Doug McKalip, chief agricultural negotiator in the Office of the United States Trade Representative (USTR), offered a global trade outlook for dairy and agriculture during his closing keynote speech to dairy processors on Jan. 24 at the International Dairy Foods Association (IDFA) Dairy Forum at the JW Marriott in Phoenix.
“What does trade look like and what are some of the challenges we face?” McKalip asked. “What [dairy processors] do is so important that others want to disrupt it. Off the coast of Yemen, there are operatives looking to restrict trade from happening. U.S. forces have been hard at work neutralizing that. In fact, a few Special Forces members paid the ultimate price to make sure trade continues and the shipping lanes would remain open.”
McKalip shifted gears to the Russia-Ukraine conflict, where ports are also blocked and preventing trade from happening, he said.
“So, what does that all mean? People want to prevent trade from happening, because they know how important it is,” McKalip stressed. “Even in the face of this, dairy and agriculture have been successful to ensure products reach the table; that children have the opportunity to eat a nutritious meal.”
This is a statement of tenacity of agriculture and tenacity of farmers, McKalip added. “And a commitment all of your companies and employees have made to make sure finished products are successful in trade.”
U.S. farmers provide things that people throughout the world need and dairy is absolutely vital, he continued. “My goal is make sure we have a fair and equitable playing field in trade. We know that if U.S. farmers are on an equitable playing field, they will shine every time and our products will please customers around the globe,” McKalip said.
Achieving results
McKalip has made several trips around the globe recently. One result of his efforts is “keeping trade moving” in Asia. “Despite the economic woes China has faced … we have been successful with partnerships with teams like IDFA in avoiding disruptions of movement of product to China.”
Currently, McKalip is working toward more permanent policies regarding trade with China. Beyond that, it is important to be well versified in trade, McKalip stressed. Indonesia in an example where he has made progress. “[And] in Taiwan, we signed the first installment of an agreement. … We are deep in the throes of discussing agriculture with Taiwan and look forward to wrapping that up in the near future.”
In Africa, Nigeria has been a place of great trade progress, McKalip noted. “Agriculture is a major focus for us in 2024,” he said. “In Africa as a whole, we launched the reboot of [of a trade agreement]. I was in Johannesburg (South Africa) in November, where over 30 African countries were present, to renew our trade partnership on that continent.”
McKalip and his team also recently hosted a group from Kenya and demonstrated how U.S. crops are grown and how U.S. farmers have made adjustments regarding sustainability.
And in Europe, McKalip said he welcomed the continent dropping its 25% duty on cheese. “We are currently engaged with the Europeans on other barriers of trade,” he said.
“All told, in 2023, we had at least a dozen tariffs dropped on agricultural products. Thirty-one countries removed their barriers to trade,” he relayed. “For U.S. milk and dairy, we hit a number of 10 billion pounds higher [in exports] than where we were in 2019. Those are accomplishments you made, and they are quite impressive.”
Looking ahead to the short-term future, McKalip expects agricultural imports to outnumber exports in 2024. “We set three new records in a row for farm exports from the U.S., [as well as] records on net farm income.”
Dairy, on the other hand, has a significant trade surplus. The United States will export nearly twice what we import in 2024.
Regarding why imports will outpace exports this year, McKalip pointed to the recovery of the U.S. economy outpacing those of other countries, with a strong dollar, low unemployment and a record-high stock market. This had led U.S. consumers to seek more expensive products from around the globe.
McKalip concluded that four or five countries account for a majority of U.S. exports, so it is “super important we continue to diversify. We need to develop new marketplaces for our products,” he mentioned. “This is a major focus for us at USTR. Every commodity needs to be part of those efforts.”
