Yesterday, we heard from Robert Young, Chief Economist with the American Farm Bureau Federation on the farm economy, today Young expands on the passage of the three long-suffering free trade agreements, and the hopes pinned on those agreements to propel the ag sector even further forward:
I would say that had we signed those, approved them, and gotten them passed when we should have, they would have been a lot more effective. But at this point in time they’re almost just getting us back in the game in a lot of those countries, so the gains from those agreements are not as strong what we would have liked for them to have been when they were negotiated.
But, we’ll be able to be competitive in those markets again, and those have been some good markets for us before, and I think we’re going to be very competitive in South Korea, I think we’re going to talk about some noticeable grain increases into Columbia, etc. I think they’re going to be very good for us.”
SFN: I know that part of the concern earlier this year is that Canada has ratified some free trade agreements with those countries, and we lost market share to them.
Young: “We absolutely did. Colombia in particular, we basically owned that market at the time those agreements were negotiated and the time those agreements came into place. We probably have seen our market share fall in half, again, because they’ve gone off, negotiated, those countries aren’t sitting still. We can dig in our heels in the ground, wait, and hold on, and whatever else. But, why would you expect a Colombia to stop? And they’re not. And yeah, so that’s the challenge we face now.”
SFN: Classic example of you can’t sit around and fiddle while Rome burns.
Young: “Exactly so, exactly so.”
SFN: of course, everybody hopes for better weather, no matter how good the weather was this year, you hope for better weather next year.
Young: “Well, and certainly for those folks in Texas, Oklahoma, and Louisiana, etc. actually Louisiana was pretty interesting, we had some of our counties took down there, and on one side of the picture you can see the flood, and on the other side of the picture, the other side of the levee’ just crops…crops just as dried up as they can be. Just a real challenge this year.”
SFN: Where do you think the parity is on cotton? Right now we have a dollar a pound cotton, give or take a few cents in either direction, and our export sales have just all but dried up.
Young: “They have. And I think that we’re facing a lot of challenges, competing fibers as well. Cotton isn’t like any other crop really, in that there are some other things we can move to in order to provide demand, and that is a real challenge for us. I’m not sure I could tell you where I think cotton prices ought to settle out in order to get us back into export markets, etc. Probably lower than we are now, but you can also talk about the dollar moving lower on us as well, and make us more competitive again there. this stuff is all linked, the challenges we’re seeing in Europe, the financial chaos we’re seeing there makes the dollar a little more attractive, makes the dollar a little stronger, and one of the casualties of that is cotton exports. So, to get things back in place again, we’ll see what happens.”
We’ll wrap up our visit with AFBF’s chief economist Bob Young next time on Today’s Topic.