There is a 72-year-old man who has been working on his 10,000-acre ranch on the Texas Gulf Coast for the better part of his life. The farmer has seen a fair share of successes and struggles within the industry including diseases and droughts. However, he is now preparing for a new threat in the market like any other ranch owner. There could be a potential loss of trade deals that could drastically reduce his annual sales from the farm.
According to Mr. Locke, the U.S market is tremendously important for the ranchers because close to 25 percent of the breeding stock they sold from the ranch stock in 2016 was to the US market. In fact, the American beef industry earned more than 6 billion US dollars from the overseas sales. Some of the biggest purchasers are the U.S partners from the North American Free Trade Agreement (Nafta) are Mexico and Canada.
President Trump’s intention to renegotiate Nafta and possibly place tariffs on other US trading partners or Mexico leaves the industry with a lot of reasons to worry. According to John Robinson, Nafta is highly beneficial to ranchers and is one of the best trade deals that is beneficial to farmers. Robinson comes from the Beef Association of National Cattle Men.
Currently, the beef industry is suffering from the trans-pacific partnership loss that was withdrawn by Donald Trump during his first week in office. The free trade agreement with these Pacific Rim Countries such as Asia was set to expand the exports of America’s beef products. Estimates reveal that it could increase these exports by $400m every year.
Jennings Steen, who is one of the cattle dealers from Austin states that the market feels quite nervous to hear that Nafta is going to change and they will no longer do the TPP. He says that dozens of cattle dealers have been calling him and his partners seeking for clarification on how the expected changes in the industry will affect the business. The ranchers hesitate to make long-term decisions because of their concern for prices.
What American suppliers were looking for was an increase in the share of Japan’s home market. The high tariff on the US beef products makes it very hard for them to compete with suppliers from Australia who sell their ranch products in Japan at lower rates.
However, the supporters of Trump presidency believe that he has enough experience in business that will allow him to negotiate the best deals for the U.S. his focus may be on bilateral agreements and not bigger deals that involve several countries.
Sid Miller who is Texas Agriculture Commissioner says that Nafta requires a facelift after 22 years. He was among the most outspoken and early supporters of the Trump presidency. Miller has been spending a lot of time assuring ranch owners that they will not lose trade with Mexico since the election. He also explains that the Trump administration will open up new trade options.