American farmers still have the economic edge | Don Brunell

How about some good news heading into the holidays? It comes from our nation’s farmers and ranchers.

Agriculture is an economic sector where America has not lost its edge. In fact, it is a bright spot in a persistently glum economy.

The U.S. Agriculture Department expects our nation’s agricultural exports to reach a record $137 billion this year and grow by another $2.3 billion in 2012. While our nation has an overall trade deficit, our agricultural sector has a trade surplus, expected to top $42 billion in 2011.

That is good news for our state, as well. Washington’s Agriculture Department estimates the value of our state’s agricultural production reached $8.25 billion in 2010, second only to 2007’s record year of $8.35 billion.

Our state and nation got a shot in the arm last month when Congress ratified new free trade agreements with South Korea, Columbia and Panama. When tariffs and trade barriers fall, more jobs are created and farmers and food processors expand their markets. In fact, the U.S. International Trade Commission estimates the South Korea agreement has the potential to create as many as 280,000 American jobs and boost exports by more than $12 billion.

One of the biggest beneficiaries will be Washington state where one of every three jobs is linked to international trade. The three trade deals are projected to increase our exports by $52.8 million.

South Korea is Washington’s fifth largest export market generating $2 billion a year. The new trade agreement immediately wipes out a 24 percent tariff on Washington cherries, reducing prices for South Korean consumers by 75 cents per pound. Our state’s cherry producers contributed $367.2 million to our state’s ag economy in 2010, and with the new lower prices, consumption in South Korea is expected to surge.

The pact also phases out South Korea’s 45 percent tariff on most apple varieties over the next 10 years and immediately eliminates that nation’s 18 percent tariff on frozen potatoes — a big boost for Washington, where spuds are our third-largest crop.

Washington food processors will benefit as well because 87 percent of our potato crop is sold to processors to be transformed into french fries, chips and mashed potatoes. That market is projected to skyrocket with the growth of McDonald’s and other fast-food chains in Asia, India and Brazil where a burgeoning middle-class has more money to dine out.

In fact, nine out of every 10 Washington potatoes are marketed outside of Washington state, with a significant portion of these going to overseas markets. Spuds contribute to our trade balance and the overall health of the state’s economy with more than $515 million of our value-added potatoes being exported annually through our state’s ports.

Now that South Korea is satisfied that the U.S. has eradicated mad-cow disease, the new trade pact will also eliminate that nation’s 40 percent tariff on beef over the next 15 years. That will increase beef exports from Washington state by $7 million per year. Beef production is our state’s fifth largest commodity and the market for American beef in South Korea has the potential to reach $1 billion.

So while our nation and state struggle with record budget shortfalls and a skyrocketing federal deficit, it is good to start this year’s holiday season with some good news.

Exports are a bright spot in the struggling U.S. economy. Even though agriculture makes up about nine percent of U.S. exports, farm exports grew much faster than manufacturing exports during the past decade.

The opportunities for America are substantial because states like Washington are blessed with fertile soils, abundant fresh water and farmers, ranchers and food processors that have some of the best science and technology anywhere.

We are blessed to be the bread basket of the world and darn proud of those who make it vibrant and strong.

Don Brunell is the president of the Association of Washington Business.