The U.S. wheat industry is amping up its efforts to convince the Trump administration of the importance of re-entering the Trans-Pacific Partnership.
That includes “formal outreach” to officials in the administration outlining why re-entering TPP would avoid the potential loss of significant market share in Japan and the resulting effects on prices, said Steve Mercer, vice president of communications for U.S. Wheat Associates.
Trump withdrew from the TPP last year, promising to negotiate individual trade deals with the 11 other TPP members. Instead, they have decided to approve the trade treaty without the U.S. and have shown no interest in negotiating individual treaties.
Points the industry hopes to convey about TPP include:
• Japan is the largest and most valuable market for U.S. wheat. Of the 6 million metric tons of wheat it imports each year, about 3.1 million metric tons are purchased from the U.S., according to an industry fact sheet.
Without the U.S., the TPP 11 would gradually discount the “effect tariff” millers pay on Australian and Canadian milling wheat from about $150 per metric ton to about $85 per metric ton, putting U.S. wheat at a $65 per metric ton disadvantage. The cost difference would force Japanese flour millers to buy more Australian, Canadian and domestic wheat instead of U.S. wheat.
“The legacy of Oregon wheat growers who first set up school feeding programs in Japan after World War II and of other farmers through the years would be lost to our competitors,” according to the fact sheet.
• Japanese milling industry sources estimate U.S. wheat imports would fall to less than 1.4 million metric tons within a few years after TPP 11 is signed, cutting the U.S. market share from about 50 percent to 23 percent. That represents a loss to the U.S. wheat industry of $500 million per year, with total losses accumulating to almost $3 billion by 2028.
• U.S. Wheat estimates wheat stocks would increase to a level that would depress baseline futures prices by 50 cents per bushel “at a time when wheat profit is already too low.”
Re-entering TPP would help protect the Japanese wheat market and help open new markets such as Vietnam, according to the fact sheet.
“American agriculture now counts on the president to re-engage on TPP and American wheat farmers, facing a calamity they would be hard-pressed to overcome, now depend on it,” the fact sheet states.
Other activities are planned that will be closely tied to such events as the signing of the new TPP 11 agreement, slated for March 8 in Chile, Mercer said.
State organizations have been just as active, he said.
“We take this issue very seriously,” he said. “It’s going to take as many people as possible to build awareness and develop solutions that support the administration’s goal of negotiating better deals for farmers and all Americans.”