October 18, 2021

New trade deal spurs optimism

Farmers unsure of impact

Jacob DeRochie/contributing photographer

Ethan Supa, a junior member at McMahon’s E-Z Acres farm in Homer, kneels next to some cows at the farm. The dairy farm, on West Scott Road, milks hundreds of cows daily.

Farmers in and near Cortland remain unsure just how a new trade agreement between the U.S., Mexico and Canada will affect their operations, but they all agree reopening dairy markets in Canada can’t hurt.

Just before midnight Sunday, the U.S. and Canada reached an agreement that would, among other things, increase dairy exports into Canada. However, it won’t go into effect until 2020.

The agreement, which replaces the North American Free Trade Agreement, will take a new name — the United States-Mexico-Canada Agreement.

“Anything is better than nothing,” Matt Sharpe of Footbridge Farms in Truxton said Tuesday afternoon. He hasn’t had much time to review the new agreement, but said any increase would help.

However, while he hasn’t read much about the deal, Sharpe said he doesn’t think it will be enough to improve prices.

Paul Fouts, a farmer in Groton and a member of the state Farm Bureau, said few details are available on the new agreement. However, with the new agreement with Canada and Mexico, both major trade partners in the dairy industry, American dairy farmers could see improvements in business.

The new agreement, according to a New York Times report, sees changes to several provisions in NAFTA including:

Dairy: The United States will be able to increase dairy exports into Canada. Within the last year, tariffs from Canada have affected the American dairy industry. In a report from the Wisconsin Agriculturist, within the Canadian quota, the tariff on milk is 7.5 percent. Over-quota milk faces a 241 percent tariff. U.S. producers, who also benefit from subsidies and tariffs, exported about $227 million in dairy goods to Canada last year, according to the report. However, the tariff was not a NAFTA issue.

International settlement dispute: A system that allows the member nations to rely on an independent body to resolve disputes will remain intact. Canada had insisted on keeping this provision, known as Chapter 19.

Autos: Requires a higher percentage of a car to be manufactured in North America to qualify for zero tariffs.

Tariffs: Steel and aluminum tariffs remain in place on Canada and Mexico, pending further negotiations. Canada and Mexico secure at least a partial exemption from any potential future U.S. tariffs on automobiles.

The deal replaces NAFTA, a three-nation accord that took effect gradually from January 1994 to January 2008, eliminating most tariffs between the United States, Canada and Mexico. During the agreement’s first two decades, trade nearly quadrupled to $1.1 trillion in 2016 from $290 billion in 1993.

However, while a new agreement was reached, it won’t take effect until 2020. Until then, farmers are unsure how it will affect them.

Once enacted, the agreement, unlike NAFTA — which was indefinite — will expire after 16 years, according to the Foundation for Economic Education.

Mike McMahon, an owner of McMahon’s E-Z Acres in Homer, hopes to learn more about the new agreement within the next couple of days. However, opening the door to trade again is good. “Anything is a help in this industry,” he said.

Milk prices are low. In August, the U.S. Department of Agriculture in Western New York reported prices at $16.97 per hundredweight, or 100 pounds of milk. It costs farms between $17 and $18 to produce a hundredweight.