NAFTA: A Success Story for ADM and American Agriculture

Originally Published in the Fall 2017  WIIT Communique.

By Lorraine Riffle Hawley, Director for International Government Relations, Archer Daniels Midland Company

For more than a century, Archer Daniels Midland Company (ADM) has transformed crops into products that serve the vital needs of a growing world. Today, we’re one of the world’s largest agricultural processors and food ingredient providers, with more than 32,000 employees serving customers in more than 160 countries. With a global value chain that includes 428 crop procurement locations, 250 ingredient manufacturing facilities, 38 innovation centers and the world’s premier crop transportation network, we connect the harvest to the home, making products for food, animal feed, industrial and energy uses.

As our company moves food, feed and energy products from areas of production to those of consumption, we benefit from trade agreements that provide duty free access and ensure efficient movement of products across borders. Here in North America, the North American Free Trade Agreement (NAFTA) represents one of the single most important trade agreements for our industry.

This regional trade agreement, which was implemented over 23 years ago, knit together the agricultural markets of the U.S., Canada, and Mexico and enabled all three of our countries and our citizens to benefit from a complementary suite of food and agriculture output at largely zeroed tariffs. For our company, NAFTA deepened what was already an important relationship with both countries.

ADM has had a presence in Mexico for 60 years. Our company has made significant investments in Mexico and today handles a third of all agriculture imports into the country. ADM’s success in Mexico has been dependent upon key provisions with NAFTA. Reduction in tariffs and quotas in the Mexican corn market has led to increased market share for U.S. producers like ADM, and because of NAFTA the U.S. holds a dominant 52 percent share of the Mexican corn market—and 97 percent of Mexican corn imports come from the U.S. These exports are key for the Mexican agriculture economy since Mexico does not produce enough grains and oilseeds to meet domestic demand.

In Canada, ADM sources, stores, transports and processes crops such as wheat and oilseeds at a total of 42 facilities manned by more than 1,000 employees. These operations include wheat mills and bakery mix plants; oilseeds crushing plants and refineries; grain elevators; and plants that blend fertilizer and manufacture animal feed and feed ingredients. NAFTA has essentially created an integrated and interlocking marketplace for U.S. and Canadian food manufacturers, farmers and ranchers—and U.S. consumers benefit from the co-production of processed foods such as pet food, bakery products, breakfast cereals and pasta as well as wheat products.[1]

The depth and breadth of our business in both countries would not be possible without NAFTA. And it is not just ADM that has benefited from our integrated food and agriculture trade relationship. Farmers, ranchers, and consumers in each of our three countries have been winners, and our sector represents one of NAFTA’s greatest success stories.

Since NAFTA was implemented, U.S. food and agriculture exports to Canada and Mexico have more than quadrupled—growing from $11 billion in 1993 to over $43 billion in 2016. In addition, the share of U.S. food and agricultural exports destined for Canada and Mexico grew from 19 percent in 1993 to 28 percent in 2016.[2] Because of the trade boon that NAFTA spurred, our industry grew to support 21 million full and part time on farm jobs. We also saw enormous growth in food and agriculture manufacturing. Today our industry employs about 2.1 million people and represents the single largest source of employment in U.S. manufacturing. Because of NAFTA, U.S. food and agriculture jobs and manufacturing centers did not leave America; they were created, expanded, and have flourished here at home.

NAFTA has been a source of economic opportunity in America’s heartland. The jobs and centers of food and agriculture output created by NAFTA have played a critical role in boosting incomes for millions of U.S. farmers, ranchers and manufacturers, and the opportunities derived from NAFTA continue to provide critical export markets that benefit America’s rural communities.

So, you’re probably asking “what does a NAFTA renegotiation mean for our industry and for the millions in America’s heartland who depend upon it for continued economic opportunity?” Well, we see the chance to create more opportunities.

NAFTA is now over 23 years old and due for updates that can improve the agreement while preserving its core benefits.

To start with, there are ways to improve the agreement through the removal of remaining tariffs, quotas, and non-tariff barriers. ADM and other agriculture industry stakeholders are asking for the inclusion of newer “21st century” provisions that can make trade more efficient and less costly for our industry. For example, we are advocating for more modern sanitary phyto-sanitary provisions (SPS) that can eliminate or expedite disputes when there are shipment delays for perishable agriculture products. One of the key provisions in a modernized SPS chapter would be a “rapid response mechanism” to address border delays and ensure that disputes are resolved expeditiously.

There are also significant gains that can be made by modernizing and adding to NAFTA’s energy chapter. ADM is one of the world’s largest ethanol producers, and we have seen firsthand how the energy landscape has changed dramatically over the last two decades. A NAFTA modernization represents a key moment to achieve regulatory convergence for renewable fuels, particularly E10 blended gasoline.

Finally, through the re-negotiation process, our negotiating teams can take into account the suite of technological advances that have been made over the last 20 years. Including provisions for e-commerce and electronic certification and allowing technology to drive more advanced customs procedures can make trade across our borders more efficient and seamless.

These are just some of the ways we can build upon the existing benefits of NAFTA and promote continued opportunities for American agriculture.

ADM is proud to be a part of the NAFTA success story and of our work across the NAFTA bloc to provide reliable, affordable and safe supplies of food, feed and renewable fuels. As NAFTA negotiations are ongoing, we acknowledge the great success that our company and our industry have enjoyed because of this important trade agreement—and we support efforts that will allow NAFTA to transition into the 21st century so that it can provide even more and better opportunities for America’s heartland.

1 U.S. Department of Agriculture
2 U.S. Census Bureau

About the Author: Lorraine Riffle Hawley is Director for International Government Relations for Archer Daniels Midland Company (ADM) and is based in ADM’s Washington, D.C. government relations office.

She joined ADM in August 2011, and in her capacity as Director for International Government Relations, manages global government relations for ADM.

Prior to joining ADM, Ms.Hawley held several government relations positions at Chevron Corporation from 2002 until 2011 where she managed portfolios including those related to Africa, Europe, and Asia. While at Chevron, Hawley was nominated to participate in the U.S. Department of State Franklin Fellows Program. While serving as a Franklin Fellow, Hawley worked in the State Department’s Bureau of East Asia and Pacific Affairs Office of Economic Policy.

Ms. Hawley represents ADM as Co-Chair of the U.S. China Agriculture and Food Partnership. She also serves on the board of directors of the U.S. Poland Business Council and as a founding member and member of the board of directors of the American Romanian Business Council and Chair of the American Central Eastern European Business Association. Hawley joined the Board of Directors of the International Student House in December 2015.

In 2012, Ms. Hawley was appointed by the U.S. Department of Commerce and U.S. Trade Representative to serve on the Industry Trade Advisory Committee for Customs Matters and Trade Facilitation. The industry advisors serving on the ITACs provide valuable input as the Administration advances its trade agenda to improve economic opportunities for America’s businesses, workers, and consumers.

Ms. Hawley graduated from the University of Georgia with a degree in Journalism from the Grady College of Journalism and Mass Communication. She is a recipient of the University of Georgia’s “40 Under 40” award—an award presented by the University to outstanding young alumni.

 

The views expressed by the author(s) of article(s) published in this newsletter are their personal views and should not be interpreted as the views of The Association of Women in International Trade (WIIT) or its individual members. See full disclaimer here.