It goes without saying that trade is big business for Nebraska's farmers and ranchers. About one-third of every commodity produced in Nebraska is exported to other countries.
Since the 2016 presidential election season, the North American Free Trade Agreement has become the target of criticism from now President Donald Trump, who has argued for the renegotiation of, and in some cases, even a withdrawal from NAFTA.
But according to a recent report from Nebraska Farm Bureau, farmers and ranchers in the state have a lot at risk if the U.S. withdraws from the agreement.
"Today, nearly half of Nebraska's total agriculture exports are bound for Canada and Mexico, our NAFTA partners. While we've known for years that NAFTA plays a critical role in providing underlying price support for Nebraska agriculture commodities, this economic analysis quantifies what this agreement means at the farmer, rancher and county levels," said Steve Nelson, Nebraska Farm Bureau president. "What it clearly shows is that withdrawing from NAFTA, or renegotiating in a way that harms agriculture trade, would be damaging."
The report, "North American Free Trade Agreement and Nebraska Agriculture," identifies 2016 export value of individual Nebraska agriculture commodities to Canada and Mexico. Analysis in the report also assigns a dollar value of NAFTA on a unit basis for individual agriculture commodities, demonstrating not only how NAFTA supports commodity prices, but also what the loss of NAFTA could mean.
Jay Rempe, Nebraska Farm Bureau senior economist and author of the report, noted the report breaks down the benefits of NAFTA into a way that's easily understandable for farmers and ranchers. "We took those export numbers, and we thought, let's try to break them down to a level we're all familiar with – and that's the prices we receive for commodities, whether price per head or price per bushel," said Rempe.
For example, the report shows NAFTA exports of soybeans and soybean meal in 2016 were worth $1.28 per bushel of soybeans produced in Nebraska. So, for every bushel produced in Nebraska, NAFTA exports of soybean products contribute $1.28 in value to Nebraska soybean producers — and that's also the amount Nebraska soybean growers stand to lose if NAFTA is withdrawn. Likewise, the report shows NAFTA exports are worth $38.22 per head of beef, $22.16 per head of pork, 21 cents per bushel of corn — including distillers grain and ethanol — and 75 cents per bushel of wheat.
The report includes numbers at the county level, as well as the benefit of NAFTA for the average farm and ranch for individual counties.
When breaking the numbers down at the county level, Platte County comes out on top, with an export value of over $34.5 million. Following closely behind Platte County are Cuming, Holt and Custer counties, each of which has values over $30 million.
The report also shows Phelps County has the most at stake in NAFTA on a per farm or ranch basis, with an estimated $55,468 benefit to the average farm or ranch operation in the county from NAFTA. Following Phelps County are Kearney, Boone and Fillmore counties.
"When we're looking at these kinds of negotiations, it's tough to tell the dynamics of what might happen if we leave NAFTA if the president decides that we're going to withdraw from NAFTA, because there are a lot of dynamics in the market," Rempe said. "What we've done is we can tell what's at risk. Looking at Platte County, our estimates suggest there's $35 million worth of export value that's at risk by us pulling out of NAFTA. In Phelps County, we can say there's roughly $55,000 per farm at risk of the United States pulling out of NAFTA."
Nelson added these numbers paint a clear picture of the benefits of NAFTA, and he hopes if any modernization of the trade agreement takes place that the Trump administration takes a "do no harm" approach.
"I believe the president wants to have better trade deals. I think he's sincere about that. But what he means by better a trade deals and what we think are better a trade deals may not be the same thing. Part of that comes back to areas outside of agriculture," Nelson said. "There may be things that need to be worked on that would be a better balance from a U.S. perspective. From the agriculture side, we know trade agreements, particularly NAFTA, have been good for agriculture."
To view the report, visit nefb.org.