The American agriculture and food industries have always been integral to our country’s collective success – not only putting food on our tables but fueling jobs and opportunities for Americans. The latest economic data underscores these industries’ broad influence and reveals they have largely recovered from the effects of the pandemic. But with the continued disruption of global supply chains, and Russia’s invasion of Ukraine sparking the biggest commodity shock since the 1970s, these industries are facing a new world. How our federal government responds moving forward will determine whether they can continue as the bedrock of the American economy.
This week, the 30 leading food and agriculture industry associations released the 2022 edition of Feeding the Economy, an annual economic impact report that quantifies the contributions of these industries. The 2021 findings reinforce what we already know: from farmers and ranchers to retailers, America’s food and agriculture industries are fundamental to a healthy U.S. economy.
In 2021, nearly 18 percent of the nation’s economy and 29 percent of all American jobs were linked to agriculture. The Feeding the Economy report shows that last year these sectors contributed more than 43 million jobs, $2 trillion in wages and $718 billion in taxes. In addition to the domestic contributions, in 2021 these industries also accounted for $182 billion in exports.
The story of this impact begins on more than 2.1 million farms and ranches, which cover two out of every five U.S. acres. From there, millions of food scientists, production workers, truck-drivers, and engineers work to deliver agricultural outputs for a variety of purposes. The reach of these goods extends beyond the foods in your local grocery stores and restaurants. Corn, for example, is also used to manufacture everyday items like laundry detergent, antibiotics and even tires.
While the American market is certainly critical, international trade is fundamental to the success of agriculture related industries – 95 percent of the world’s consumers are located overseas and exports account for more than 20 percent of U.S. agriculture production volume. While shipments of crops may get the headlines, significant economic value is often added to American agricultural production before goods are exported, which helps explain why agriculture related manufacturing jobs are so important and numerous in the U.S. In addition, U.S. consumers and businesses that serve them benefit greatly from the agricultural imports that have expanded consumer choice and affordability.
The COVID-19 pandemic demonstrated the need for more resilient supply chains. Russia’s invasion of Ukraine underscored that point with an emphasis on the perils of supply chains that cross moral and strategic fault lines. Even before Russia invaded Ukraine, world stocks of energy, minerals and agricultural commodities were at an eighteen-year low. Now world commodity markets are soaring. Ukraine, historically regarded as the “breadbasket of Europe,” is a leading exporter of wheat and edible oils. Its farmers may not be able to plant corn or oilseed crops this spring and the ability to efficiently harvest its soon-to-ripen wheat crop is in grave doubt. That tragedy would further unsettle U.S. consumers with inflation, compound the wretched plight of Ukraine, and threaten to push third world food insecurity to crisis levels.
So, global supply chains are hurriedly being restructured for greater resilience, but without the U.S. in a strong leadership position. After World War II, the U.S. became the global leader in advancing trade, with great economic benefits to Americans and the advantages that accompany making the rules of the game. Regrettably, the U.S. has backed away from that role. We now lag badly behind Europe and China, who are setting global trading rules to their advantage over the interests of the U.S. For example, the world’s largest free trade agreement, the Regional Comprehensive Economic Partnership (RCEP), was recently inked by China and trading partners. It weakened U.S. economic influence and, contrary to U.S. norms, it included no meaningful assurances for environmental or labor protections.
The U.S. should reassert its leadership by seeking new free trade agreements with special focus on nations that share our democratic values. President Biden has assembled able leaders who could smartly advance new trade relationships, though his team still has some glaring vacancies.
So far, President Biden has declined to consider new tariff reducing trade agreements. That gives his trade team little to work with. As sanctions have highlighted the importance of economic might, the U.S. cannot afford to fall farther behind in shaping a changing world economic order. If we do not resume the forward leaning posture the U.S. once had, we risk economic opportunity for our farmers, manufacturers, retailers and everyone else involved in the wide-reaching economic engine of American agriculture and food.
John Bode is the President & CEO of the Corn Refiners Association and is an appointed member of the Agricultural Policy Advisory Committee. He has been an active leader in federal food and agriculture policy for the past four decades, including in three Presidential appointments at the U.S. Department of Agriculture, where he was responsible for over half of the USDA budget.For more opinions and ag news, visit www.Agri-Pulse.com.