U.S. agriculture stands to lose big if a trade dispute with Mexico or Canada surfaces.
CoBank CEO Tom Halverson told Bloomberg News recently that agriculture is in a “vulnerable position.”
President Trump withdrew the U.S. from the Trans-Pacific Partnership and is vowing to renegotiate the North American Free Trade Agreement.
However, as Halverson point out, Mexico is considering Brazil and Argentina as potential trade partners for corn.
He says the prospect of a dispute with a major trading partner like Mexico is the last thing that many farmers, ranchers and grain handlers in the U.S. would like to see right now, adding agriculture has already suffered through several years of low commodity prices and a strong dollar, which has made overseas sales tougher.
He cautions that weak prices are affecting some agribusinesses that borrow from CoBank, and that’s starting to impact credit quality, and suggest that trade problems could put further pressure on cash flow and credit quality.