U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) have expressed concern that the recent announcement that the eleven remaining TPP members have concluded talks on a revised deal without us is a looming disaster for U.S. wheat farm families and related industries. It puts U.S. wheat exports at serious risk in Japan, which has been our largest, most consistent importer for decades.
President Trump recently suggested that we could reconsider the decision not to join TPP if a better deal is possible. The President is a tough negotiator and clearly wants a good deal for the United States. It would be a better deal for wheat farmers now if the Administration would apply its strength to open the door all the way to negotiating a better TPP deal or bilateral solutions to protect the crucial Japanese market and help open other wheat markets like Vietnam.
TPP 11 calls for gradually discounting effective tariffs that Japanese flour millers pay for imported Australian and Canadian milling wheat over 9 years from about $150 to about $85 per metric ton (MT). Imported U.S. wheat effective tariffs would remain at about $150 per MT.
Sources within the Japanese milling industry estimate this $65 per metric ton disadvantage would eventually force them to find alternatives to U.S. wheat and cut average total imports of Western White, dark northern spring (DNS) and hard red winter (HRW) wheat from about 3.1 million metric tons (MMT) per year to as little as 1.35 MMT per year. U.S. wheat farmers and the U.S. grain trade will essentially be writing a $500 million check every year to Australian and Canadian farmers, even at today’s relatively low wheat prices, if nothing changes before the effective tariff schedule is fully implemented.
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