts

Note: Crop insurance net indemnities included in farm-related income.Source: Farm Income Data, Updated August 2016. Economic Research Service, USDA.

U.S. Agriculture Relies on Exports.Exports support higher prices and expanding production.

4Source: USDA: ERS, Farm Income and Wealth Statistics. USDA: FAS, GATS, all agriculture. CY data.

0

50

100

150

200

250

300

350

400

450

U.S. Ag Exports

U.S. Ag Cash Receipts

U.S. Ag Exports and Imports 2016

The United States is an export powerhouse. All sectors export, most have a trade surplus.While we are big importers, most imports are complementary.

0

2

4

6

8

10

12

14

16

18

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Tree

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Ru

bb

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U.S. Exports U.S. Imports

0

5

10

15

20

25

30

35

40

Oilseeds & Products

Billion$

USDA/FAS/GATS complex mix of categories. CY data.

Trade is Important for U.S. Agriculture

5

U.S. Ag Exports as a Share of Production. Exports are a critical source of income for a wide range of ag products (2015/16).

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Source: USDA/FAS/PSD database, marketing year data

Korea, Colombia, Panama FTAs

Source: USDA Global Agricultural Trade System (CY basis)

0

30

60

90

120

150

19

47

19

50

19

53

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

20

10

20

13

20

16

Billions $U.S. Ag Exports

U.S. Ag Imports

Tokyo Round of GATT

Uruguay Round of GATT

GATT Established

Kennedy Round of GATT

Trade Act of 1974

Trade Act of 1988

Trade Promotion Authority

Fast TrackDenied

Doha Launched

China in WTO

CAFTA-DRNAFTA

Japan: Beef & Citrus

Source: USDA FAS Global Agricultural Trade System*Share of exports to the 20 FTA partners in 1990 vs. share of exports to same countries in 2015.

0

10

20

30

40

50

60

70

Grains &feeds

Dairy Poultry Beef Pork Fruits &veg.

Pe

rce

nt

(%)

1990

2015

0

1

2

3

4

5

6

7

Pre 5 years Post 5 years

0

2

4

6

8

10

12

NAFTA

Billion$U.S. Ag Exports Grow after Trade Agreements

(Comparison average pre and post five years)

Note: China reference is WTO AccessionNote: four year data post agreement only for Colombia, Korea and Panama.

9USDA/FAS/GATS CY data.

High Income($12,476+ GNI per capita)

100

300

500

700

900

1100

1300

Mill

ion

s o

f H

ou

seh

old

s

Households w/real PPP incomes greater than $20,000 a year

Lower-Middle Income defined as ($1,026-$4,035) GNI per capita

Upper-Middle Class Income defined as ($4,036 - $12,476) GNI per capita

Middle class in middle income countries projected to increase by 119% by 2024 vs. just 12% in high income countries

Source: Global Insight’s Global Consumer Markets data as analyzed by OGA

Most of the increase will be in middle income countries and the impact on

worldwide food consumption will be significant

Lower income countries spend much more of that additional income on food

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Co

ngo

, D.R

.

Nig

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Gam

bia

Zam

bia

Gh

ana

Nig

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Ind

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ina

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ibia

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stan

Mex

ico

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ao

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y

Au

stra

lia

Can

ada

U.S

.

Other

Education

Recreation

Transport &communicationHealth

Furnishings

Housing

Clothing

Food

Source: USDA, Economic Research Service using International Comparison Program 2005 data.

-2%

0%

12%

17%

22%25%

45%

62%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

EU NorthAmerica

FSU East AsiaminusChina

SouthAmerica

China SoutheastAsia

South Asia

Changes in Beef, Pork, and Poultry Consumption2016 vs 2006

Source: USDA Production, Supply & Distribution Database

-20% 0% 20% 40% 60% 80% 100%

North America

E. Asia minus China

EU

FSU

South America

China

South Asia

SE Asia

-7%

-3%

3%

20%

53%

71%

73%

85%

Changes in Grains and Oilseed Meals in Feed Consumption2016 vs 2006

Source: USDA Production, Supply & Distribution Database

14

• 355 million bushels (or 2.1 million acres) of corn • $1.3 billion in value to corn • 1.48 million tons of DDGS (169 million bushel

equivalent) • $205.4 million in value to DDGS • 11.7 million tons (or 3.1 million acres) of combined

corn and DDGS fed

Source: World Perspectives, USMEF

2015 U.S. Red Meat Exports accounted for:

Without red meat exports, the price of corn in the U.S. would have been $.45 a bushel lower.

Meat Exports Expand Corn Demand

Meat Exports Expand Soybean DemandCurrently more than 20 percent of domestic pork production is exported; that is expected to grow to 22 percent over the next 10 years even as hog production and pork production expand.

Over the next 10 years, one in every 2.75 pounds of additional pork production will go to the export market.

One pig finished from 12 lbs to 284 lbs consumes an average of 136 lbs of soybean meal.

U.S. pork exports in 2016 will utilize:· 1.75 million tons of soybean meal· 73.4 million bushels of soybeans

That should be the equivalent of 1.5 million acres of soybeans this year

Pork exports are likely to generate more than $672 million to soybean growers in 2016 (assuming season average price of $9.15/bu).

Estimates from World Perspectives, Inc., based on USDA baseline projections for pork and soybeans

As WTO Stalls, Countries Turn to FTAs for Market Access. U.S. Falling Behind.

0

50

100

150

200

250

300

1961 1977 1986 1993 1997 2001 2005 2009 2013

Total WTO-Notified PTAs

U.S. WTO-Notified PTAs

Global Preferential Trade Agreements

Source: WTO

0

20

40

60

80

100

120

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Sin

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ar

Source: WTO Tariff Profiles. 2012

USA EU China Canada Mexico Japan

Korea

VietnamMalaysia

India

Norway

%

Production Process Methods and Labeling Requirements Become Trade Issues

Beta-Agonists

Antibiotics Animal welfare

Geographic IndicationsOrganic

Antimicrobial treatments

Sustainability

Halal slaughterNew technologyHormones

Health/nutrition standards

Known Unknown

Unknown Unknown

Residues

Top 10 Ag Markets 2016

USDA/FAS/GATS. CY data.

FTA CountriesChina/HK/Taiwan

Our top 10 markets account for 75% of exports. Successful bilateral negotiations will ensure low tariff access in most of these markets.

19

0 5 10 15 20 25

China

Canada

Mexico

EU

Japan

Korea

Hong Kong

Taiwan

Indonesia

Vietnam

Billion $

0

5

10

15

20

25

1991 2016

Source: USDA Bico

0

0.5

1

1.5

2

2.5

3

1993 2015

U.S. Ag Exports to North America: 1993 and 2015 billion dollars

Source: USDA Bico HS – 10 product groups

North America Share of Total U.S. Ag Exports

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1993 2015

Source: USDA Bico HS – 10 product groups

U.S. Trade with Mexico: Agricultural & Agricultural Related

Source: FAS-GATS – BICO-HS6

-5

0

5

10

15

20

25

301

99

01

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11

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21

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Val

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Bill

ion

Do

llars

U.S. Agricultural Trade Balance with Mexico– 1990-2016

Trade Balance

U.S. Exports

U.S. Imports

0

0.5

1

1.5

2

2.5

$ billion

Key U.S. Ag Exports to Japan

2016 USDA/GATS/FATUS

Top US Export Market#2 Export Market#3 Export Market

Significant Tariff Barriers

25

Japan: Beef Tariff

WTO Bound

WTO Applied

Chile/Mexico TRQ

Australia FTA

TPP

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2001 2015

China share of U.S. Exports to World

FATUS categories. Beef and pork include variety meats. Fruit includes fruit juice. Corn includes DDG and ethanol. Tobacco includes cigarettes.

Key China Trade Policy Issues• Grain Protectionism

• Subsidy policies• Improper TRQ administration

• Cotton subsidies and tariffs• Beef (sanitary restrictions)• Biotech (corn and soybeans)• Rice (phyto protocol)• Other Corn Product issues

• CVD/AD• VAT• ethanol tariff

• Poultry (sanitary restrictions & CVD/AD)• Dairy • Other ………….

House Trade Votes

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50

100

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500

28

TPA 2015 – Vote of AG Congressional Districts

Top 230 Congressional Districts ranked by value of ag production ($200 million or greater)

resigned, no vote

Voted no,then yes.

Yes on TPA” 2015

No on TPA” 2015

Did not vote

8 November 2016

Exports are critical to the health of U.S. agriculture, and for rural communities.

Trade agreements have helped support U.S. agriculture production and prices.

U.S. agriculture is competitive, but other countries are seeking advantages. Aggressive trade policy can protect us from falling behind and create new opportunities.

Opportunities include Mexico, Canada, Japan, China and others.