Mexican Beef Imports Hurting American Beef Industry

This blog is part of a series exploring NAFTA and agronomics. The series is based on the larger paper: NAFTA Renegotiation: What's at stake for farmers, food and the land?

Because NAFTA entered into strength effectually the aforementioned time equally the formation of the WTO and the 1996 Farm Bill—not to mention the series of gratis merchandise agreements that followed—it is difficult to tie precise outcomes in the agriculture sector to NAFTA. Merely the trends in agriculture postal service-NAFTA very conspicuously testify the loss of small and medium sized farms, the rapid expansion of CAFOs and contract production in the meat and poultry sector, and the growing power of multinational agribusiness firms across the N American market place. Below we explore outcomes and trends in agriculture and food following the passage of NAFTA.

Agronomical trade

NAFTA has dramatically contributed to the integration of Northward American agricultural markets, co-ordinate to the USDA.15Integration is when formerly separate markets have combined to form a unmarried market. Terminal food products, like beef, experience integrated markets as well equally raw materials like creature feed.

Agriculture trade among the iii countries has expanded considerably, though the U.Southward. agricultural trade balance with NAFTA partners has fallen with both partners, co-ordinate to an assay of government information by the University of Tennessee'southward Agronomical Policy Analysis Eye (APAC). APAC found that from 1997 through 2014, U.S. overall agricultural trade balance with Canada was a negative $thirty.4 billion and with Mexico a negative $ix.half dozen billion.xvi

The peak U.Southward. agronomical exports to Mexico are animal products, grains, oilseeds and sugar, which together made up 79 percent of exports in 2015. United mexican states is the superlative market for U.Due south. pork, chicken and corn. U.S. corn exports to United mexican states more than than quadrupled in volume compared to the decade prior to NAFTA.17 Mexico bought about 28 percent of all corn exported from the U.S., $ii.5 billion worth, in 2015-16.18

Mexican exports of fruits and vegetables and some animal products to the U.S. also expanded nether NAFTA. In the twelvemonth before NAFTA, the U.S. was largely a net fruit and vegetable exporter, and now is a net importer by a wide margin. Mexico'southward almanac exports of fruit and vegetables to the U.S. more than than tripled by 2013. Mexico and Canada are the largest strange suppliers of U.Due south. fruits and vegetables.nineteen

The integration of the North American market is perhaps best understood through meat and poultry production. Between 1993 and 2013, trade between the 3 countries in creature products increased more 3-fold from $4.6 billion to $15.5 billion.20 U.South. beef exports rose 78 percent by volume since 1993, with United mexican states existence the number one importer and Canada number four.21 The export of animal feed from the U.S. to United mexican states's pork and poultry industries rose in correlation with increases in Mexican pork and poultry production.

Beef and pork production itself has become much more integrated between the 3 countries. The U.S. now imports alive cattle from Mexico and Canada to finish and process. Mexico has averaged about 1.2 1000000 head of cattle exported to the U.S. for fattening and processing each year since 2000.22 These imports of live cattle have allowed the beefiness industry to depress the marketplace price for U.South. raised cattle. The issue is the reduction of the U.South. cattle herd and loss of U.South. cattle ranchers. Co-ordinate to the Ranchers-Cattlemen Action Legal Fund (R-Dogie), the U.S. has lost 147,000 alive cattle producers from 1996-2009.23 Because Mexico and Canada brought a successful instance at the WTO to claiming the U.South. mandatory Land of Origin Labeling (Absurd) rule for beef, consumers in the U.S. do not know where their beefiness was built-in and raised.

Canadian hogs are also brought to the U.S. for slaughter. In 2014, the U.S. imported 3.9 million Canadian feeder pigs.24 These pigs, birthed on Canadian farms, were finished and slaughtered in U.S. The pig products are consumed in the U.S. or exported, often to Canada or United mexican states.

It is non only animal product that has cantankerous-border integration as part of its concern model. For case, cotton is produced in the U.S. and sent to United mexican states to be turned into jeans and imported dorsum into the U.s.25 Much of U.S. seed is adult in the U.S. and then sent to United mexican states to be "multiplied" or grown in sufficient quantities for sale to U.S. farmers.26

Farmers and ranchers

The integration of agricultural markets has led to a decline in the number of farmers in all 3 countries. The USDA does non monitor agricultural trade related job loss, and there is no NAFTA Trade Adjustment Assist program for farmers as there is for some classes of industrial workers. However, USDA information shows a dramatic increase in the number of very large farms and a sharp drop in the number of mid-sized farmers later on NAFTA.

From 1992 through 2012 the U.S. lost 245,288, or 22 percentage, of small-scale farmers (under $350,000 almanac gross farm income) and 6,123, or 5 percent of mid-sized farmers (nether $999,999 annual gross subcontract income). As farmland ownership consolidated in the U.S., large-scale farms ($1 million and over almanac gross farm income) increased by 35,066, or 107 percent.27 The number of farms responsible for 50 per centum of U.Southward. agricultural production was cut in half from 1987 through 2012.28

The loss of many U.Southward. farms during this period, linked to low commodity prices, is as well continued to major changes in meat production. The CAFO model depends on cheap animal feed, often sold below the price of product. In outcome, inexpensive corn and soy, aided by the 1996 Farm Bill, served equally a subsidy for CAFO product, according to research by Tufts University's Global Development and Environment Constitute.29 The expansion of factory farms, peculiarly in poultry and hog production, has led to most of U.S. meat production coming from fewer, big operations. The growth in CAFOs has coincided with the disappearance of independent poultry and pork producers—now most all under contract with multinational meat companies similar Smithfield and Tyson. Contract farming has been highly criticized for being unfair to producers, burdening them with up front costs, associated debt, and other financial risks, while not paying fair prices to cover those costs.

The dairy industry has also followed the CAFO model. Smaller dairies have been pushed out by lower prices, driven largely past over-production from increasingly large dairy CAFOs.30 1 of the driving motivations behind the dairy industry's agile engagement in the TPP, and at present NAFTA, is to tear down Canada's supply management program in an effort to absorb excess milk production from U.South. dairy CAFOs.

Farmers and ranchers in Mexico and Canada have also been injure by NAFTA. Based on Mexican Census data, Tufts University researcher Tim Wise estimates that more than two million Mexicans left agriculture in the wake of NAFTA'southward flood of imports, or as many equally i-quarter of the farming population.31 And over the last thirty years, Canada has lost one-third of its farm families. Today, there are only under 200,000 Canadian farmers.32

Nutrient system workers

The U.S. nutrient system is deeply dependent on immigrant labor—peculiarly fruit, vegetable and dairy product and meat processing. According to the Farm Bureau, U.Southward. agronomics relies on an estimated i.5 to two meg farm workers, with fifty to seventy percentage of those unauthorized.33

While proponents of NAFTA argued that it would improve the economical conditions in Mexico and reduce the movement of immigrants from Mexico to the U.Southward., the exact opposite occurred (as critics like IATP predicted34). Mexico's poverty charge per unit in 2014 was higher than its poverty rate in 1994, and real (inflation-adjusted) wages were almost the same in 2014 as in 1994.35 From 1994 through 2009, Mexican emigration to the U.Due south. more than doubled. Since 2009 (directly post-obit the financial crunch), that tendency has started to contrary with more Mexicans returning to Mexico from the U.S. than inbound the U.s.36

The reduction of the U.South. cattle herd has as well led to the loss of beef processing jobs since NAFTA. Co-ordinate to the United Food and Commercial Workers Union, 50 plants take closed since taking out 52,695 in daily cattle kill capacity later on the passage of NAFTA.37 Meat processing in the U.S. had already begun a major reorganization in the 1970s and 1980s, transitioning to fewer, much larger meat packing plants, and moving those packing plants to rural areas where union organizing was more difficult. Simultaneously, poultry processing took off largely in anti-union southern states—creating low-cost competition for the beefiness and pork industries. The availability of immigrant labor, including from United mexican states, aided in the meat industry's efforts to break the unions and proceed labor costs depression.

U.S. factory farms, particularly dairy CAFOs, are deeply reliant on new immigrant labor, often from Mexico.38 Working atmospheric condition are oftentimes difficult and new immigrants, often undocumented, have few legal protections. Latino immigrant workers in the New York dairy industry released a report this summer documenting poor treatment, including on-the-chore injuries, intimidation, poor housing and long hours for low pay.39

The Trump Assistants's ambitious anti-immigrant policies, from advocating for a wall forth the U.S.-Mexico border to making it more difficult for temporary agronomical workers to enter the U.S., are causing disruptions in agronomical operations across the country. A growing number of U.S. subcontract operations (primarily fruit, vegetable and dairy) face up worker shortages due to the immigration crackdown.40 The fruit and vegetable industry has testified before Congress calling for action to permit the entry of more workers.41 The dairy industry is especially concerned with the Trump Administration's aggressive anti-immigrant policies, alert that the price of milk could skyrocket without low price, immigrant workers.42

While immigration rules are non explicitly included in NAFTA, there is little disagreement that the merchandise agreement contributed to rising immigration, and that U.S. agribusiness has benefitted profoundly from that evolution.

Agribusiness marketplace share

Since NAFTA, at that place has been a dramatic increment in agribusiness market share concentration in virtually all sectors including seeds, fertilizer, meat and crop production. Agribusiness concentration levels in U.Due south. agriculture are high and rising—and as competition declines, farmers and ranchers are vulnerable to agribusiness efforts to depress prices, according to a recent USDA report.43 In addition, it tin be difficult for farmers and ranchers to gather market information, i.e., price transparency and toll discovery—in highly full-bodied markets.

"I of the major consequences of NAFTA was the consolidation and restructuring of the agri-food system on the continent," writes Dr. William Heffernan of the University of Missouri. "This has led to profound impacts on firms, employees and communities even in the The states."44

The top ten companies exporting foodstuffs from the U.Southward. to Mexico include grain companies Bartlett Grain, ADM, Cargill and CHS, as well as meat companies such as Tyson Foods and JBS, according to Panjiva, a trade information company. The top x companies shipping north include Driscoll's, a berry grower; Grupo Viz, a Mexican meat supplier; Mondelez, the U.S. snacks company; and Mission Produce, an avocado producer.45

Many of the global meat giants have operations throughout Due north America. For case, Smithfield has pork production joint ventures in Mexico with Granjas Carroll de United mexican states and Norson. Brazillian-owned JBS'due south poultry segmentation, Pilgrim'south De Mexico, has multiple locations throughout Mexico. JBS, currently embroiled in a major bribery and food prophylactic scandal, is also deeply invested in beef processing in Canada. Cargill, the meat and animate being feed behemothic, has 30 facilities in thirteen Mexican states and all-encompassing meat and grain investments in Canada.

Smithfield, the globe'due south largest pork producer at present owned by the Chinese WH Group, benefited in particular from NAFTA. An assay by Tufts University's Global Evolution and Surroundings Plant ended that a glut of inexpensive animate being feed resulting from the 1996 Farm Bill, immune Smithfield to consign pork to NAFTA countries at below the toll of production prices. The visitor and so benefited from NAFTA's investment rules to expand its Mexican operations. The diminishing number of farmers in Mexico acquired past NAFTA besides provided admission to cheap labor.46

When President Trump threatened to pull out of NAFTA, information technology immediately kicked their lobbying into high gear to reach the White House with their concerns. At the sole NAFTA public hearing held past the U.S. Trade Representative, Cargill emphasized a cautionary arroyo "We appreciate the Administration'south guiding principle of 'do no harm' for the NAFTA renegotiations."47 In comments to the USTR, JBS USA besides urged the USTR to "showtime, preserve current market place access and the conditions that back up integrated value bondage, including all tariff and duty preferences and rules that allow U.S. businesses to compete in the North American market."48 And the U.S. Meat Export Federation warned, "any erosion in the market admission terms contained in the existing NAFTA agreement would be highly detrimental for farmers, feedlots, meatpacking plants, and exporters."49

Food safety

Just equally merchandise agreements have shaped U.S. farm policy to benefit agribusiness, and so have trade deals contributed to the weakening of U.S. food condom rules to benefit food companies. The food safety, plant and creature disease provisions in NAFTA, known as Sanitary and Phytosanitary Measures (SPS), and shortly thereafter the establishment of the WTO SPS rules, helped usher in a new era of nutrient prophylactic de-regulation. NAFTA established that Mexico and Canada nutrient safety regulations did non take to exist "equal" (or the aforementioned as) to U.Southward. regulations, only rather the more than difficult to interpret and verify "equivalent." The definition of "equivalence" was non part of NAFTA – nor was the requirement that independent regime inspectors, rather than meat company staff, exercise the actual inspecting.

Non just did NAFTA found a food safety template for time to come trade deals in which trade concerns were given priority over consumer wellness, information technology also helped propel efforts to deregulate and privatize food safety inspection in the U.S.

As food rubber good and former IATP board member Rod Leonard has written, rules set at NAFTA and at the international standards body Codex, were used in 1996 to push U.Due south. nutrient prophylactic standards, particularly for meat and poultry, toward greater company controlled inspection. "As the global norm in food rubber, `equivalence' was intended to showtime the race to the bottom of nutrient rubber standards globally," Leonard wrote.fifty

Earlier this yr, USDA auditors found that the meat inspection arrangement for nearly meat processing plants (including JBS and Cargill beef operations) in Canada was not "equivalent" to U.S. standards. Canada has moved toward a privatized inspection arrangement, with the companies taking on more responsibility, according to Food and Water Lookout.51

The rise of food imports under NAFTA has increased pressure on food prophylactic inspectors at the Food and Drug Assistants and the USDA. According to Public Citizen, the FDA physically inspects only 1.eight percent of food imports it regulates (vegetables, fruit, seafood, grain, dairy and animal feed); and the USDA just viii.5 per centum of beef, pork and chicken that is imported.52

The demand for greater oversight of nutrient imports has been severely undermined by inadequate funding of food safe inspection programs. In 2011, President Obama signed into law the Nutrient Prophylactic Modernization Act, but earlier in 2017, Congress appropriated simply near half the resources needed to implement the constabulary. A GAO report found that the FDA could not see the Food Safety Modernization Act (FSMA) mandate for inspections of foreign importers due to lack of resources.53 According to food rubber skilful Bill Marler, "FDA is inspecting merely about 2,500 strange food suppliers today. The FDA should exist inspecting nearly 20,000."54

NAFTA also allowed for the regionalization of nutrient rubber standards to facilitate trade in meat. This regionalization was particularly important in cases of animal disease outbreaks. For example, when localized outbreaks of Avian influenza hit specific counties in specific U.S. states, poultry trade with Mexico was allowed to proceed uninterrupted, with the exception of those states.55

NAFTA'due south SPS rules take been tested in recent years with the development of animal diseases in multiple NAFTA countries. These diseases may be linked to high levels of market integration. In 2009, a new flu strain (a mixture of swine, human and avian flues) emerged out of the land of Vera Cruz Mexico, an area heavily populated by grunter CAFOs, later spreading into parts of the U.S. There is some evidence that the initial strains of the flu emerged from Northward Carolina—home to a high density of squealer CAFOs—leaving pathogen expert Rob Wallace to dub information technology the "NAFTA flu."56 In 2014, a deadly porcine epidemic diarrhea virus (PEDv) in piglets hit both U.S. and Mexico pork production,57 and this twelvemonth the virus hit Canada.58 As the U.S. has struggled with outbreaks of diverse strains of avian influenza in confined poultry facilities throughout the country, then has Mexico in Veracruz, Puebla and Jalisco states, every bit has Ontario, Canada.59,60

Health

The adverse health effects of rising obesity rates take been well documented in the United states of america61 Similar ascent obesity rates in both Mexico and Canada have been linked to NAFTA. In the case of United mexican states, increases in imports of sweeteners, processed foods and meats have translated into increased consumption of snack foods, processed dairy products and soft drinks.62 Inquiry published this year from Canada reached like conclusions.63

Aside from increased imports, NAFTA's investment provisions helped facilitate the investment of U.S. processed food companies in both United mexican states and Canada. Food sales associated with U.South. investment in Canada and Mexico are now substantial. In 2012, majority owned affiliates of U.S. multinational nutrient companies had sales of $32.4 billion in Canada and $thirteen.8 billion in Mexico—these sales were 90 pct larger than the value of U.Southward. processed nutrient exports to Canada and Mexico.64

Climate change

While greenhouse gas (GHG) emissions overall increased in all three countries during the NAFTA years, GHGs specifically tied to agriculture varied. In the U.Due south., agriculture-related GHGs increased from 1990 to 2015 by viii percent. The Ecology Protection Agency has identified the increase in CAFOs as a primary crusade: "One driver for this increase has been the 64 pct growth in combined CH4 and N2O emissions from livestock manure management systems."65 Agriculture-related GHGs increased slightly in Mexico from 1990 to 2015, also tied to the livestock manufacture.66 Agronomics-related emissions have remained largely apartment over the concluding decade in Canada.67

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Source: https://www.iatp.org/blog/201901/what-are-outcomes-nafta

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