NAFTA Investments Face Uncertainty

August 16, 2017 08:13 AM

Grain harvest in south Texas may be over, but product is still rolling. 

“My sorghum is just pretty much gone,” said Charles Ring, a producer from Sinton, Tx. “There are just a few loads left.” 

Exports have been essential to prices for decades now. 

“I was trading corn and shipping corn and sorghum into Mexico before the North American Free Trade Agreement (NAFTA),” said Ring. “I remember having to wait until February of the following year to ship anything into Mexico because [of] their tariff.”

That changed once NAFTA kicked in and fully took effect on Jan. 1, 1994.

“When NAFTA came along, all of that evened out,” said Ring. “We could trade corn openly all year long.”

The agreement is one reason he’s following renegotiations closely. 

“It can’t be one-sided,” said Ring. “There’s other industries that may have been hurt. We just don’t want agriculture to be the pawn in all of this. We want to make sure that our products are openly traded and easily accessible to the Mexican market.” 

Bobby Nedbalek, a farmer from San Patricio County, Tx agrees.

“It’s just very, very critical that we do not lose a chance to move grain in that direction if it’s profitable,” said Nedbalek. 

Nedbalek said he’s not opposed to an update, but it’s whether or not the U.S. can gain anything for farmers. 

“I don’t know exactly how to craft a gain [with the deal] for agriculture because we do have a good relationship with Mexico and they come into this area and have been involved in some country elevator operations,” said Nedbalek. “That’s been good competition and keeps all the natives honest.” 

Some of that competition comes from a Mexican company called ‘Chapa Quiroga.’ It owns multiple U.S. elevators, including one in Progreso, Tx. It employees about 300 people and has invested $6 to $7 million in infrastructure in the last few years. In 2016, it shipped roughly 500,000 metric tons of grain to Mexico.

If NAFTA changes, owner Alejandro Chapa said, “The company we created in Texas won’t be worth all of that investment, all of that infrastructure,” said Alejandro Chapa, owner of Chapa Quiroga. “It would be worthless because we should move to other parts of Mexico for us to be able to receive grain through other means.” 

“Mexican customers are not going to say, ‘Yes, my grain is going to be 20 percent higher,’” said Deneb Galvan with Chapa Quiroga. “They’re going to seek opportunities in other places.” 

Those other places include South America and any major changes could ultimately impact farming in South Texas significantly. 

“Three-quarters of the production and our draw area—which is essentially Houston south—goes across the border to Mexico,” said Daniel Perkins, a Gavilon location manager in Progreso. “Production in south Texas in general of row crops would be vastly different without Mexico as a consumer. If there were a drastic change, there would be a drastic impact on our area down here.” 

“It will be a pity if things go wrong,” said Galvan. “I’m very convinced, I’m very confident that things are going to go in the right way.”

To Galvan, the right way is no new tariffs.  

“[That’s] because this is a benefit for both sides of the border, not only for one,” said Galvan.

As these stakeholders see it, it’s leading to positive economic growth for everyone. 

“We need a healthy Mexican economy,” said Ring. “It’s as important as anything that [Mexico] can buy our products.”

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Spell Check

Kearney, NE
8/17/2017 06:51 AM

  We still have tariffs on U.S. goods entering both Mexico and Canada. It's in the form of currency manipulation, as both Canada's and Mexico's currencies are vastly under valued compared to ours. Let's make a "NAFTA" currency for trade between the NAFTA countries. That would eliminate this unfair trade barrier for the U.S.


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