Uncertainty of trade takes its toll in agriculture and business
ARLINGTON - In the midst of a simmering trade war, representatives from various industries and commodities gathered at the Arlington Agricultural Research Station on May 30 to discuss trade, specifically fair trade and the importance of trade to agriculture and businesses. As the microphone traveled around the tables, one message was clear: Exports and trade are critical to Wisconsin industry and businesses.
As Wisconsin Farm Bureau Federation President Jim Holte said, Wisconsin farmers "can and should be able to compete" in an international market. With Mexico and Canada making up 52 percent of the state's exports, exports give farmers the "opportunity to grow their business," Holte pointed out.
But with President Trump threatening to pull out of the North American Free Trade Agreement (NAFTA) and haggling with China, farmers are left wondering and hoping — hoping for some kind of certainty.
Holte and nine other Farm Bureau presidents sent a letter to Secretary of Agriculture Sonny Perdue on May 15 "on behalf of the over 1.3 million collective member families" of the state Farm Bureaus they represent, expressing concern with the escalation of trade disputes with China.
In the letter, the Farm Bureau presidents reminded Perdue that they recognize "there are issues that need to be addressed in the trading relationship "between the U.S. and China, however, "it is important to remember actions have consequences."
"We are worried about the potential consequences of a trade war with China," the letter stated. "For decades, farmers and ranchers have understood that growing our customer base outside our borders is critical to our economic survival."
While the development of international trade rules and passage of free trade agreements is not perfect, trade has helped the United States and the Midwest in particular, "grow into the breadbasket of the world," the letter continued.
Business and commodity representatives at the Wisconsin trade roundtable event pointed to areas of improvement for NAFTA.
"It needs to be updated, but do no harm," said Nicole Wagner, executive director of Wisconsin Corn Growers Association. "Ethanol was never mentioned in NAFTA and Mexico has a lot of potential; uses a lot of ethanol with their new mandates that were put out recently."
Lisa Nelson, director of Walmart public affairs pointed out e-commerce.
"Back when NAFTA was created, that wasn't really an avenue of trade or sales," Nelson said. "That needs to be accounted for in today's market."
Dairy producer Lloyd Holterman with the Dairy Business Association talked to Canadian farmers while at a dairy conference in Canada.
"They are more fearful than we are because they know they can't compete on price or quality with the U.S.," Holterman explained. " They don't have as much supply, so they are really concerned and I think they feel that they've got more to lose if they don't sign the NAFTA agreement than we do, even though they are pretty much set in concrete on supply and management."
Holterman said at some point Canada's supply management system is "really going to hurt them" because "they wonder when their taxpayers are going to get sick of subsidizing every aspect of their industry."
Impact of trade uncertainty
With the uncertainty of trade, what is the impact on sales or input costs, Wisconsin Department of Agriculture, Trade and Consumer Protection Secretary Sheila Harsdorf asked the group.
The answer, from kidney beans to cheese there is a definite impact.
Since kidney beans are not as easy to grow as corn or soybeans, it takes extra time, and often specialty harvesting equipment, to get people involved in growing kidney beans, Charles Wachsmuth, with Chippewa Valley Bean Company explained.
"With the uncertainty of trade, contracting with Europe has backed off to the point that if things happen come harvest in September, we're going to have a lot of very high-priced beans that we will have no market for," said Wachsmuth. "What that’s going to do going into '19 is then further suppress the price and growers are going to say, the heck with growing these futzy crops, they are going to plant soybeans and forget about doing kidney beans. And then there will be a long push to get people back into growing edible beans and specialty crops."
When it comes to cheese, the recent European Union agreement with Mexico has forced changes to product names away from geographic indicator names, Jeff Schwager, president of Sartori Foods said.
"First month revenue is down about 30 percent at retail, just because people don't know what the product is any more," said Schwager. "And the marketing efforts to re-educate people are huge."
But it's up to businesses, commodity groups, to get the message out — constantly.
Part of the reason Schwager says "we are in the situation we're in" is that "we've done an incredible job over a long time" producing incredible milk, grain and animals, "we are so far ahead of everybody else in the world on this — and our story isn't out there."
Schwager gave the example of Sartori's exporting of specialty cheese with Germany being its number one market. Their partner in Germany started selling the cheese by putting a picture of the Statue of Liberty next to Sartori's cheese, "so that people knew it was American cheese."
"He's since gone to a replica of the state of Wisconsin and we're trying to build that," Schwager said. "I think there is incredible opportunity out there ... We should all be proud to market our stuff, made in Wisconsin, and have everybody in the world understand where Wisconsin's at instead of saying, we're just north of Chicago."
Waschsmuth said they are seeing a lot of food nationalism, especially in Europe, where people will pay more if they know where the food is produced. Waschsmuth thinks country of origin labeling isn't getting enough traction in the United States.
"That's one thing, I think for Wisconsin — we grow such great things — we may want to look at putting some effort into that in the future," Waschsmuth added.
Country of origin labeling is important in the ginseng industry as well.
Jackie Fett, executive/marketing director for the Ginseng Board of Wisconsin said buyers don't want Chinese ginseng.
"They want Wisconsin ginseng, so we have that going for us," Fett said.
Some Walmart stores in Wisconsin implemented a program identifying Wisconsin made products. "Those product numbers immediately increased," said Nelson.
"That is something that we have talked about, whether this could be a goal in Wisconsin to help the state - actually look at what are best practices in other states," Nelson added. "Minnesota has a fantastic program that has the state seal."
While DATCP offers the "Something Special from Wisconsin" program, Nelson said Walmart suppliers would not pay to participate in the program.
"We've seen an increase when things are specifically branded and labeled from Wisconsin," Wahlberg said. "We do have some programs. They are just not known very well."
DATCP and Governor Scott Walker are "well aware" how critical NAFTA is to Wisconsin and Walker is "getting that message out," Harsdorf said.
"We will continue to get that voice out," Harsdorf added. "Combined, our efforts are very important."