The president and CEO of the National Milk Producers Federation suggests producers and agribusinesses keep an open mind on the way tariffs could be used to help expand U.S. agricultural exports in the coming years.
Gregg Doud, who served as the U.S. trade ambassador for agriculture during the first Trump administration, highlighted how agricultural exports and farm income levels have moved in tandem, and how farm income falls when trade slips.
Net farm income hit a record in 2022 when agricultural exports topped $195 billion. Net farm income has fallen as agricultural exports have fallen back to $176 billion for 2024.
“We understand commodity markets and how they work. We understand we go up for a while. We go flat. We go up. Spike, then we plateau again for a while, go down, then we go up, and then we do this again,” Doud said during the USDA Agricultural Outlook Forum on Thursday. “This is how commodity markets work. Are we another flat spot? And if we are, how do we get out? How do we get that next leg up?”
Doud then highlighted some of the markets that draw a lot of attention from U.S. agriculture, both good and bad.
“We’ve gone almost 25 years where exports to Europe have been flat as a pancake,” Doud said.
The trade gap between the U.S. and EU on agricultural products is $23.6 billion, Doud said.
As the head of a dairy trade group, Doud highlighted the U.S. imports $3 billion in dairy products from Europe annually while U.S. sales to the EU are just $115 million.
“We export 15 times more cheese in Guatemala than we do the European Union. Folks, we export more cheese in New Zealand,” Doud said.
EU officials have found a variety of ways to maintain protectionism, Doud said, the latest being the Farm to Fork initiative which has certification requirements and protocols regarding how food is grown and processed. “They’re designed to keep us out,” he said.
Doud added, “I’ve made a huge mistake this morning if I’ve said anything nice about the European Union.”
EU protocols on biotechnology and pesticides complicate efforts by U.S. companies to develop products over fears that they might not receive EU acceptance. That ends up stagnating agricultural investments, Doud said.
“Our challenge is, if we can’t get this technology approved by our government so we can commercialize it, and the people that made the investment can’t get a return on that investment, where’s that venture capital money? Where’s that investment of technology and agriculture? It’s going to go somewhere else.”
Switching to China, Doud pointed to the trade negotiations during the first Trump administration that led China to buy as much as $38.1 billion in goods in 2022 — a level that helped boost farm income to record levels that year. The commitment was supposed to be for China to buy at least $40 billion a year in U.S. goods, but China never reached that level. Right now, the Chinese economy is struggling. Still, the demand that comes from China is difficult to replace, he said.
“You can do a free trade agreement with the rest of the world and it does not replace China’s demand,” Doud said.
Going forward, where are the opportunities with China? Soybean import demand is probably flat, but looking at commodities such as wheat, corn, soybeans, beef, pork or poultry, Doud added, “I don’t see any silver bullets from China.”
Doud touched on the prospects of ethanol exports to China but said that requires building out infrastructure. The U.S. took years to build out its own ethanol infrastructure.
“You can’t expect the Chinese to just snap their fingers and do something enormous in that capacity,” he said.
Looking at Brazil, Doud said, “We have a tremendous opportunity for Brazil in dairy if we can ever crack that nut.”
India also remains a market U.S. farmers have longed to fully tap, but India is a reluctant buyer. “We’ve been mining for gold in the hills of India for 40 years and I still don’t think we’ve found it,” he said. “I’m not sure it’s there.”
Doud also said he is concerned about what is happening with Mexico and the regulatory ability to manage the screwworm.
“I can’t imagine how upset the Mexican ranchers are with the situation,” Doud said. He added, “This is an existential threat to the livestock industry in North America.”
Looking at protein demand over the next decade, Doud said the supply of protein is going to be nowhere near the demand potential. Globally, where will that expansion come from, the EU, Asia or Brazil? “Where can grow more protein? Where can we grow more beef, more pigs, more chickens, more dairy? Where is it folks? Right here.”
Doud touted the investments both U.S. and foreign companies have made in recent years to expand dairy processing production. Doud said companies are currently developing $8 billion in processing capacity.
“The place to grow is going to be in the United States,” he said.
While the U.S. may be the growth market for protein, Doud said all of the easy trade negotiations have already happened. “This is tough sledding.”
For agriculture, there is no alternative but find ways to expand trade, Doud said. He added he gets asked about tariffs all the time. He sees tariffs as a potential strategy to help ensure the U.S. can capture new markets going forward. Doud pointed to views from his former boss, former U.S. Trade Representative Robert Lighthizer.
“So how do we level the playing field? Just a little bit of tariff. And that’s a really interesting perspective from an agricultural economist’s standpoint.”
Doud then wrapped up his talk by pointing back to the $23.6 billion agricultural trade deficit with the European Union.
See, “USDA Forecasts Record Corn Crop, Larger Soybean Crop for 2025-26,” https://www.dtnpf.com/…
Also see, “Canadian Ag Minister Warns of $200 Million in Daily Ag Trade Disruption,” https://www.dtnpf.com/…
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