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North Dakota is an important producer of agricultural products and a major
exporter. In 2007, North Dakota ranked 8th among all 50 States with
agricultural exports estimated at $3.9 billion and its farm cash receipts were
$7.6 billion. Agricultural exports help boost farm prices and income, while
supporting about 45,173 jobs both on the farm and off the farm in food
processing, storage, and transportation. Exports are important to North Dakota's
agricultural and statewide economy. Measured as exports divided by farm cash
receipts, the State's reliance on agricultural exports was 51 percent in 2008.
North Dakota's top agricultural exports in 2008 were:
wheat and products -- $1.6 billion
soybeans and products -- $688 million
feed grains and products -- $559 million
feeds and fodders -- $342 million
World demand for these products is increasing, but so is competition among
suppliers. If North Dakota's farmers, ranchers, and food processors are to
compete successfully for the export opportunities of the 21st century, they need
fair trade and more open access to growing global markets.
How Trade Agreements Benefit North Dakota Agriculture
North Dakota, the nation's second largest wheat producer, benefited from
limits set on subsidized wheat exports as a result of the Uruguay Round
agreement. These limits influenced the European Union's decision to change its
Common Agricultural Policy, ultimately lowering internal EU market prices to
world price levels. As a result, annual EU wheat exports dropped from 22 million
tons to about 14 million tons as lower market prices stimulated domestic use,
and annual EU wheat imports jumped from 1.5 million tons to 7 million tons as
the levied margin of protection fell. This translates to an 11-percent reduction
in global export competition and a 5.5-million-ton increase in EU imports, half
of which is supplied by the United States.
Under the North American Free Trade Agreement, Mexico eliminated import
licensing for wheat and is phasing out tariffs. Since 1994, average annual U.S.
wheat exports to Mexico have more than tripled, from 23 million bushels to 85
million bushels, valued at $349 million in 2002. North Dakota could also benefit
from China’s accession to the WTO in which China agreed to lock in tariff-rate
quotas and lower tariffs and end export subsidies. These concessions provide an
opportunity to increase U.S. wheat exports. This should facilitate trade in
future years, but has had little impact in the past year or so because of ample
domestic production in China.
As the nation's No. 1 sunflower grower, North Dakota benefits under the
Uruguay Round agreement from a 50-percent reduction in Japan's tariffs and a
40-percent reduction (phased in by 2004) in South Korea's tariffs on sunflower
oil. Sunflower oil exports to both countries combined were valued at $7.4
million in 2002.
North Dakota benefits under the North American Free Trade Agreement as Mexico
phases out its in-quota tariff rate on frozen potatoes (initially at 15 percent
in 1993). At the same time, a special safeguard tariff-rate quota of 1,800 tons
will grow at a compound annual rate of 3 percent. These changes support U.S.
potato fry exports to that country, which jumped from $9.6 million in 1994 to
$35 million in 2002. Frozen potato fry sales to Japan increased 23 percent to
$152 million over this period. As for South Korea, U.S. frozen potato fry
exports to that country rose 47 percent to $22 million during the same period.
Export Success Stories
In Peru, one of the largest mills purchased U.S. wheat after many years of
using other suppliers. After attending several U.S. Wheat Associates activities,
including a Peruvian durum wheat visit to North Dakota, the mill purchased a
parcel of 5,000 metric tons of U.S. durum wheat with an estimated value of