Needed: Strong Trade Agreements With Predictable Allies


I’m worried about soybeans.

We grow them on my farm in Iowa, along with corn and cattle.

As the planting season approaches, however, I’m not sure how to handle my soybeans. Should we plant more or fewer than last year?

Much of it comes down to Mexico: Will that market still be open by harvest time?

Like all American farmers, we need export markets—and for us, Mexico has been a good destination for our soybeans. Our farm depends on these foreign customers.

So let me say this about NAFTA: It’s been great for me as a farmer because it helps keep me in business. And it’s been great for American consumers, who enjoy more choices and better prices on a range of products, from beer to guacamole.

My preference would be to keep things the way they are.

President Trump, however, has a different idea. He says he wants to re-visit NAFTA—and this is causing some uncertainty.

Farmers face uncertainty all the time. We lack forecasts for this summer’s weather. Will it be wet or dry? Hot or cool? Markets are volatile, too. Will the demand for beans be strong or soft? Will prices go up or down?

If we could gaze into a crystal ball and learn these basic facts, our planting decisions each spring would be a lot easier.

This year, however, we confront the added uncertainty of politics—and one question is whether we’re about to enter a tit-for-tat trade war with Mexico.

Nobody wins trade wars.

I’m optimistic that we won’t enter one—and though I’ve been skeptical of some of what President Trump has said about trade, I think we should give him a chance to improve NAFTA.

First of all, he’s making good on a campaign promise. As a candidate, he pledged to renegotiate NAFTA. So we should expect him to try. Simply opposing any change to the status quo—even a status quo that’s working well —is to become irrelevant.

As farmers, we make changes all the time. Right now, on my farm, we’re going through a big one.

I got into the cattle business 35 years ago. Yet the world has transformed since then, and the models that worked for us in the 1980s and 1990s don’t make much sense nowadays. We’re a small player in a large-commodity market. To survive, we need to find a new niche, perhaps by selling directly to chefs or even artisan butchers.

I’m getting old for this—and so I’ve challenged my daughter, who runs the business for us, to adapt by updating our practices. I’m counting on young minds like hers to grasp the new economic realities and innovate for the future.

I’m also sharing with her a bit of wisdom that a wise old farmer passed along to me when I was about her age: Don’t ever let yourself become convinced of anything. Let the market tell you what to do—and if it tells you to change, make sure you’re listening.

The political markets have just told us something: NAFTA is most likely going to change. And it’s not just President Trump. If he had lost the election and Hillary Clinton had won, we’d possibly be facing a similar situation.

At any rate, our country is about to reconsider and possibly update NAFTA. And as much as I am confident the existing agreement helps me and other farmers as well as consumers, perhaps it’s time to give it a new look. Since it came into force, after all, we’ve undergone a technological revolution involving everything from online shopping to the ubiquity of mobile phones.

A new and improved NAFTA should account for this, making it easier for us to move goods and services across the border, and in a way that creates new opportunities for people on both sides.

If it’s done well, then perhaps our cattle business will connect with restaurants in Chicago and Minneapolis—and also Monterrey and Veracruz.

Ultimately, we need a simple thing: Strong trade agreements with predictable allies.

We need to remember that everyone has a stake in these negotiations. It is imperative that we engage as stakeholders and make the case for trade. Don’t leave this to others to get it right.

Meanwhile, I’ve got to decide how many soybeans to plant this spring.


Note: this column first appeared at The Hill on Feb 1.

Reg Clause

Reg Clause

Reg Clause is the fourth generation to manage the Clause Family Farm Jefferson, Iowa. The operation raises corn, soybeans, cattle and grandkids.

Reg volunteers as a board member for the Global Farmer Network and is currently serving as Chairman. Reg has extensive experience in business consulting, specializing in business development including feasibility studies, business planning and financial structuring for clients as diverse as biofuels, wineries, meat processing, niche marketing and many more. His work has allowed him to travel extensively around the world to conduct in-depth analysis of agricultural production systems.

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