U.S. CORN FARMERS LOSE MARKETS AS CONGRESS STALLS ON FTA WITH COLOMBIA

SEPTEMBER 2011

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(Posted Tue. Sep 6th, 2011)

Sept. 6: Now more than ever, it is critical the Congress ratify the pending U.S.-Colombian Free Trade Agreement and ensure that U.S. farmers compete on a level playing field against foreign suppliers set to make significant headway into the country’s feed market. Traditionally a Top 10 export market for U.S. corn, Colombian corn imports have eroded substantially over the past four years and stand to further decline in light of new trade agreements recently implemented with alternate suppliers.

 

“U.S. corn producers stand ready to develop and provide corn products to meet the modern demands of global consumption,” said National Corn Growers Association First Vice President Garry Niemeyer. “I urge Congress to work swiftly to pass the pending free trade agreements Colombia, as well as those with Korea and Panama.”

 

Specifically, Canadian feed wheat farmers currently enjoy an advantage as their nation’s FTA with Colombia was implemented beginning August 15. In the short 10 days after the agreement took effect, Colombian buyers have placed orders for more than 77.1 million bushels of Canadian feed wheat.

 

According to U.S. Grains Council Latin America Regional Director Kurt Shultz, U.S. farmers face stiff competition in Colombia as U.S. corn imports are currently taxed at a 15 percent duty while Canadian feed wheat now can be imported duty-free. Notably, Brazilian and Argentine corn enter this market with a duty of 6.7 percent.

 

This differential has been clearly reflected in the decline of U.S. corn exports to Colombia. In 2007, Colombia imported 118.1 million bushels of corn with the United States enjoying a 93 percent market share. In 2010, however, U.S. market share has shrunk to only 20 percent, representing a $475 million dollar loss to the U.S. economy.

 

Under the Colombia Free Trade Agreement, the United States would have immediate access to Colombia’s market for 82.7 million bushels of corn at a zero percent duty. Over the course of the 12-year phase out for corn’s 25 percent over-quota base tariff, the rate would be reduced each year by 2 percent, while at the same time, the volume of the tariff rate quota would increase by 5 percent, compounded annually. That growth will result in an approximately 133.8 million bushel tariff rate quota the year before the over-quota tariff is completely eliminated for corn.