TRANS-PACIFIC PARTNERSHIP COULD SIGNIFICANTLY BOOST FARM ECONOMY
Congressional passage of the Trans-Pacific Partnership (TPP) could boost net farm income by $4.4 billion over the farm income levels expected without Congressional passage says a new report by the American Farm Bureau Federation.
In October 2015, TPP negotiations concluded and the final agreement was signed by the United States and 11 other countries in the Pacific Rim. TPP is a multi-lateral agreement which means that all 12 members are signing agreements with each other. This means that all other countries will still gain access to improved trade relations with the other member countries even if the U.S. fails to pass the agreement.
Other countries gaining efficiencies while the U.S. remains at a standstill equals lost ground for the U.S. in the global economy. The U.S. will actually see losses in market share and declines in the value of our agricultural trade if we fail to sign TPP.
From agriculture’s perspective, the major short-term gains in trade resulting from TPP come from increased access to the animal protein markets in Japan. Longer term, economic growth in Vietnam along with much better entry terms into that market should also result in an improved trade picture there.
Specific gains for U.S. agriculture are as follows:
- Livestock receipts with implementation are $5.8 billion higher with approval than without. For the crops sector— including fruits and vegetables—receipts are $2.7 billion higher. Net farm income is also $4.4 billion higher.
- U.S. beef and pork exports are expected to be $1 billion and $940 million higher, respectively.
- Farm prices for corn, soybeans, wheat, rice, cotton, fed steers, feeder steers, barrows and gilts, wholesale poultry and milk are all projected to be marginally higher with the agreement in place than without.
- Net trade rises for rice, cotton, beef, pork, poultry, butter, cheese and non-fat dry milk.
- Net trade of corn declines slightly, but overall use increases and corn revenue rises as higher feed use is needed to provide for the added beef and pork exports rather than being exported as raw commodities.