The importance of Mexico to local agriculture

Two farm hands milking cows in a parlow

 

It is no secret that agriculture plays a vital role in the state economies of Minnesota and Wisconsin. In fact, both states rank in the top 10 nationally in ag receipts. But it is also no secret the importance of international trade to the upper Midwest and our industry.  

Trade was a major topic of discussion during the 2016 political season. Both Democrat and Republican candidates campaigned on the idea of reforming international trade. Two deals in particular, the Trans-Pacific Partnership and the North American Free Trade Agreement, received the majority of attention.  

After taking office in January, President Donald Trump quickly moved to back out of the TPP agreement that was reached by his predecessor. The President has also stated his intent to renegotiate NAFTA with neighboring Canada and Mexico.

In addition to potentially reworking trade, President Trump campaigned vigorously on stemming illegal migration from Mexico with the construction of a new wall along the U.S. southern border. When questioned on the expenses of a new structure, the President has floated a couple ideas, including placing tariffs on goods coming from Mexico.

The idea of tariffs has some within the ag industry worried that Mexico could retaliate with tariffs of their own, leading to a trade war. A second possibility is that Mexico turns to alternative sellers. One Mexican senator is already threatening to introduce legislation to purchase grain from Argentina and Brazil.

The implications of decisions affecting trade and immigration from Mexico loom large for Minnesota and Wisconsin. Let’s take a closer look at just how important Mexico is to agriculture within these two states.

Minnesota by the numbers:

There are over 74,500 farms in the state of Minnesota. Producers here grow a variety of crops, such as corn, soybeans, sugar beets and a host of small grains, just to name a few. The livestock industry is primarily made up of hogs, turkeys and cattle – including for both beef and dairy.

Canada and Mexico are Minnesota’s top two trade partners, accounting for over a third of all exports in 2015. Mexico’s share of imported Minnesota goods in 2015 was over $2.4 billion. Agriculture represents the number one industry for the state’s exports.

When it comes to commodity segments, the importance of Mexico shines through. According to the Minnesota Department of Agriculture, Mexico is the top buyer for corn, soybean meal and poultry products. They are also the second largest buyer of soybeans, wheat, pork and beef. The state’s dairy industry is heavily reliant on Mexico, as over one quarter of all dairy products made in Minnesota travel south of the border.

Wisconsin by the numbers:

Like their neighbors to the west, the Badger State is home to a large number of farms, coming in at just under 70,000. Agriculture is a major driving force for the state’s economy, contributing over $88 billion annually. The industry is also a large employer. Roughly 12 percent of the population works directly within ag.

Wisconsin is well diversified when it comes to commodities. Dairy is the unquestioned leader, but the state ranks first nationally in snap beans, cranberries, ginseng and silage corn. Of these commodities, more than $3.4 billion worth of agricultural products were exported from Wisconsin last year. As of 2014, Wisconsin exported nearly $1 billion in dairy products, alone!

Although Wisconsin does not export as many agricultural goods to Mexico as Minnesota, the country does serve as the number two foreign trade partner. The export value of Wisconsin agricultural products that traveled to Mexico last year totaled $360 million.  That represented a nearly 21 percent increase from 2015.  

Farm labor:

Immigrants have become key to farm labor within the U.S. Although migrant labor touches most corners of agriculture, we are going to highlight the dairy industry in particular.

A 2015 study conducted by Texas A&M University in partnership with the National Milk Producers Federation showcases just how important foreign-born workers are to the dairy industry.

A sign hanging in a dairy parlor in Spanish

The sign reads “Cows and high quality milk depend on you. Cleaned. Dedicated. Moved.

According to the study, half of all workers on U.S. dairy farms are immigrants, with the majority coming from Mexico. One-third of all dairy farms within in the U.S., of which produce 80 percent of our country’s milk, employ foreign workers.  A complete loss of such workers would result in an estimated $32 billion of lost economic output and the closure of an one-in-six dairy farms.

Efforts are being made within the dairy industry, and agriculture as a whole, to reform the U.S. guest worker visa program. This particular program is utilized by many dairy operators in order to fill staffing needs.

Mexico is a critical player in Minnesota and Wisconsin agriculture. Losing the country as a trade partner, or the labor force it provides, would present a great challenge to farmers and agribusinesses everywhere.