Mississippi Agricultural News:
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Trade Policy Affects Mississippi FarmersBy Bonnie Coblentz MISSISSIPPI STATE -- Decisions made in Washington, D.C., Brussels and Tokyo affect everyone, a fact not lost on Mississippi farmers impacted by international trade policies. Mississippi's top five agricultural exports are soybeans, cotton, poultry, rice, live animals and meat. When looking at the value of these exports compared to the value of farm production, in 1999, state agribusiness firms exported almost 50 percent of the soybean crop, 33 percent of cotton, about 10 percent of poultry, 85 percent of rice, and 10 percent of meat and live animals. In some cases, value added to the farm products may be reflected in export value. Bill Herndon, an international trade specialist with the Mississippi Agricultural and Forestry Experiment Station, said Mississippi farmers are dependent on international trade and exports for their economic livelihood. "Without the export market, ag prices would fall to unacceptably low levels. Farmers would have to take one out of every four acres out of production since about 25 percent of all our production is exported," Herndon said. Recent trade agreements such as the North American Free Trade Agreement have made Canada and Mexico top importers of Mississippi ag products. Herndon said state exports had some problems in 2000, one being the high value of the U.S. dollar compared to foreign currency. Lingering effects of the Asian financial crisis of 1998 and continued trade sanctions against Cuba and Iraq further reduced the state's ability to export. "In general, ag exports across the United States and Mississippi have increased since 1999," Herndon said. "A bright prospect in the future is permanent normal trade relations with China. That is expected to have a very positive impact on agricultural exports of grain, oilseeds and cotton." Albert Allen, MAFES agricultural economist who specializes in international trade, said 1999 was a fairly typical year for exports. "Exports are very important to Mississippi farmers and the rest of the economy," Allen said. "As exports have increase revenue for farmers, they have also created off-farm jobs in transportation, processing and financing." Exports, and the money they generate, are influenced by free trade and trade barriers. Allen said the World Trade Organization and the European Union were both established to protect the trade interests of member countries. "The United States normally favors free-trade, and many times the European Union is just the opposite," Allen said. "Japan, a major soybean importer, often has its own trade barriers." Allen said trade barriers are most often imposed to protect a country's new industries and domestic producers. Problems arise when these trade barriers aren't lifted and exports from other countries are never allowed to enter that market. Other reasons for establishing trade barriers include a desire to protect the health of the people or the environment, or to be self-sufficient. Allen said the European Union imposed trade barriers they say will protect their people's health, such as bans on genetically-modified crops. Japan has barriers to foreign trade to protect its own rice crop from foreign competition. Sanctions are another factor influencing trade. Trade sanctions prohibit the export of goods to certain countries, and usually are imposed to meet foreign policy or national security goals. "The only problem with trade sanctions is you have to have other countries participating with you to make it work," Allen said. "For example, the United States has trade sanctions against Cuba, but as long as some of the European Union countries trade with Cuba, our sanctions have little effect." Allen said free trade is a two-way street, requiring both imports and exports. Many countries limit imports to reduce competition with domestic production, but Allen said the economically-efficient companies and industries will make adjustments and survive free trade. "The overall benefit of free trade is consumer welfare -- the consumer getting the best product for the best price," Allen said. American farmers sometimes say imported products are inferior and don't meet the same standards U.S. products must meet, Allen said. "A lot of countries are not on a level playing field with the United States. They don't have high wages, emissions limits, environmental quality standards and other restrictions we face," Allen said. "American products cannot compete on the world market unless there is a level playing field." Getting that level playing field requires governments working together to make trade truly free since many countries want to export, but not import. This situation only benefits those opposed to trade, Allen said, and it's not trade until product moves both ways. "Consumers are basically left out of this debate," Allen said. "There are numerous consumers, but they're disorganized. The smaller number of farmers, manufacturers and distributors are well-organized with lobbyists, and they usually want trade barriers to protect their specific interests. They call for free trade as long as free trade doesn't impact them adversely." Released:
Nov. 20, 2000 |
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