When India’s Prime Minister Narendra Modi recently visited the White House, he brought along some good news for United States farmers.
He agreed to cut tariffs that were imposed on some U.S. farm goods five years ago in retaliation for U.S. tariffs on Indian steel and aluminum imports, according to the Office of the U.S. Trade Representative.
India, within 90 days will remove the retaliatory tariffs it placed on chickpeas, lentils, almonds, walnuts and apples, USTR said in a statement.
“Today’s agreement represents the culmination of intensified bilateral engagement over the last two years, including through the U.S.-India Trade Policy Forum, to deepen our economic and trade ties,” said U.S. Trade Representative Katherine Tai. “As a result of our work, U.S. agricultural producers and manufacturers will now enjoy renewed access to a critical global market and we will strengthen our trade relationship with one of our closest partners.”
India raised its tariffs on U.S. apples by 20% in 2018, pushing the country’s overall tariffs on the fruit to a whopping 70%—enough to sharply curtail U.S. exports.
“U.S. apple growers can now begin the work of competing for, and hopefully regaining, this critical market,” said U.S. Apple Association President and CEO Jim Bair. “We look forward to once again shipping great apples to this valued trading partner.”
India also hit U.S. walnut and almond exporters with a 20% tariff in 2018 and industry representatives expressed relief over India’s tariff removals.
India may have reversed its retaliation on U.S. walnuts, but its tariffs are still high. India maintains a 100% tariff on all walnut imports. The U.S. currently faces 120% tariffs, but that will drop back down to 100% as soon as India implements the reduction.
The good news on the trade front comes at a time when some farmers, ranchers and lawmakers are increasingly worried about declining exports and a trade deficit.
In May, the U.S. Department of Agriculture cut its forecast for the value of U.S. ag exports in fiscal year 2023 to $181 billion, a $3.5 billion reduction from the agency’s February prediction of $184.5 billion.
The quarterly Outlook for U.S. Agricultural Trade, released by USDA’s Economic Research Service and Foreign Agricultural Service, also shows lower imports than expected for fiscal year 2023 but predicts a larger-than-expected trade deficit of $17 billion.
Just three months ago, USDA was expecting a negative trade balance of $14.5 billion—the first since FY 2020, when the U.S. closed out the year with a $3.7 billion deficit.
USDA now says it’s expecting stronger exports of soybeans, cotton and dairy in FY 2023, but it highlighted new predictions for weaker shipments of commodities like wheat, corn and beef.
The U.S. is now forecast to export $14.5 billion worth of corn, $2.1 billion less than the USDA agencies were predicting in February amid competition with Brazil, which just began planting its second-crop corn, commonly known as the safrinha.
“Brazil is forecast to have a record production for its upcoming safrinha crop, to be harvested starting in June 2023, which has eased global prices and made Brazil’s corn more price competitive than U.S. corn,” USDA said in the new outlook.
USDA left its sorghum export forecast unchanged at $800 million but cut its wheat prediction $900 million to a total of $7.4 billion. The cut in wheat exports is “significantly due to smaller-than-expected winter wheat production for 2023-24 on higher acreage abandonment and reduced yields amidst drought conditions,” but USDA also stressed “increased competition in Western Hemisphere markets from regional competitors Canada and Argentina.”
Despite some headwinds on the export front, top trade officials recently said they are still working diligently to open new markets and create a level playing field.
“Our mantra at USTR is there is no commodity too small to spend time advocating on its behalf. There is no international marketplace out there that is too small to not spend time trying to open up that market,” said Doug McKalip, the U.S. Trade Representative’s top agricultural negotiator, at the National Council for Farmer Cooperatives annual Washington, D.C. conference.
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“Farmers in America prove time and time again that if you get that window open for market access, they will drive through it with the superior product and with high quality and reliability,” he added.
Speaking on a panel with McKalip, USDA Trade and Foreign Agricultural Affairs Under Secretary Alexis Taylor acknowledged that agricultural exports are projected to be down about 8% from an all-time record of $200 billion in U.S. food and agricultural exports last year. Exports are facing some strong headwinds, she said, including a strong U.S. dollar and increased global competition.
However, she pointed out that exports could still exceed $180 billion and be the second highest on record, resulting in a “really good ag export year.”
Taylor also said that she and other USDA officials are doing a lot of work on market diversification because “we have all felt what an overreliance on a single market can be.”
China has remained the top ag export market for dozens of commodities, U.S. agricultural exports to China in FY 2022 were $36.4 billion and surpassed the previous year’s record with China as the largest export market for the second consecutive year. Soybeans accounted for nearly half of U.S. agricultural exports to China at a record $16.4 billion, surpassing the previous year’s record by more than $2.2 billion.
Both Taylor and McKalip emphasized the importance of having trade promotion tools available to help expand opportunities. Two of the most popular USDA programs are the Foreign Market Development program and the Market Access Program. Several farm groups are advocating for those export programs to receive more funding in the next farm bill.
McKalip reminded the NCFC members who were going to meet with members of Congress to remember “there is a fairly good chance the member you’re talking to wasn’t in office the last time in the farm bill was reauthorized” and may not be familiar with trade promotion programs.
“As we approach this farm bill, we shouldn’t take anything for granted. It’s important for us to make sure that we tell the story, and we explain how that connective work really results in opening up markets and getting foreign products to places where they hadn’t been previously.”
Editor’s note: Sara Wyant is publisher of Agri-Pulse Communications, Inc., www.Agri-Pulse.
