Trade matters. It’s easy to forget about the important role that export markets play in building corn prices, of course, because most of you never see your corn again once you take it to the elevator. But let’s be intentional now about recognizing the importance of exports and trade to your farm’s profitability. More corn leaves Illinois than any other state, so this really should be a top-of-mind topic for you. Specific to the news today, corn-in-all-forms exports just took a hit as Japan announced it will increase to 50% the import tariff on U.S. beef. You know what would have kept that from happening? A trade agreement, specifically the Trans Pacific Partnership.
According to an article in Drovers online, “Japan was the top export market for U.S. beef, valued at $1.5 billion in 2016. According to data compiled by the U.S. Meat Export Federation, first quarter U.S. beef sales to Japan increased 42 percent over 2016. In addition to the United States, the 50 percent safeguard tariff also applies to imports from Canada, New Zealand, and other countries that do not have a free trade agreement with Japan.”
Of all corn fed to livestock in this country, beef animals account for 27% of it. Overall, beef cattle ate or will eat up about 8% of the 2016 corn crop.
When prices go up due to trade barriers, no one wins. Consumers must pay more for the same product, encouraging some of them to substitute with a different, lower cost product. And farmers don’t win because market segments are lost. To be more precise, U.S. cattle (and corn) farmers don’t win in this case.