Farm groups applaud tentative U.S.-Japan trade agreement

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – National and Idaho farm groups quickly applauded the Aug. 25 announcement that the U.S. and Japan have reached a trade agreement in principle.

The agreement is expected to be a win for several U.S. farm commodities, including beef, wheat, dairy, potatoes, pork and wine. All of those commodities except for pork are produced in significant amounts in Idaho.

Together, dairy, beef, potatoes and wheat brought in $5.4 billion in farm cash receipts in Idaho last year and, according to an Idaho Wine Commission study, that industry has a $170 million economic impact on the state annually.

Response from groups representing U.S. farmers and ranchers was swift and positive.

“This trade agreement will benefit growers in Idaho by ensuring that the Japanese market remains open to wheat grown in the U.S.,” Idaho Wheat Commission Chairman Ned Moon stated in a news release.

Japan imports about $14 billion worth of U.S. agricultural products each year and through the first six months of 2019 was the No. 5 market for Idaho agricultural exports. According to the Idaho State Department of Agriculture, Japan purchased $25 million worth of ag products from Idaho during the first half of this year.

Moon and others said the agreement, which is expected to be signed by both nations in September, is particularly important in light of the preferential market access to Japan that many other nations enjoy under the EU-Japan Economic Partnership Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreement, which was implemented in December 2018.

Those agreements have allowed some of the United States’ main competitors to gain a significant advantage when it comes to market access provisions.

“Locked out of the agreement, U.S. wheat imports would have become less cost competitive to the point that Japan’s flour millers would have no other choice than to buy wheat from the CPTPP member countries,” Moon said.  

Idaho farmers have exported wheat to Japan since 1956 and a trade team from that nation typically visits Idaho each year. According to Moon, Japanese flour mills prefer the soft white wheat grown in Idaho because it’s ideal for their sponge cakes and pastries.

The U.S. exports about $700 million worth of wheat to Japan each year and national groups representing grain growers in the United States applauded the tentative agreement.

“We applaud the administration for completing this much-needed trade deal with Japan,” National Association of Wheat Growers President Ben Scholz said in a joint news release with U.S. Wheat Associates. “This is a huge win for those of us who grow wheat and all U.S. farmers and ranchers.”

While details of the agreement still need to be hashed out, “lowering market access barriers with one of our most valuable and loyal grain buyers is a crucial win-win,” U.S. Grain Council President and CEO Ryan LeGrand stated in a news release.

Japan is the top foreign market for U.S. beef and National Cattlemen’s Beef Association President Jennifer Houston said the Aug. 25 announcement was “an exciting day for America’s cattlemen and cattlewomen.”

Japanese consumers purchased more than $2 billion worth of U.S. beef last year, which amounted to almost 25 percent of total U.S. beef exports in 2018.

“President Trump and his trade team have delivered another great victory for the U.S. beef industry by expanding market access to Japan, our top export market,” Houston said. “Removing the massive 38.5 percent tariff on U.S. beef will level the playing field in Japan and we are very thankful to President Trump and his trade team for continuing to fight on behalf of America’s ranching families.”

The agreement will greatly improve access for U.S. red meat into Japan, U.S. Meat Export Federation President and CEO Dan Halstrom said in a statement.

“This announcement is tremendous news for U.S. farmers and ranchers, and for everyone in the red meat supply chain, because it will level the playing field for U.S. pork and beef in the world’s most competitive red meat import market,” he said. “Favorable access to Japan is a major win, not only for the U.S. red meat industry but for all of U.S. agriculture and for our nation’s rural economy.”

The U.S. exported more than $350 million worth of potato products to Japan in the past year, making Japan the top foreign market for U.S. potato products, according to the National Potato Council.

About 15 percent of Idaho’s potato product exports go to Japan.

In a news release, the NPC strongly supported the trade agreement and called it welcome news for the domestic industry.

“It allows U.S. potato exporters to recapture vital momentum in Japan and level the playing field against foreign competitors,” said National Potato Council CEO Kam Quarles.

According to the NPC news release, “given a competitive tariff regime and reasonable market access agreements, it is believed that this market can grow by another $150 million annually in the very near future.”

American Farm Bureau Federation President Zippy Duvall said, “America’s farmers and ranchers are pleased to hear that the U.S. and Japan may be close to a trade deal that includes agriculture,” and that AFBF looks forward to reviewing the details of the agreement.

“This is much-needed good news on the agricultural trade front,” he said. “We appreciate the administration’s work to secure greater access for these farm goods and others.”

The agreement should also come as welcome news to the U.S. dairy industry. Just six days before the agreement was announced, a U.S. Dairy Export Council blog said that a trade deal with Japan was critical for the U.S. dairy industry. Without one, it said, the U.S. risks losing $5.4 billion in dairy export business.

Japan is the world’s largest cheese importer and a significant buyer of whey, lactose and other dairy products, the USDEC blog stated.

“Without a strong U.S.-Japan free trade agreement, USDEC estimates competitors could win half of existing U.S. export business in Japan, with lost sales mounting to a total loss of $5.4 billion when the EU-Japan and CPTPP are fully phased in,” the blog stated.