The economy of Montana depends on partners around the world for success. Each year, millions of tourists visit our beautiful state, while at the same time millions of bushels of grain grown by Montana farmers flow out of the Pacific Northwest to consumers overseas.
Trade wars and tariffs have been a hot topic of discussion in recent months, and it can be difficult to keep up with the ever-changing dialog. We must not forget in these discussions that the world continues to move forward with trade deals and we may soon find ourselves on the losing end.
Japan is our top wheat customer, on average purchasing about 20 percent of the entire Montana wheat crop. However, our farmers stand to lose millions annually in this single market because of the impending ratification of the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership” or “TPP-11”. If the agreement is ratified by six members, the deal will come into effect immediately for those partners.
Currently, both Canada and Japan are considering ratification in their respective legislatures. With the US outside the deal, competitors in Canada and Australia will hold a significant cost advantage into the Japanese flour milling market and Montana farmers may lose a major portion of what has been our best market. Japanese mills have indicated they may reduce purchases of US wheat from 114 million bushels to 50 million bushels. For Montana alone, that could mean losing sales of 25 million bushels – worth about $129 million in 2017.
Wheat and barley crops grown in Montana are known for high quality and consistency, two attributes our customers value and willingly pay premiums for. Over the past 50 years Montana farmers have invested heavily in the development of overseas markets and those investments have paid off. From 2012 to 2016, over 70 percent of our wheat production was exported, primarily to Pacific Rim markets, at a value of over $860 million per year to Montana farmers. We must maintain existing markets, like those in Japan and the Philippines, and capture share in emerging growth markets like Indonesia, Malaysia and Vietnam. Investments in developing these markets must be supported and facilitated by expanding trade agreements.
Montana grain farmers are dependent on exports for the profitability of their operations. This has been true for decades and will only continue to grow in importance as population and economic strength increase globally. The long-term sustainability of the Montana grains industry, and the communities and families it supports, hinges on our ability to export grain to consumers around the world.
Farming is a risky occupation for many reasons, but strong trade relations and the agreements that support trade partnerships have been a bulwark against the volatility of the market and nature for farmers across the nation. We need to expand access to markets around the world to ensure the viability of farming for ourselves and next generations of Montanans.
Collin Watters is the Executive Vice President of the Montana Wheat and Barley Committee. The Montana Wheat and Barley Committee is the producer-funded and directed checkoff organization for wheat and barley growers in the state.