Industry insiders look at the outlook for ag trade
The Grain Customer
Raul Panszi is purchasing manager for Integradora de Insumos del Noreste, a grain-buying co-op in Mexico.
> Problems with Financial Fears
Our company is a co-op of 28 small cattle feeders, egg producers and a few hog producers. We buy about 1 million bushels of corn and sorghum from the U.S. per month. We really like to buy from U.S. grain producer co-ops and this used to work very well. We were able to pay a little less than if we buy from a big grain company, and they were able to get paid a little more.
Price is an issue, but mainly quality. If we ordered U.S. No. 1 grain, that is what we got, whereas the big companies want to deliver grain that is barely No. 2.
Now, a new manager doesn't believe in trade and fears that selling to us might open him to payment risk. The past two years, Argentina pushed grain into Mexico, but with lower prices, I don't think it will pay to ship to northern Mexico. We are concerned about supplies.
Tim Burrack is a grain producer, board member of Truth About Trade and chair of Iowa Corn Promotion Board.
> Dangerous to Slip Back
Instead of moving forward with a cohesive trade policy, we seem to be setting back on the gains we've made. There are several free trade agreements that are done deals and nothing is happening with them. Not only should we get them approved, but we should get one done with Japan—one of our largest traders. Then we need to work on one with the EU. They would be good for everyone. NAFTA is a good example; all three countries have benefited.
I believe the foot-dragging is all payback—it may be good politics, but economically it will limit consumer choice. You can legislate against the laws of economics as long as you are willing to subsidize the effort with tax dollars. But at some time in the future, worldwide economic recovery depends on relatively free trade of goods and services.
Philip I. Levy is a resident scholar at the American Enterprise Institute for Public Policy Research.
> Trade Is the Unsung Hero
Recent GDP numbers show the vital role that trade has played in countering the nation's economic ill health. Last year, exports grew while imports shrank, acting as an eco- nomic shock absorber. Breaking down the recent –0.7% GDP, investment was –3.1%; consumption, –0.6%. Combined, exports and imports were the biggest driver of economic growth, at 1.65%, outstripping government spending at 1.3%.
Yet the President has embraced spending and shunned trade. He has adopted new tire tariffs, endorsed violations of free trade agreements and failed to seek authority to negotiate a new global WTO agreement. The President's supporters laud his ability to take in facts, set aside ideology and formulate a pragmatic response. An embrace of international trade would be a refreshing change.
David Hughes is a large grain producer in Argentina and a Texas A&M University graduate.
> More Food Is Needed
In the next 20 to 30 years, we will have to feed a growing population with an increase of greater than 70% in ag production. And it needs to be done in a socially, environmentally and economically sustainable way. The discussion will probably revolve around who will pay for good land stewardship and sound agricultural practices: the developed world, which has already used up most of its resources, or the developing world that needs to use its resources to develop? How will the premiums for sustainable production be distributed along the value chain?
Trade is integral to the mission of feeding the world. We will need better trade policies and government policies to act as incentives to greater investment in research and production technology. Such policies will generate a pull for added value from one region to another.
Top Producer, November 2009
- NOVEMBER 2009