If efforts to renegotiate the North American Free Trade Agreement (NAFTA) are unsuccessful, it could have a devastating impact on the U.S. poultry industry, the chief financial officer of the nation’s third largest poultry company said.
Mexico is presently the largest importer of U.S. chicken, but if NAFTA talks fail, it could mean Mexico could implement a 75 percent tariff on U.S. poultry.
The sixth round of NAFTA talks between the U.S., Mexico and Canada began on January 23 in Montreal, Canada.
For companies like Sanderson Farms, which ships a lot of products – particularly legs and thighs -- from its poultry plant in Palestine, Texas, to Mexico, the impacts of NAFTA’s collapse would essentially close that market.
“It would effectively prohibit us from selling product to Mexico,” Sanderson Farms Chief Financial Officer Mike Cockrell told Reuters.
Cockrell added that the loss of the Mexican market would be comparable to the impact of Russia’s 2002 ban on U.S. chicken imports.
During his recent speech to the American Farm Bureau Federation, U.S. President Donald Trump acknowledged controversy over NAFTA, but added, “On NAFTA, I am working very hard to get a better deal for our farmers and ranchers and manufacturers.”
Farmers for Free Trade, a bipartisan organization co-chaired by former Sens. Max Baucus, D-Montana, and Richard Lugar, R-Indiana, is among the groups heavily concerned by the prospect of the 75 percent tariffs on poultry. In a recent press release, the organization urged the Trump administration to modernize NAFTA without abandoning it.
“Particularly at a time when farm incomes are down, rural communities depend on demand beyond US borders to keep and grow rural jobs and economies. That’s why we urge the Administration to modernize NAFTA without withdrawing, to proceed with caution on imposing new tariffs that could hurt American farmers, and to open new markets across the globe to keep pace with our competitors,” the organization stated.
“The quickest way to reverse any regulatory or tax benefits targeted toward rural America would be to withdraw from NAFTA. NAFTA withdrawal would not only threaten commodity and stock markets, it would create a massive new tax on American agriculture. In Mexico alone, our chicken exports would see a 75 percent tax, pork would be taxed at 10 percent, and beef taxes would rise to 25 percent. Taking withdrawal off the table is the only way to provide American farmers and ranchers with the certainty they deserve.”