Why American Farmers Are Nervous About USMCA

This is a story about not making things worse.As the U .S., Mexico, and Canada negotiate over continuation of their three -way trade agreement, U .S.farmers look on with apprehension.

They've already been hit hard by troubled export markets elsewhere in the world, particularly to China.

Our farmers are true patriots because China and others have targeted, China had others, remember this, have targeted our farmers.

In rural Iowa, Stu Swanson has just planted his 34th and likely most challenging crop.

Unfortunately, the clock is ticking on us.We're at this point where we need to get a plan going forward or the operation may come to an end.And my farming operation, I would do anything I had to keep it alive.I would go find another job.I would downsize or upsize or whatever I need to do.But the heritage of and the sacrifices that my parents and grandparents made, I don't want to be the generation or the person that that fails and lets them down is something I think about daily.

It's something I think a lot about in the dark of night that keeps me up.We have to find a way going forward and we've kind of been operating on hope the last few years.That hope is starting to dwindle.

Swanson is a corn, soy and pig farmer and on the board of the Iowa Corn Growers Association.We met him a year ago on his farm amid a tough period for the agriculture industry.

A lot of farms I understand are actually cash negative.

Are you cash positive?I haven't ran a number to tell you today.Certainly we know that over the last three years we've seen about a 30 percent decline in commodity prices.I think over thatsame time, we've seen the nine major crops all be underwater, so we are producing at a loss on the nine major crops.

In the years since, conditions appear only to have gotten worse, even after a $12 billion aid package from the Trump administration.

It's been a tough winter and spring.We've lost farmers in our neighborhood and across the state that took their lives because of the struggles they've seen.We've seen farmers that weren't able to get financing for the 2026 crop.And so, unfortunately, when we have low returns, at some point, the financing dries up.

If U .S.trade policy overall has been rough on farmers the one bright spot has been the USMCA which has shifted exports from declining Chinese business to growing business with Canada and Mexico.Since 2023 China has slipped from the top export market for U .S.agriculture to third with Mexico now top and Canada second.

Since NAFTA to today since it was inception to today U .S.exports to Mexico and Canada have grown about 600 percent.

Tom Halverson is the CEO of Cobank which operates as a farm credit bank.

The most important thing I can say about that is you know this has been a massive trade liberalization success in the the agricultural sector.I'm not going to speak to autos or other industries and so forth.But from an agricultural perspective it's been a tremendous success.Does that mean every single agricultural producer and every nook and cranny of the United States is benefit from it.No that's not the way economics works right.You have winners you have losers.

But the biggest number of winners the biggest incremental value creation has come from the liberalization of these markets.To me moving backwardsbe to reverse that trend.increase tariffs, increase market barriers, drive our closest neighbors and colleagues in Canada or Mexico to retaliate against us in a way that would harm our access to those markets.Just remember, these are the two largest markets for American agricultural exports in the world.They happen to be our closest neighbors and where we have the greatest ability to incrementally grow our volume.

The more successful and the more prosperous Canada and Mexico, the more prosperous and successful is the United States in general but particularly American agricultural producers.

It's why both Halverson and Swanson value stability over all else as the USMCA comes up for review.They favor a 16 year renewal instead of potential annual reviews from the point of view of an American farmer.taking a look at this renegotiation of USMCA, what's the best they might hope for and what's the worst they might fear coming out of the negotiations?

I think the best that we can hope for here is we keep all the benefits that we have of the liberalization we've accomplished over the last 30 years, and then we add a little bit to it, right?So that Over the next 16 years, if we get a push out for 16 years of a renewal, that would provide a great deal of stability and confidence for our agricultural producers to say, hey, This is a framework of trade that's going to last and be stable.And I'm not going to have any unexpected negative consequences for quite some time.Therefore, I can have some confidence in making long term investment decisions.Right.Because one of the things we're having difficulties and challenges with in certain sectors right now because of trade uncertainty is people don't know they're delaying making investment decisions.

Right.Because they don't know if that investment decision is going to be wise or not.If tariffs and the changes in their costs and ability to stayproduct are going to be meaningfully affected.

That suggests perhaps almost as important as the terms is the duration.Yes.Because you need that certainty.

Yes.You're a farmer.I think it's fair to say that if we got the if we got a continuation with a little bit of a little bit of small L liberalization somewhere, some benefits in dairy or some other place, but it was only for a year.And we were all told, well, we're going to do this year after year after year and definitely into the future.That would not eliminate or mitigate the problem that we have of long term uncertainty, because we're not building power plants with a 40 or 50 year life here.We are making lots of long term investments, and that is oftentimes very significantly impacted.

by the trade regime.Right now, about 20 % of our agricultural product in total has to be exported.We have no population growth in the United States right now, so the more agricultural productivity and output we have, it's not hard to recognize that it's got to go someplace, right?And we're not going to consume it here in the United States, so the long -term future for U .S.agriculture can be defined as exports, exports, and more exports.

In corn one of the destinations for those exports increasingly is Mexico.It is the largest export market for U .S.corn.According to USDA data the U .S.

exported almost four million tons of corn to Mexico in the first two months of the year an increase of around 11 percent from the same period last year.

It's.Like 6 .5 % of the total production goes to Mexico alone.The two countries combined, when you look at corn and corn products, it's about 1 .8 billion bushels of corn, which is the entire production of the state of Minnesota, or again, that carryout that we have.So, if we don't have this relationship of the three countries, we're looking at doubling our carryouts,then finding a situation where we just simply won't be able to dig ourselves out of that kind of a hole.So it's a really, really big deal.

It's the gold standard in my mind.It's something that we could replicate across the world.

But despite it being the gold standard for U .S.farmers, America does run a trade deficit in agriculture with both Mexico and Canada.which could have the potential to be a sticking point for the Trump administration, which we've had for three or four years now.

It's the natural aggregation of the market forces and decisions of American consumers.You probably do like I do.And most people we know want to have fruits and vegetables we used to not get in the wintertime.Now we want them 365 days a year.That means we have to buy them and import them from other places.And the result of that is even though we're exporting more and more agricultural volume, We're also importing more that has resulted in our agricultural balance of trade going negative.

President Trump has long talked up his support from and for farmers.And earlier this month he traveled to Wisconsin to meet with them.

As president, I fought for the American farmer like no one has ever fought before.Nobody's like, I'm up here today.I don't need this.I got elected.I don't know.What the hell do I have to be here for?

My personal judgment, what I do and what I encourage customers and people I talk to to do with all politicians, quite frankly, is, you know, listen carefully to what people say, but watch what they do.Watch what the results of the policies are.try and understand what the intended results are, and then always watch extremely carefully and closely for what always happens, which is the unintended consequences, because it's often the unintended consequences that are the most consequential and come at you from an unexpected perspective.And I think, you know, one of the places to look always for unintended consequences is, you know, when you think you have avery strong negotiating position where you put tariffs on somebody and don't expect them to retaliate and then they do.right.

The unintended consequence of that as well they did.And now that's costing our producers or our industry.

Be it a trade dispute with China putting a halt to soybean orders or the war in Iran driving up fertilizer costs.Farmers have felt the brunt of those unintended consequences.

I'm excited that President Trump has initiated lots of trade talks.I would like to see more details and I would like to see the boats loaded and product moving.Unfortunately, it's not moving as fast as I would like.I think all farmers When we hear about a trade deal, we expect that tomorrow we'll see the price go up and we'll see the products moving in our carryout going down.But we haven't seen that yet now because I think we're at a crossroads where we might need to look at farm policy a lot different than we have in the past.And this might be the time where we change direction on some of these things, including subsidies and payments.

If we can utilize the benefits of the government in terms of trade investment into new domestic uses, help find new markets for us.I think that's the way we have long term success.This is the end of the line here pretty quick.I think we've seen the start of the loss of farmers permanently one way or another.I think that we could increase the speed of the change of agriculture for corn farmers like Stu Swanson.

The change needed may not be in the USMCA at all.They've seen their exports rise to both Canada and Mexico.What they need are trade deals with the rest of the world to restore export markets that they've lost.