What are the three priorities determining a Pacific Northwest wheat farmer’s success? 1.Trade. 2.Trade. 3. Trade.
Upwards of 90 percent of the wheat grown in 20 Eastern Washington counties is exported. Include Idaho and Oregon in the calculation and around two-thirds of the nearly 300 million bushels of wheat produced in the Pacific Northwest in 2016-2017 will wind up in bellies other than Americans’.
But trade isn’t important just to PNW wheat farmers. America as a whole exports around 45 percent of the wheat it produces. Last marketing year, Mexico was the biggest importer, surpassing Japan for the first time.
It’s ironic then that exports of wheat to both of these countries is currently under a cloud. The unsteady status of NAFTA, the North American Free Trade Agreement, has wheat farmers in the Midwest and Northern Tier states holding their breath against the possibility of a Mexican standoff.
Here in the Northwest, there’s no breath holding. President Trump’s withdrawal from the Trans-Pacific Partnership trade agreement last year, leaving the remaining 11 countries to come up with a treaty of their own, has already teed up a trade catastrophe.
Under the deal crafted by the 11 countries, Canada and Australia, two of America’s pre-eminent adversaries in the quality wheat markets of the world, will see a substantial reduction of a tariff into Japan. Currently, the U.S. controls about 50 percent of Japan’s 3.1 million metric ton market, with most of the other 50 percent divided between Canada and Australia.
Under the new treaty, the Japanese suggest our market share will decline dramatically and along with it, the price of wheat in the U.S. — by about 50 cents a bushel. Given the number of bushels we produce, that means America’s wheat farmers will have $500 million less each year to spend on everything from crop inputs to groceries and charities, while our Australian and Canadians competitors will have that much more.
But it’s not just money in the future we’re losing. If our absence from the TPP lingers any amount of time, we’ll also lose the millions of dollars we’ve spent developing the Japanese market over the last 70 years. Squandered might be a better word.
The U.S. has a competitive advantage in producing high quality wheat and Japan wants to continue buying from us to meet their consumers’ needs. They are very comfortable with the system that has evolved in tandem with America’s farmers and are loath to change it. In meetings we’ve held with the Japanese, they ask again and again about America re-entering the TPP.
Although Japan is at the top of our minds now, Vietnam is another TPP member where the U.S. once had high hopes. Other countries are also at risk. Indonesia is considering joining the trading bloc, and it is the second biggest wheat importer in the world, soon to surpass Egypt as No. 1.
At a conference I recently attended, it was suggested that communicating shared values are three to five times more important than sharing facts. You’ve heard the facts, but trade is also a value — one that America has embraced almost continuously since its founding. Along with capitalism, trade is what made America the juggernaut of the 20th century.
We should not abandon our values, any more than we should abandon regions of the country where Americans have seen the American dream pass them by. But the notion that we can prosper without trade is antithetical to everything that makes us American.
President Trump indicated recently he’s open to the U.S. joining a renegotiated TPP. At a time when Pacific Northwest farmers are already reeling from prices below their cost of production, that would speak volumes to the rural residents who voted for Trump — as well as our loyal, long-time Japanese customers.
Scott A. Yates is director of communications and producer relations for the Washington Grain Commission.