As agricultural producers experience higher input costs and lower revenues, along with declining U.S. government support to agriculture, understanding the impacts of international trade and how markets and competition are affected will take on added importance for farmers, agribusinesses, policy makers, and agricultural leaders.
The United States is the largest exporter of farm products and those exports account for about 35% of farm income, up from 28% in 1996. The economic impact of U.S. agricultural exports to Canada and Mexico totaled $107.8 billion and 509,332 jobs in 2016. The total economic impact of Texas agricultural export trade to Canada and Mexico totaled more than $3.3 billion in 2016 and supported 18,674 jobs. In addition, agricultural exports help support rural communities across the United States, with each dollar of exports stimulating another $1.27 in business activity.
Agricultural imports are also important, as U.S. consumers are more dependent on them for certain commodities, as well as, for year-round supply. Not surprisingly, these include tropical products not produced, or only sparingly produced, in the United States such as limes, coffee and bananas. Orange juice and tomato imports have increased over the years as production, mainly in Florida, has decreased significantly. Other products such as beef and pork account for a smaller share of US imports.
Trade agreements impact exports and imports. The North American Free Trade Agreement (NAFTA), negotiated between the United States, Canada and Mexico and initiated on January 1, 1994, has been extensively studied over the years. NAFTA was designed to expand the flow of goods, services, and investment throughout North America. NAFTA calls for the full phased elimination of import tariffs and the elimination or fullest possible reduction on non-tariff trade barriers, such as import quotas, licensing schemes, and technical barriers to trade.
Trade is an important part of agricultural markets. As US agriculture has become more dependent on trade, world events carry more risk for prices. Growing export markets will continue to be important goal for US agriculture in coming years.
For more information about the importance of agricultural trade in the economy, please see the following publications:
- Impacts of the Increased Dependence on Trade on the Farm Economy (pdf)
- Economic Impacts of U.S. and Texas Agricultural Exports to Canada and Mexico (pdf)
- Economic Impacts of Increased U.S. Imports of Fresh Produce from Mexico by 2025 (pdf)
For further information, please contact Luis Ribera, Extension Economist and Director, Center for North American Studies, Department of Agricultural Economics, Texas A&M University, College Station, Texas 77843-2124. Telephone: 979-845-3070; e-mail: email@example.com.