U.S. Ag Trade Model Didn’t Boost Exports but Did Foster Agribusiness Monopolization
Decades of failed U.S. agricultural trade policies have led to extreme market concentration and the loss of tens of thousands of independent family farms. Yet, ironically, Big Ag still claims that more free trade agreements will help American farmers. This is the first part of a two-part series on how and why the longstanding U.S. ag trade model has failed American farmers and consumers alike.
Large agriculture lobbying groups argue that more free trade agreements will open up more markets for U.S. farms to export more food. That the United States had an agricultural trade deficit in 2022 and is forecast to import more agricultural products than it exports in 2023 and 2024 — after the U.S. was a net agricultural exporter for nearly 60 years until 2019 — is driving their call.
These Big Ag organizations conveniently exclude from their narrative the fact that the agricultural trade balance has gone into the red under the free trade regime. Nothing highlights this more than the large agricultural trade deficit the United States developed under NAFTA. Before NAFTA, the U.S. had a small, but consistent, food trade surplus with Mexico and Canada. But after NAFTA began, even as the United States dumped massive amounts of corn on Mexico, the flood of Mexican beef and vegetable imports led to a large and persistent U.S. food trade deficit with Mexico.
NAFTA was no fluke. After entering NAFTA, WTO, and a dozen free trade agreements (FTAs) starting in the mid-1990s, the U.S. agricultural trade surplus deteriorated almost year after year from 1997 until 2007.
During this period, seven new FTAs came into effect and still, the agricultural trade balance steadily declined. Then, after the start of the Global Financial Crisis, global food prices spiked. Given that the U.S. agricultural trade balance is measured by value, the data showed an increase in the U.S. ag trade surplus. But that represented a jump in prices, not a jump in exports when measured by volume. From 2006 to 2011, agricultural exports increased by 93% in value but only 8% in volume as measured by the USDA’s Foreign Agricultural Service.
When the global economy stabilized and the food price spike subsided, our agricultural trade balance kept deteriorating until 2019. Then, for the first time in nearly six decades, we became a net food importer!
As it turns out, for the last two decades, the United States has consistently exported around 20% of its agricultural production by dollar value — new trade agreements or not.
Bottom line: the current system isn’t working to expand trade opportunities for American farmers to sell their products around the world. So, it’s not surprising that the calls for new trade deals are coming not from farmers, but from the already overly influential agribusiness lobbying groups. Agribusinesses associated with these commodity lobbying shops have gobbled up U.S. farmland and monopolized our domestic markets, while ignoring the plight faced by American farmers every day.
Maybe it’s time for a new U.S. policy that aims to achieve fair prices for independent producers and resilient supplies of affordable and healthy food for U.S. consumers rather than a mythical export nirvana.
Last year, less than 4% of farms controlled more than a quarter of U.S. farmland. Large-scale and non-family farms now account for the majority of agricultural production value.
In the last 40 years, farms with revenues of $1 million or more have secured higher market shares while the number of small and midsized farms has decreased.
Some areas within agriculture are particularly concentrated. In recent years, two seed companies accounted for 72% of corn and 66% of soybeans planted in the United States. Four meatpackers accounted for 85% of beef slaughter and 67% of pork slaughter. Mergers and expansions of already large agribusinesses have forced out competitors. This means high input costs but lower farmgate prices for farmers whose only option is to sell their crops to the more and more consolidated middlemen that stand between the farm and the table. In the meantime, consumer food prices continue to increase and a few huge agribusiness corporations just get more powerful.
Just one example of this lose-lose situation: The Department of Justice’s recent lawsuit claiming that data company Agri Stats helped meatpackers collude to raise domestic prices also alleges that part of their strategy is dumping excess production in foreign markets to drive up consumer prices at home.
So, it’s no wonder these huge corporations want more trade deals. While they do not increase our exports, the rules limiting domestic farm policy embedded in these pacts helps them in their ultimate mission to reap record profits by jacking up food prices for Americans, while driving down the prices that they pay farmers for their production.
Part two of this series will explore Big Ag’s dominance of the official U.S. government trade advisory system.
