Betty Resnick is an agricultural economist who writes for The American Farm Bureau Federation, the largest general agricultural organization in the country. Representing nearly 6 million families across the United States, many of whom are farmers and ranchers, it has a bureau in every state.
Up until the last three or four years, there has been a historical surplus in agricultural trade, explains Resnick. The projected deficit in agricultural products in 2025 is $50 billion. To understand why, you have to know what the US imports and what it exports. Soybeans, corn, and tree nuts from California are top exports, while higher value foods like fruits, vegetables, and processed items like European cheeses are imported. Horticultural goods have declined in the US since 2000, falling by roughly 10% for fruit and 23% for vegetables, whereas imports of foreign produce have risen approximately 126%. National labor costs average between 30-40% while production in other countries is considerably lower.
The adverse effect wage rate is the required hourly rate for laborers working under an H2A visa. The rate is determined by government surveys. In California, the rate is nearly $20 an hour, and the employer is also required to pay for housing. Comparatively, workers in Mexico may earn only $20-30 a day.
Agricultural exports peaked around 2022, in large part because of the high price of commodities we were seeing due to the war in Ukraine. Cotton, corn, wheat, soybeans, and sorghum, primarily grown in the Midwest and Southeast, have seen commodity prices fall. The strong US dollar and weakened foreign currencies are making it more difficult for countries to buy US exports. Resnick points to Brazil as a major competitor of exports, with the country being the main global exporter of soybeans.
The US also hasn’t seen a new free trade agreement since 2012, while other countries are waging these agreements. Canada exports many of the same products as the US. Their Trans-Pacific Partnership is making inroads into Southeast Asia.
Mexico is a major export partner to the US, with $30 billion of products being exported to the country last year. Pork products and about 40% of US corn exports made their way across our southern border.
Farmers are very resilient and will do what the market demands, Resnick says. With tariffs looming, she says that many producers are taking a wait and see approach.