MGGA: TPP Good for Montana Agriculture



Op-Ed by Montana Grain Growers Association

Montana agriculture has benefited greatly from having strong relationships with our overseas trading partners. Ease of trade is vital to farmers in this great state, and exports are essential to a strong agricultural economy. Wheat is the most export-dependent grain commodity in the United States, and the number one agricultural export from Montana. With Southeast Asia being a key area of growth, Montana is especially poised to benefit from the Trans Pacific Partnership (TPP). The USDA projects wheat imports by key Southeast Asian markets to increase by nearly 50{2fba0047518ad2e639da733ea78e24abf77cec06f485a26b152e17f2a77aa67a} by 2025. Australia currently has free trade agreements with virtually the entire region. Without TPP, Australia will be the sole preferential supplier in those growing markets. 


A level playing field is an absolute necessity; even a 5{2fba0047518ad2e639da733ea78e24abf77cec06f485a26b152e17f2a77aa67a} tariff at current prices puts U.S. supplies at $12-$15 per ton higher compared to Australia, Canada, and the Black Sea. TPP allows Japan, an important Montana trading partner, to create new tariff-rate quotas for wheat and wheat products, and eliminate existing tariffs for processed products such as cookies and crackers. Additionally, Malaysia and Vietnam will eliminate tariffs on wheat and wheat products. TPP makes significant progress in non-tariff provisions as well, including biotechnology, sanitary-phytosanitary requirements, and environmental and worker protections. TPP is fundamentally different from past bilateral trade agreements, in that it is a platform that should expand in future years. The expansion of TPP would benefit wheat and other ag commodities significantly, especially as populations and economies continue to grow in the Pacific Rim. 


A good example of what happens to agriculture when the United States falls behind on trade agreements is Colombia. While a U.S. agreement with them was stalled, Canada passed their own trade pact and it completely decimated U.S. market share, with long-term average U.S. wheat exports falling from over 55{2fba0047518ad2e639da733ea78e24abf77cec06f485a26b152e17f2a77aa67a} down to 27{2fba0047518ad2e639da733ea78e24abf77cec06f485a26b152e17f2a77aa67a}. It is vital to Montana grain producers to both maintain and expand market access, and free trade agreements provide that framework.


TPP will boost demand for U.S. farm products among nearly 500 million consumers in 11 countries across the Asia-Pacific region; end harmful tariffs which decrease U.S. competitiveness; and establish high-standard trade rules, which will allow the U.S. to become a leader in market-driven and science-based avenues of trade, directly improving the U.S. food and agriculture industry. 


With over 12,000 Montana jobs supported by agricultural exports, and $1.6 billion in agricultural export value to the state, TPP will benefit not only wheat farmers, but every person throughout the extensive supply chain. From the implement dealer to the country elevator manager to the longshoreman loading vessels at the port, this 21st century trade agreement guarantees huge benefits to Montana agriculture.

Photo courtesy of USDA NRCS: Wheatfield east of Great Falls

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