HENDERSON, Iowa — Dick Godfrey raises cattle with the knowledge that any beef produced from those cows could end up on a dinner plate in Tokyo.
“Livestock producers are aware that we are part of a global market,” he says. “We know our customers are all over the world.”
Godfrey, who farms and runs a cow/calf herd in Mills County, Iowa, is the president-elect of the Iowa Cattlemen’s Association. While he has not been part of an overseas trade mission, the southwest Iowa producer knows the value of foreign customers.
Two of the largest customers are Mexico and Canada, which makes news of a revised agreement between those countries and the U.S. music to Godfrey’s ears.
“It’s very important to get that ratified,” he says. “Then, we need the tariffs removed so we are trading like we were under NAFTA.”
Godfrey says updating the current agreement with South Korea is a positive sign, as are pending talks with Japan.
“We are seeing attempts to negotiate with these countries one-on-one, which I view as very positive,” he says. “I like that things are starting to happen.”
Shifts in the trade landscape are happening rapidly, says Joe Schuele, vice-president of communications for the U.S. Meat Export Federation.
While the Unites States-Mexico-Canada Agreement has yet to be ratified, he says it is a huge win for agriculture.
“It’s important that all ag exports that were previously duty-free will be so going forward,” Schuele says, but ratification is unlikely before U.S. tariffs on steel and aluminum are eliminated.
The Korea-United Status agreement, also known as KORUS, is a revision of an older trade pact between the two countries. He says that under the agreement, most U.S. pork enters Korea duty-free, and beef will be duty-free by 2026.
“That’s critical for our ability to compete in Korea,” Schuele says.
The Trump administration officially notified Congress of its intent to open talks with Japan on a bilateral trade agreement. Schuele says this is vital to keeping the Japanese market completely open to U.S. exports.
“Japan currently has an agreement with the European Union, and the 11 countries left in the TPP (Trans-Pacific Partnership) are in the process of ratifying that agreement,” he says. “All of our competitors are gaining tariff relief, so it’s urgent that the U.S. is able to reach similar terms with Japan.”
Negotiations are ongoing with the Philippines, with the U.S. Trade Representative announcing Oct. 22 that talks were heating up on a bilateral agreement.
“We send a lot of pork and beef to the Philippines, so this is a tremendous announcement,” Schuele says.
These new trade deals cannot come soon enough, as the United States continues to produce large amounts of red meat and poultry, says Scott Brown, Extension livestock marketing economist with the University of Missouri.
He says while tariffs to Canada and Mexico have not severely impacted volume, the value of exported meat has taken a hit. Brown says while trade with North American neighbors provides short-term gains, agreements with Asian countries are part of a bigger picture.
He says while beef supplies appear to be tightening somewhat, pork supplies continue to grow.
“It’s going to be hard to export substantially more pork than we are now,” Brown says, adding the USDA’s most recent Cold Storage report indicates pork demand remains strong. “We want to make sure all markets are available to us when supplies are large.”
Brown says interest in bilateral agreements with individual trading partners appears to be growing, and cited the work with South Korea and Japan.
“There is room to see growth in those nations, particularly in beef exports to Japan,” he says.
Godfrey says while livestock producers understand the importance of global trade, they also understand that any potential pact takes time.
“With anything, you have to work out the details,” he says. “The talk of bilateral agreements with individual countries is very positive news for our industry.”
This story was updated Nov. 1, 2018.