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Successful Farming magazine / Agriculture.com - - - May 16, 2006 - - - 2:42 p.m. CDT

No time to back down

Protectionism still looks like a bad deal in spite of frustrations in trade

By Dan Looker, Business Editor

If you're a rancher, especially if you belong to the new cattle group, R-CALF, I can hear your reaction to the trade cover story that starts on page 24: "Trade isn't good for us!"

Just last month, R-CALF predicted that imported beef will capture a record share of the U.S. market in 2006, partly because our Canadian border opened to young live cattle in mid-2005.

I asked Jim Robb what he thinks.

Robb heads the Livestock Marketing Information Center in Denver, which works for land-grant universities. He's neutral in the fray between the trade skeptics in R-CALF and trade boosters in the older National Cattlemen's Beef Association (NCBA).

That record share of beef imports was last year, he says. Most economists expect a slight improvement in 2006.

The problems of beef stem from BSE, not a flawed trade deal with Canada and Mexico. In fact, if we didn't have the partial opening of Mexico to cattle under 30 months of age, last year's beef trade deficit would have been bigger.

According to NCBA, the value of beef exports to Mexico in 2005 was $882 million, a little above the pre-BSE level of $877 million in 2003. That helped offset the 2005 deficit of $1.5 billion. Before BSE was found in the U.S., we exported up to $2.4 billion more value in beef to the world than we imported each year.

R-CALF members aren't the only producers disillusioned with what they see as lackluster results. Even members of the National Corn Growers Association are beginning to think the growing market for ethanol means we don't have to open markets in other countries.

The wrong target

Trade itself isn't the problem, at least for major commodities from the nation's midsection. All those ethanol plants sprouting in the U.S. need a market for distillers' grains. It turns out that Mexico is starting to import them.

If you're not benefitting from trade, don't blame agreements. Blame lack of competition in your ag industry.

Last month R-CALF's president, Texas cattle producer Chuck Kiker, called for "immediate action to implement country-of-origin labeling (COOL)" so consumers can choose domestic or imported beef. And he blamed multinational meat packers for holding up COOL in Congress. He's right.

Mexican importers of U.S. feed grains would like to import directly from U.S. co-ops and ethanol plants.  It's difficult because of the lock big grain exporters have on rail transport. More competition in grain trading and rail transportation would help.

I know, the track record of recent administrations in enforcing antitrust laws isn't inspiring. And Congress has no spine to strengthen antitrust.

Instead of farm and ranch groups splitting on the merits of trade agreements, it's time to demand more oversight of competition in the marketplace. The ag community shouldn't just cheerlead and rubber-stamp more trade agreements without getting real benefits from our own government.

Don't outsource agriculture

For U.S. fruits and vegetables, trade has brought tough challenges from China, Mexico, and elsewhere. Now the fight in Congress over immigration laws could finish off many producers.

Jim Benham, president of Indiana Farmers Union, worries about it, too. He  farms 1,100 acres of corn and soybeans and raises about 50 acres of tobacco "to subsidize my corn and bean habit," he jokes.

In the early 1990s Benham could no longer find enough local high school kids to help with tobacco. He began hiring migrant laborers, mostly Hispanic. Through a contractor, he pays them about $7 an hour. Under current laws he can't ask them to prove they're legal. If he uses an existing, complicated guest worker program, he'd pay more than $9 an hour. "It's such an enormous problem for the government, I don't see how we're going to fix it," he says.

Austin Perez, a lobbyist for American Farm Bureau, follows how Congress is trying to fix it. His group opposes a House bill that would turn illegal immigrants into felons and penalize employers. It supports  a broader Senate compromise  - if farmers aren't required to pay more than prevailing wages that others pay. The Senate bill would just expand today's guest worker program's wage scale. Farm Bureau estimates that would cost the produce industry $5 to $9 billion a year.

"If Congress doesn't get this done right, we would create a $5 to $9 billion hole for other countries to fill," Perez says.

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Dan Looker can be reached at dan.looker@meredith.com.

                            This page was last updated on Monday, June 02, 2008.