NAFTA — the North American Free Trade Agreement signed in 1994 — receives mostly favorable reviews from regional agriculture organizations, growers and businesses, with predictions that once a few sticky wickets are corrected, free trade among the United States, Canada and Mexico will continue to improve."It˜s a good marriage, but we˜re seeing some bumpy roads," said Chandler Keys, vice president of the National Cattlemen˜s Beef Association˜s Center for Public Policy. "Trade relationships are broad-based and encompass more than a single trade agreement, like NAFTA."
Canada and Mexico are the second- and third-largest individual country markets, respectively, for U.S. agricultural products covered in a report released this summer by PROMAR International on behalf of a couple of dozen U.S. agricultural groups.
In essence, the report said that NAFTA has been good for U.S. agriculture. The United States exported more than $6.4 billion to Canada and $5 billion to Mexico in 1996. And, the U.S. agricultural net trade balance was substantially higher under NAFTA at $605 million a year than in the pre-NAFTA period at $530 million a year.
Outstanding trade issues, according to the report, include access to the Canadian dairy and poultry market, grain trade between the United States and Canada, access of U.S. feeder cattle to Canada, and imports of winter vegetables from Mexico. The report also notes, however, that these issues were not necessarily caused by NAFTA.
So what does NAFTA mean for Northern Colorado farmers and ag-related businesses? Bob Brunner, president of Northern Feed & Bean in Lucerne, answers that by saying, "Has it been good for pinto (bean) farmers? No. Has it been good for us? Yes."
Northern Feed & Bean, he explained, has entered into a partnership with a Mexican company to package beans in Mexico. "We˜re distributing beans in two-pound packages to major grocery store chains in Mexico," he said. "Our business has gone up since NAFTA. But I can˜t say that for everybody."
For example, Brunner said that permits for bean imports into Mexico were to have been issued by the Mexican government in February. Because of fear by Mexican farmers that American imports would curtail sale of Mexican-grown beans, the permits weren˜t issued until mid-May. That means American bean farmers missed out on four and half months of sales.
"That hurts the industry as a whole," Brunner said. Ironically, he noted, permits are not required for beans imported from Mexico.
"The opportunity for them to market in this country with greater freedom is out of balance to our opportunities to market produce from our country into Mexico," explained Wayne Mininger, executive director of the National Onion Association, based in Greeley.
That˜s one reason he˜s not quick to praise the benefits of NAFTA. "In the produce business, there˜s more reluctance to call NAFTA positive," he said.
By its very nature, the produce business is labor-intensive, with a high cost of growing crops. Competing against countries such as Mexico where labor costs are much lower makes it difficult for the American farmer.
Mininger said the peso devaluation in 1995, shortly after NAFTA was implemented, reduced opportunities to sell produce in Mexico.
"Almost overnight, the buying power was diminished by 40 percent," he said.
Onion exports out of Northern Colorado that had developed curtailed dramatically, he added. "We˜re just now starting to see it revive."
And Canada, he continued, is importing more produce into the United States than in the past, thanks in large part to the advent of its greenhouse industry and flexible growing rules.
Mininger said that while some say NAFTA has indeed had a major effect, others say it has been more evolutionary than revolutionary and choose to adapt to change as it occurs.
"It˜s a question of perspective and perception," he said.
For wheat growers in Northern Colorado, NAFTA has meant increased exports of winter wheat to Mexico only.
"U.S. wheat is prohibited to being exported to Canada. It˜s a closed market," said Darrell Hanaban, executive director of the Colorado Wheat Administrative Committee in Denver.
And, the Canadians have proved to be tough competitors in marketing to Mexico. Just prior to NAFTA, the Canadians "were aggressive and captured the largest market share (in Mexico). Since the implementation of NAFTA, we have recaptured a large percentage of market share. We haven˜t reclaimed it completely, but we have seen major increases in exports," Hanaban said.
Although wheat acreage has increased, Hanaban said that is more a result of the Freedom to Farm bill implemented in Congress in 1995. The bill gives farmers flexibility to plant whatever crops they choose, rather than be subject to set-asides and acreage-reduction programs.
Although Colorado is a corn-deficit state — it uses 40 million more bushels of corn than it grows — growers still realize the positive effect of NAFTA, thanks to the simple fact that increased use of corn somewhere affects the price everywhere. Or, as Hal Smidley, executive director of the Colorado Corn Administrative Committee, said, "A rising tide lifts all boats."
Smidley said that "when looking at (Mexico˜s) growth/development plans and increased production of animal protein, meat, milk and eggs, they will require more corn than they˜re capable of producing."
He also noted that NAFTA provides a framework for working on resolutions to trade disputes.
"We˜re now facing a situation in which Mexico has placed sanctions on high-fructose corn syrup. These sanctions will be reviewed under both NAFTA and the World Trade Organization rules," he said.
In coming years, Smidley predicts that as Mexico develops and increases commercialization of industries, its citizens will have higher incomes, "which invariably will result in a diet higher in animal protein, which requires corn."
And much of that animal protein is imported from Northern Colorado.
"NAFTA has been very positive for us," said Mark Gustafson, vice president of sales and marketing at ConAgra Refrigerated Foods in Greeley. "Obviously, any opening of markets or market access has benefit … In this area, Monfort beef plant and the Longmont turkey plant do tremendous business."
How much of an increase in the Canadian and Mexican markets can be attributed to NAFTA is difficult to determine, because sales were increasing prior to the trade agreement, he said. Mexico is the third-largest market for beef, pork and processed meats; Japan and Korea are first and second, respectively.
NAFTA, Gustafson noted, helped provide a harmonization of tariff and meat-inspection issues with Canada, the fourth largest market for U.S. beef.