Uncertainty surrounding trade agreements poses a threat to the agricultural economy. That is according a report from the Federal Reserve Bank of Kansas City.
Cortney Cowley, economist in the Bank’s Omaha Branch, says exports account for roughly 20 percent of ag income.
“If you look at Canada, for example, it’s responsible for about 60 percent of vegetable exports. Mexico is responsible for about 30 percent of corn exports. If we lost that, it would be a pretty big hit to some of those commodities,” Cowley tells Nebraska Radio Network.
Trading with Canada and Mexico would likely continue for the most part, Cowley says, due to proximity, but prices would likely be higher.
The export share of the total U.S. crop production value increased to about 40 percent last year, showing trade’s importance with growing ag incomes.
Cowley says economies like China and India need to be open to U.S. exports.
“There’s just a lot more opportunities there for expanding demand for meat protein products or some other products that, historically, people in those countries haven’t been able to afford,” she says, “but as their economic standing increases, they can afford and will demand those.”
The report also shows the U.S. share of world crop exports has declined from 65 percent to 27 percent over the past 40 years.
At the same time, demand for agricultural products in the U.S. has been relatively flat.
“Especially, more recently, so a lot of the outlook for agricultural products in the future, a lot of the growth, will be in some of these export markets,” Cowley says.
AUDIO: Mike Loizzo reports [:34]