Maintaining trade with Mexico and Canada is crucial for the Texas ag economy with an economic impact from Texas agricultural export trade totaling more than $3.3 billion in 2016 and supporting 18,674 jobs, according to research conducted by the Center for North American Studies at Texas A&M University.
Center director Dr. Luis Ribera, also a Texas A&M AgriLife Extension Service economist, said the study found the economic impact of U.S. agricultural exports to Canada and Mexico totaled $107.8 billion and 509,332 jobs in 2016.
“This gives us a good picture of how important it is to keep these markets open,” Ribera said. “When you look at it, over 509,000 jobs and almost $108 billion in economic impact is a lot of money and jobs, especially now that commodity prices are low and farmers are struggling to make a profit.”
The North American Free Trade Agreement, NAFTA, negotiated between the U.S., Canada and Mexico, and initiated Jan. 1, 1994, was designed to expand the flow of goods, services and investment throughout North America.
NAFTA calls for the full-phased elimination of import tariffs and the elimination or fullest possible reduction on non-tariff trade barriers, such as import quotas, licensing schemes and technical barriers to trade.
TARIFFS CAUSE DISRUPTION
Ribera said such tariffs would cause disruption in current U.S. agricultural exports.
“If you start to put tariffs on those items, you can expect retaliation,” he said.
Ribera says 35 percent of U.S. farm income comes from selling agricultural products overseas.
“If you go back from 1994 to last year, U.S. agricultural exports increased 192 percent,” he said. “During the same period, U.S. agricultural exports to Canada and Mexico increased 288 percent. These markets are very important to us. These agricultural exports have a lot of value throughout the economy and support a good many jobs.”
According to the report, Canada and Mexico are important markets for Texas agricultural exports as well. In 2016, Texas exports to Mexico totaled $833.5 million of which $270.8 million were animal products and $562.8 were plant products at farm-gate level.
The top four Texas agricultural exports to Mexico were beef and veal, valued at $141.7 million; cotton, $125.4 million; sweeteners, $64.5 million; and corn, $62.4 million.
Texas agricultural exports to Canada totaled $875.1 million of which $222.6 million were animal products and $652.6 were plant products at farm-gate level.
The top four Texas agricultural exports to Canada were other horticultural products, $230.3 million, followed by beef and veal, processed grain products and food preparations at $110.2 million, $77.6 million and $77.3 million, respectively.
Mexico has already discussed options of grains and oilseeds purchases with Brazil and Argentina.
“They are looking to get the best deal out there, though nothing has happened yet,” Ribera said. “It is still a concern when you look at the overall economic implications of agricultural export trade.”