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Trade agreements would boost state’s pork industry

Post-Bulletin, Rochester, Minnesota, USA

Trade agreements would boost state’s pork industry

By Brandon Schafer

4 June 2007

When it comes to U.S. trade policy, in recent years it has seemed more difficult to gain bipartisan agreement among American policy-makers than to negotiate with foreign governments.

That was certainly the case earlier this year as four Free Trade Agreements (FTAs) negotiated by the Bush administration — with Colombia, Panama, Peru and South Korea - sat stalled in Congress over concerns about the lack of adequate labor and environmental standards in the pacts.

After weeks of negotiations between congressional leaders and the administration’s trade-policy team, the stalemate was recently broken when House Speaker Nancy Pelosi and U.S Trade Representative Susan Schwab announced an agreement on new labor and environment provisions for these and future FTAs.

With this crucial bipartisan breakthrough at the leadership level, the focus now shifts to the rest of the Congress.

Minnesota pork producers fervently hope both political parties will unite behind their leaders and quickly approve the pending FTAs because these trade pacts will provide a much-needed boost to U.S. pork exports.

Just how important are pork exports to Minnesota’s economy? Nearly 2,600 jobs and $112 million of personal income are generated for the state from exports of Minnesota-grown pork, according to Iowa State University economists Daniel Otto and John Lawrence. More pork trade, resulting from these pending agreements, would mean more jobs and more income.

Overall, the pork industry provides tremendous benefits to Minnesota. Otto and Lawrence estimate that the state had more than $1.8 billion of gross receipts from hog sales in 2005. This helped support about 20,000 pork-related jobs in the state, ranging from input suppliers and producers to processors and handlers, as well as Main Street businesses.

For U.S. pork producers, the economics of trade are simple: Exports currently add $33.60 to the price they receive for each pig. The South Korean and Latin American bilateral FTAs will collectively increase the value of exports to producers by an additional $12.60 per head, according to Iowa State University economist Dermot Hayes. The trade agreements also would give U.S. pork producers easy access to those countries’ markets, while their competitors in Canada and the European Union would still face trade restrictions.

That trade agreements have benefited the pork industry is borne out by the tremendous increases in pork exports to countries with which the United States has pacts. Since the U.S.-Canada Free Trade Agreement went into effect in 1989, for example, U.S. pork exports to Canada have increased by $421 million, and since implementation in 1994 of the North American Free Trade Agreement with Mexico, pork exports to that country have increased by $446 million.

To help sustain the jobs and other economic activity created by the Minnesota pork industry, particularly in the face of rising feed costs — the result of the rapid rise in corn-based ethanol production — the state’s pork producers need more markets in which to sell their products.

Let’s hope members of Congress will follow their leaders and pass the pending FTAs. That would be good for U.S. pork producers, and good for Minnesota’s economy.

Brandon Schafer is a pork producer from Goodhue, Minn., and a member of the executive board of the Minnesota Pork Producers Association.