Getting Back on Offense with Lesly McNitt
May 30, 2019
Scott Miller: I'm Scott.
Bill Reinsch: I'm Bill.
Scott & Bill: And we're The Trade Guys.
Andrew Schwartz: You're listening to The Trade Guys, a podcast produced by CSIS where we talk about trade in terms that everyone can understand. I'm H. Andrew Schwartz and I'm here with Scott Miller and Bill Reinsch, the CSIS Trade Guys. In this episode of the Trade Guys, we welcome another special guest. Lesly McNitt is the director of public policy for the National Corn Growers Association. We'll ask Lesly what she's hearing from corn growers, from the administration and from the Congress and much more right here on this episode of the Trade Guys.
Andrew Schwartz: Lesly, it's so great to have you here representing the National Corn Growers Association, but I want to just put corn in the United States in perspective for a second. The United States grew more than 14.6 billion, that's billion bushels, which is 385 million metric tons of corn last year. That's roughly 17% of that production was exported to more than 80 different countries. That's a lot of corn.
Lesly McNitt: It's a lot of corn and when you look at all the other products that corn goes into and those exports, it really amounts to closer to like 25% of our production being exported.
Andrew Schwartz: So Mexico, 25% of this is exported to Mexico. 21% is exported to Japan, 9% is exported to South Korea. Those are the three top US corn export destinations. Those are three hugely important US trade partners. We could go through the other top 10 but this is a big part of our export economy. So tell us what's interesting for you now. I mean, there's been a lot going on with farm. There's been a lot going on with trade. President Trump just announced a big, big package of farm aid. How's this all affecting you?
Lesly McNitt: Well, in my day to day, we're dealing with all of it. The way I think about it is we are seeking to get back on offense. Corn farmers want to get back on offense on trade. And what I mean by that is, we are, in the last couple of years, responding a lot on trade. And we'd like to be more in a posture where we can be going after new markets, new trade agreements. Because what we've seen and two out of the three markets that you just cited as our top three, we have free trade agreements with and we're seeking one with Japan being the other one where we don't have a trade agreement.
Lesly McNitt: Those trade agreements really have catalyzed dramatic growth and exports for corn farmers and have performed really, really well for corn farmers, and trade has sort of skyrocketed as a priority in the policy space for corn farmers. So we want to see diversification of our portfolio, get back on offense, start building out new markets, new agreements to facilitate that trade. But we've been responding to a lot of these issues, whether it's threatened withdrawal from NAFTA or the US Korea Free Trade Agreement, how to deal with trade aid, how to deal with the disruptions with China. It's been a little bit more of a defensive crouch and we are looking to get back on offense. So that's how this is moving around in my mind right now.
Andrew Schwartz: Scott Miller, who is a Midwestern farm guy who loves corn, is chomping at the stalk to get in on this. Scott jump in here.
Scott Miller: Corn is a part of my boyhood, so no doubt I remember it being the principal crop in the part of Ohio where I grew up and really a lot of states west of Ohio. So one of the things that I discovered about corn that many of our listeners may not know, is how many products corn winds up into. Everybody knows sweet corn and breakfast cereal, but a lot of it goes into animal feed. There are many other human food uses. It's a principle ingredient in the Nashville and Jack Daniel's whiskey and lots of American-
Andrew Schwartz: Well, that's sacred.
Scott Miller: Absolutely.
Bill Reinsch: There's a song about that, you know? Rain makes corn, corn makes whiskey, and it goes on from there.
Andrew Schwartz: This is a country song, I'm assuming?
Bill Reinsch: It is indeed, yes.
Andrew Schwartz: Bill, you are a font of information today already. Scott, please continue. But it's good to know about Jack Daniels.
Scott Miller: Sure, That's good. But could you give us an idea of all the things that corn goes into because that's part of your diversification strategy.
Lesly McNitt: It is an important part. I mean, Cheetos and Doritos are my favorite corn products.
Andrew Schwartz: Nice.
Lesly McNitt: And cereal.
Andrew Schwartz: Captain crunch is my favorite corn product.
Lesly McNitt: That's a corn product. But you've got corn gluten, feed and meal. Right? And like you said, livestock feed. There's distillers dried grains, which is a byproduct of the ethanol process, which is also an animal feed product.
Scott Miller: It's an oil seed, right? So you get corn oil.
Lesly McNitt: You get corn oil, but it goes into starches, sugars. So processed foods.
Scott Miller: What gets exported? The raw material or these downstream products?
Lesly McNitt: It’s all of the above. So still direct corn exports, the actual corn is still the leading category for us in terms of exports.
Scott Miller: And that's mostly feed corn, right? Rather than sweet corn.
Lesly McNitt: Yes, yes, exactly. You eat sweet corn, white corn makes its way into tortillas. Those are all things. Popcorn, and we have members that grow popcorn, of course. But most of the corn is yellow corn that makes its way into feed products, is processed or becomes ethanol, which is another major category. So we sell mostly export corn, but over the years have seen a real trend in value added products. So all the other things that we just collectively listed, we've seen those products and that diversification and how we export corn. We call it corn in all forms. We've seen that really grow.
Scott Miller: Got It. Well, we heard about the NAFTA train from a previous guest, Blake Hurst of the Missouri Farm Bureau. And Blake talked about the NAFTA train. And at that time when we interviewed Blake, he was just at the front end of the retaliation for the steel and aluminum tariffs. And they were worried about the NAFTA train. So what's the situation at the moment and what's the relationship with our neighbors and when it comes to corn?
Lesly McNitt: This relationship is critically important to the farmers that I represent. They've put a lot, our industry has put a lot into really integrating our supply chain. So making trade really efficient. The Mexican livestock industry has really, really grown as a result of NAFTA and we are their top supplier of feed. So it's a really important relationship. And Canada's our number two market for ethanol export. So that's a really important relationship. I think that the US corn industry has worked really hard, particularly through some of the turbulence in the last couple of years to say, hey, we're still your friend. We still want to be a reliable supplier. The quality of our products, the efficiency with which we trade, our relationships are still really, really strong. And we'll continue to advocate for the future of that relationship.
Lesly McNitt: And I think that that's solid. But I also think throughout the uncertainty, our neighbors have had to think about what their plan B would look like if we were no longer a reliable supplier of the products that they enjoy. Mexico in particular has demonstrated a willingness to talk to Brazil and Argentina as their plan B, and has increased imports of corn a little bit, and of rice and beef as well. So this is impacting other commodities and other farmers, not just the ones I represent. But if you're not sure what the terms of your trade are going to be, I think it's understandable that anyone would look for a plan B, but we're just feeling really positive that our relationship is strong at the moment.
Scott Miller: Well, the retaliatory tariffs went away a week ago, eight days ago. What's happened? Anything? Things are getting back to normal?
Lesly McNitt: So it's my understanding that they're getting back to normal. But we were in kind of a unique position where corn and corn products didn't have retaliation from Mexico and Canada for the steel and aluminum tariffs. We knew that our day could come any moment, but pork, dairy, apples, there were a number of other commodities that really, really felt it in a different way. Where we saw that hit was reflected in our price. And prices have stabilized a little bit, but I don't necessarily think it's a result of the tariffs going away for corn. Our price is more closely tied to soybeans and so we still have the impact of what's going on with China. It's just bad weather. They can't plant.
Scott Miller: So soybeans is a substitute in terms of animal feed for corn. So suddenly prices drop, it puts pressure on corn prices.
Lesly McNitt: Typically, yes. I mean, there's a very strong correlation in the market place, but we weren't hit directly with retaliation from Mexico and Canada in this particular instance.
Scott Miller: And yet the business was still disrupted to some extent.
Lesly McNitt: Absolutely. I think, listen, the market doesn't like uncertainty.
Scott Miller: Right.
Lesly McNitt: Farmers are trying to figure out what to do, how to make planting decisions. I mean, there were a lot of farmers that were going to plant more corn in year because the soybean markets have been a mess as a result of what's going on with China. And we've seen corn prices down but still soybeans are in worse shape. So they were going to plant corn, but the weather's been a nightmare.
Scott Miller: This is the theme from every single guest we have on this show, which is if you look at the macro numbers, you really have to squint hard to find the impact of the tariffs and the retaliation in the overall macro growth numbers. So the economy looks pretty good at top line basis, but everyone we talk to is their business has been disrupted in important ways. And it's opening that up and getting those voices to become more prominent in the debate that I think would help Washington a lot.
Lesly McNitt: Oh, absolutely.
Bill Reinsch: One of the debates coming up about the relief, that $16 billion or whatever it is that has been cranked out.
Andrew Schwartz: The Trump administration announced last Thursday, $16 billion farm aid package to offset losses from a 10 month trade war with China.
Scott Miller: One of the criticisms, and I'd like you to comment on of that, was that this is going to influence farmer planning decisions. That if they think the soybean benefit package is bigger, they're going to plant more soybeans and that would mean less corn or vice versa. Is that true? Is anything like that going to happen or is it our planning decisions at this point pretty much locked in?
Lesly McNitt: It's tricky. I think that they sort of were locked in, but a lot of farmers have not been able to plant corn. We're way behind in our corn planting.
Scott Miller: Because of the weather.
Lesly McNitt: Because of the weather. You've had floods, you've had late snow, rain. I mean, it's just been really, really tough. Right? So what are these guys doing? Guys and gals are sitting home watching the markets, they're watching the volatility, they're watching prices and they can't get out in the fields and they're anxious and they're frustrated. And I think that the timing of this announcement, even without having all of the details about what the package will look like, it incentivizes farmers to plant or at least to look what they did last time and try and take signals from there. I do think that USDA is trying to avoid that to the extent possible. And we certainly have been providing guidance to try and avoid that because we don't want it to distort those decisions and distort the marketplace.
Scott Miller: So what are you telling them? Plant what you think is going to happen to prices and going forward?
Lesly McNitt: We don't really tell our members what to plant.
Scott Miller: Well, if you're providing guidance, what guidance are you providing them?
Lesly McNitt: Well we were providing some guidance to the administration on behalf of farmers about how to avoid that scenario as much as possible. Some of it can't be avoided, but the challenge here is that farmers were going to plant corn and then they couldn't. So what can they plant later? They can plant soybeans.
Scott Miller: This is weather related, basically.
Lesly McNitt: That's weather related. And then the announcement of a program sort of signals further that they should plant something rather than take the loss, collect the insurance. And, yeah.
Andrew Schwartz: Can we go back to what Scott was saying just a minute ago? Scott said that, what we'd like to do is open it up to the voices who are being affected here. And you were about to answer that. What do you say to that?
Lesly McNitt: Well, you were talking about the big picture economic numbers.
Scott Miller: Right.
Lesly McNitt: And I'm glad that you hit on that, Scott, because I think that's something that a lot of people don't see and don't read tied to-
PART 1 OF 3 ENDS [00:12:04]
Lesly McNitt: ... something that a lot of people don't see and don't read, tied to those headlines about the 3.6% unemployment rate, which is great, but what they're not seeing is that the farm economy does not resemble the national, economic facts and figures. The farm economy is on its fifth year of downturn. We're talking about really low prices running for five years now. So a lot of these farmers are below the cost of production; they're not at breakeven; they're relying on a spouse or a family member's off-farm job for insurance, to help pay for living expenses, while they don't break even.
Lesly McNitt: And farmers plan, they can do that for a year or two. But when you're on year five, and then you've got all this uncertainty in the marketplace, you're trying to figure out how to market your corn and try and make some money. And you can't, because you don't know whether the markets are going to be up or down, significantly, overnight.
Scott Miller: I recall one of these downturns of the 1970s, where you had several straight years of declining prices. And at the end of this string, it really started affecting young farmers who were much more reliant on loans; had much less equity in their farms; and drove a lot of people off the farms, into the cities.
Lesly McNitt: It's the young folks, it's the farmers that are renting and don't have equity anymore, at this point in time. They don't have collateral to show their bankers. They don't have cash flow to show their bankers, to get a line of credit for the next year of farming. And that's where we have been really focused on markets, and we will continue to be focused on markets. That is NCGA's priority. It's what we hear farmers want. You hear of this from... The President even said it last week.
Lesly McNitt: Farmers want trade, not aid. They want the markets to drive things.
Andrew Schwartz: Right. Nobody wants a handout, who works on a farm.
Lesly McNitt: No. But if you're in year five, and you've got to go meet your banker and you have no cash flow, and your collateral's gone-
Scott Miller: The domestic market's not growing. We just can't eat all that much more stuff.
Lesly McNitt: You can say, "I'm going to [crosstalk 00:14:00]
Andrew Schwartz: We're at maximum capacity.
Scott Miller: You've got to find people outside of the country who want to consume your product.
Andrew Schwartz: Well the other thing I was going to say too is that with five years of downturn in the farm economy, that affects so many other industries around the farm economy, and all the communities the farmers live in, and all the businesses in those communities. So you're really talking about a lot of people in rural areas that are hugely affected but this. Who do those people... I don't know if "blame" is the right word... But who do those people point to when they see this five-year downturn? That's been over two administrations. Who are they looking at, when it comes to pointing fingers?
Lesly McNitt: That's a really great question. And I really don't think that their knee-jerk reaction is to point fingers. I think they're trying to figure out a solution.
Andrew Schwartz: We're always in Washington looking for: Who's to blame? And, what politician is to blame? But I think it's a lot more complex than that. We could very easily sit here and ask you, "Is what Trump's doing causing turbulence and uncertainty?" But it's a lot more complex than that, I think.
Scott Miller: Most farmers I've talked to got into the business not because it was easy, but because it's the business they wanted to be in. And there tends to be a good bit of stoicism about this in the community.
Bill Reinsch: My father-in-law was a farmer, cattle, and he grew corn, mostly-
Scott Miller: To feed the cattle.
Bill Reinsch: ... mostly to feed his cattle. And I think he did it because he loved doing it. There was always something wrong: The weather was wrong, prices were wrong, at various levels, the government would do something wrong. I think farmers are never really, really happy.
Scott Miller: Other than doing what they love, which is-
Bill Reinsch: Right, yes. But they always [crosstalk 00:15:38]
Andrew Schwartz: If you're out on the combine and you're listening to John Mellencamp, and the sun's shining, and the wheat's growing, and the corn's flowing, you're pretty happy.
Scott Miller: You said something that I wanted to pursue for a minute, because it was really interesting-
Bill Reinsch: That's a pretty picture, isn't it?
Lesly McNitt: I've joined him. It's a good experience, yeah. But it's nice to know where that corn's going to go when you're harvesting it.
Bill Reinsch: Exactly.
Scott Miller: You talked about particularly the young farmers, the people who can't get credit. Is the uncertainty, and the five years, really contributing to a... what would be the right word... further centralization of the industry? You've got young people and marginal people getting out of business, which means that you've got a few that are getting bigger, presumably, and stronger and then they hire people. But it's not quite the same thing. Some of the same things that people have talked about that are going on in our society, generally, seem to be going in this community as well. Is that right?
Lesly McNitt: Yeah. I think we're watching to see what happens there. But you hear a lot of folks talk about... Farmers are used to, first they're used to cycles, just going back to what we were talking about. There is that stoicism, because they're used to these business cycles-
Scott Miller: That's the word I was looking for. Good word, stoicism.
Lesly McNitt: I think it was Scott's word, not mine, but.
Andrew Schwartz: Scott has coined so many phrases on this show, when it comes to-
Lesly McNitt: I'll take credit for it.
Scott Miller: I'm just saying. I'm just saying, thank you.
Andrew Schwartz: We could go through them here, but we don't have time for that. Scott is like the resident genius. He's the trade whisperer, when it comes to concepts and words. But anyway, I digress. Go ahead.
Lesly McNitt: I do think that they're stoic, and we're keeping an eye out to see what happens in terms of consolidation-
Scott Miller: They're really looking for growth. And you talked about the opportunities that are there. So, what's your priority list look like? U.S., Japan? FTA, you mentioned that.
Lesly McNitt: Huge, right. That's huge for us. We've got to get USMCA done first.
Scott Miller: Okay.
Lesly McNitt: We need that certainty. We're going to walk and chew gum. USTR is certainly walking and chewing gum, these days.
Scott Miller: What do you think of its chances these days? Are you optimistic?
Lesly McNitt: Of USMCA?
Scott Miller: Yeah, yeah.
Lesly McNitt: I see a path to yes. I am optimistic. And I think there's a roller coaster that's being portrayed in the media. But as I'm up on The Hill, talking to members... House, Senate, both parties... I think that there's a productive conversation actually taking place. It's a matter of: Are the bigger-picture politics going to tank this thing, but I'm-
Scott Miller: There seem to be fewer bombs being thrown than in a typical trade agreement.
Lesly McNitt: I feel optimistic.
Andrew Schwartz: My column this week is that I'm still optimistic too. This is something that Scott and I have disagreed on. But I'm beginning to worry that some of the bombs are going to detonate. They're out there. But the President has started talking about just sending the bill up again, which would be a huge mistake. Or he's going to start talking again, I think, about-
Scott Miller: Withdrawal.
Andrew Schwartz: ... withdrawing NAFTA, which would be another huge mistake. Telling the Democrats he's not going to negotiate with them on anything as long as they're investigating him is a ticket to accomplishing nothing. And I'm beginning to be a little more nervous about the Democrats restraining themselves.
Andrew Schwartz: On a previous show, we talked about the landmines that are out there, and those are the landmines. And I think you're right that there's a path to avoid all of them. I'm getting a little more worried that some of them are starting to tick, and particularly the Trump ones. Today's gossip was that there are these people, particularly in the White House, including the Vice President, who are saying, "Just send it up. Send it up. Push it to Congress. Make them vote."
Bill Reinsch: I think-
Andrew Schwartz: And Lighthizer's pointed out, the last time that a president did that was in 2008, with Columbia, and the same speaker of the house.
Bill Reinsch: The Vice President was in Congress then. He should remember. I'm pretty sure he was in Congress then. It was an ugly scene. And you're just like, "we've seen that movie. Thank you very much."
Andrew Schwartz: One would think.
Bill Reinsch: No interest in rerun. But I'm glad to hear that you think there's a path here. That's good.
Andrew Schwartz: A path to yes.
Lesly McNitt: I do. I think folks understand that this is important, and that not having NAFTA as a possible outcome, and not having an improved, modernized agreement... If you think about this from a Democrat's perspective, there are a lot of things that Democrats and some of their core constituencies have wanted to change in trade. And I think that this agreement really does set a precedent in some of those areas, like labor and environmental standards, to build on; to take as a template for trade agreements moving forward.
Lesly McNitt: And there's an opportunity there, and I think that there does seem to be a good relationship between the House Democrats, in particular, and Ambassador Lighthizer. I think both sides have worked on cultivating that. And if they can work through a few of the key issues, I actually think that the pharmaceutical one might be the biggest one, from a policy standpoint.
Scott Miller: Couldn't agree with you more.
Bill Reinsch: That's right.
Scott Miller: I think you're exactly right about that.
Lesly McNitt: And if they can work through those things, and I really do think that there are a lot of members of Congress interested in working through those things. Because this is different from any previous agreement that they've had to consider, in that it's not abstract what this would deliver, right?
Scott Miller: Right.
Lesly McNitt: It's already delivered. We know what it looks out. We know that there are a lot of jobs tied to this agreement. I think the Chamber estimates like 14 million jobs tied to this agreement. And so we know that our value chains, our supply chains, our economies are linked, they're integrated. We're all connected. And unwinding this would be incredibly challenging. But there's also quite a bit to gain here that then we can look at building on in future agreements.
Lesly McNitt: So back to your initial question, Scott. Japan: We'd love to see more of the foothold, generally, in Asia. There's some really big markets, some really important growing markets. Vietnam would be a good one for us. We have a sister organization that does the market develop for the corn industry. They also do barley and sorghum. And they're called the U.S. Grains Council. So we work on that, strategy and how that informs our policy, very closely.
Lesly McNitt: They are really interested in India, as well. We have big challenges there, but it's such a compelling market. I think everybody's got their eye on it, and if-
Scott Miller: A billion people, and lots of problems. But that's basically every industry's experience.
Lesly McNitt: Yeah, they have energy demands. They have feed demands. There's an opportunity there. So there's a lot more opportunity for growth in Asia, in Latin America, in the Middle East. And Sub-Saharan Africa's going to be a big market. They're looking at all of it, short- and long-term.
Scott Miller: And you haven't mentioned Europe, where we're actually trying to have a negotiation.
Lesly McNitt: Yes. They're not trying to have us in the negotiation, unfortunately.
Scott Miller: They're trying to avoid dealing with you in any respect, in the negotiation.
Lesly McNitt: That's true.
Andrew Schwartz: Let me ask you this, Lesly. Your job is to represent the corn growers, in front of the Congress and to the Administration. What do they feel about the Congress and the Administration, right now? It seems like there is a lot of uncertainty; and there is a lot of turbulence; and it's affecting their business. And, like you said, five years of a downturn. This is not a pretty picture, although there's scenarios, as you just pointed out, that could be just around the corner, that could be really great. So we might be on the cusp of turning things around, but here in Washington we know, things are not pretty.
Andrew Schwartz: And they know things are not pretty. So what are you telling them? What are they telling you?
Lesly McNitt: They want people to get things done and they're frustrated by this sense that things are not getting done. When they see breakdowns in communications, or in relations, between Congress and the White House.
Bill Reinsch: Are they frustrated with Trump?
Lesly McNitt: I think they're frustrated with certain things that the President has done. But they're very nuanced in their views of the decisions that are being made, and the way in which the decisions are being made. What I hear, they think the President is decisive in his action. And that's something... Farmers are executives, they're business people, they want to be decisive, they take action, they solve problems.
Lesly McNitt: So from a style standpoint, I think that they like that and they like that he doesn't talk like a politician. We hear that quite a bit too. He has a different way of doing this. Farmers like to be pretty unconventional in a lot of ways and are willing to innovate and think outside the box. But, they don't like that a tweet can tank their markets for 24 hours, unexpectedly. Even on something as big as China, which has been so disruptive for corn farmers and other-
PART 2 OF 3 ENDS [00:24:04]
Lesly McNitt: As big as China, right, which has been so disruptive for corn farmers and other farmers' markets. They still sympathize with the reasons for the dispute with China. Corn farmers have experienced huge delays in biotechnology approvals. Why is that relevant? Because if they're looking at dealing with a pest or trying to improve the way they're growing their corn and they know a technology's out there, but it won't hit the marketplace for seven years, because they're waiting for China to improve it, that bother them. It bothers them when they hear that there's IP theft. There was actual theft of seeds from fields in Iowa to take ... by Chinese Nationalists to take [crosstalk 00:24:44]
Bill Reinsch: I read about that.
Lesly McNitt: To Iowa. That was reported big in the Ag Press, farmers don't like that stuff, so they sympathize with the reasons even though they hate being the collateral damage.
Scott Miller: Sure. The last time I was at a counter the Bob Evan's restaurant, the farmers were uniformly complaining about the price of seeds, but they're paying for them. They're not stealing them. That technology is vital to successful operations, to high yields, to efficient farming. My sense is that most farms just want people to get on with it. Stop fighting about the little stuff, focus on the big things, get a program together, help us succeed.
Lesly McNitt: They're not looking for who to blame. Sorry to interrupt. They're not as much as maybe we think that way.
Andrew Schwartz: That's interesting. Well, I think it's important what you said, they don't like being collateral damage, but they also aren't trying to point finger. They want solutions.
Lesly McNitt: They've taken hits from the market in the past. I think when I lost my train of thought earlier, what I was thinking about was the 80's, because it was a really disastrous time for the farm economy. A lot of farmers went out of business.
Andrew Schwartz: That's when we started seeing Farm Aid concerts and things like that.
Lesly McNitt: Yes, consolation, right? You saw the farmer foot print shrink. You saw farmers tell their kids, "Don't come back to the farm. It's not profitable."
Scott Miller: There's nothing here for you.
Lesly McNitt: "There's nothing here for you. Go to Wall Street. Go be a lawyer or whatever." What you hear from farmers who have been doing this for a long time, this is starting to remind them of the 80's. The biggest difference, I think, is inflation. We don't have inflation. You don't have maybe the same debt to asset ratio, to get technical. Some of the things are not the same, but the feeling, the uncertainty, that what is coming, the anxiety, it's because it's reminding a lot of these folks of the 80's. I think some of the folks who have been in it for a longer time, think, "We, we're used to weathering these storms," but it is the younger ones who haven't really lived through that. They're just not as prepared.
Bill Reinsch: Are there a lot of young people that go into farming? These are mostly I assume kids that are taking over the family farm?
Lesly McNitt: The overhead is very expensive, so it's a lot of families trying to move the operation to the next generation. They want to stay in it, but you do have, I mean, you do have some young people that are really interested in farming and in sustainable food systems. They're interested in urban farming. There was a big effort from USDA, from a lot of different stakeholders in the Ag community to create opportunities and pathways for new and young farmers, returning military vets from rural areas, college grads, you name it. I think in this type of economy; those challenges are really difficult to overcome. When corn prices and when commodity prices were better a few years ago, it was a lot more of an attractive field to go into.
Bill Reinsch: I wonder, you know there's a lot of colleges, particularly out in the Midwest, Iowa, for example. We did a conference out at Iowa State a few year ago, that have agricultural departments and agricultural science departments. They turn out every year with bachelor's and master's degrees in various aspects of agronomy and agricultural science. Is that declining? Do we have any data on that? Are there fewer people going into it or are they just going into it then they're ending up in labs or they ended up working for big serial companies making better products and not doing farming?
Lesly McNitt: My reference point is a few years old at this point, in terms of data. Purdue did a big study on this to look at where the jobs in the food and agriculture industry, because food and Ag contributes to 12% of U.S. manufacturing. It's actually the largest segment of manufacturing. 9% of U.S. employment, so back to your point about huge ripple effect, this industry has major implications more broadly in our economy, and they need all kinds of disciplines to provide the workers and the skilled workers in this industry.
Scott Miller: It's becoming much more sophisticated work on almost all levels. I mean, compare a tractor today to one built 20 years ago and look at the level of ... with guidance control, and the technological sophistication's amazing. The services that are embedded in that machine are remarkable. The farming community doesn't stand still. It continues to evolve, it continues to apply technology. We're feeding an amazing number of people in the world with amazing efficiency. That's something that people have been saying can't be done since [inaudible 00:29:05].
Lesly McNitt: Absolutely. When you look at the longer term projections, we could see enough demand to really get ourselves out of this economic spot that we're in it, but we just need enough farmers to stay in business to get through it.
Bill Reinsch: Global demand, not U.S. demand.
Lesly McNitt: Correct.
Andrew Schwartz: Last question, what do you do over the next year and half, two years to educate the candidates, and the rest of the Congress, and the President for issues that are going to be debated over the next two years and this presidential cycle?
Lesly McNitt: I think it's a great question. It's a really challenging one that we're trying to figure out. I think the fact that Iowa's such an important early state, is a really great way to help the candidates get acquainted. That just happens to be the heart of the corn belt.
Bill Reinsch: Happen to grow a lot of corn there.
Lesly McNitt: Yeah. It's a great way for the candidates to get to know farmers and get to hopefully listen and hear what's on the minds of farmers, and then trying to work to elevate these issues, so that they get on the radar. I think that agriculture, more broadly, the big pieces are going to be how does the farm economy get on the radar. That's probably going to be a little bit more obvious during these campaign stops, particularly in Iowa, but trade specifically is a much more challenging issue on the campaign trail. I mean, we saw it. TPP was not popular for either of the major candidates last go around.
Andrew Schwartz: It was astonishing how TPP all of a sudden ... rarely do you see trade issues, especially trade issues that most people don't know anything about other than those three letters, become a wedge issue during a presidential campaign.
Lesly McNitt: Yeah, but both candidates swore, Clinton and Trump were both negative on it, so I think that we're still trying to think about what is the USMCA conversation even look like? Fingers crossed it'll be done, but China, tariffs, where is everything going to stand and is it going to be so politicized that we can't have a constructive conversation? I think what we're working to do is to make sure that farmers' voices are heard, that they're part of the conversation, that candidates are listening to them, and understand how things impact them in their communities. I think that's the best that we can do.
Bill Reinsch: I think what you've got going for you on USMCA is exactly what you said at the beginning of this conversation, which is that what NAFTA really has done is integrated the market and that was the point. Over 25 years, it really did that. I think there were people that opposed NAFTA in the beginning, as you know there was Ross Pero and the great sucking sound of jobs and investments leaving the country. I think 25 years later, a lot of politicians have come to terms with it and realized, maybe they weren't for it then, maybe they're skeptical about it, maybe it has deficiencies, but it's created an integrated market and the consequences of interrupting that, which you spelled out very clearly, are enormous. I think in contrast with TPP, what you don't have USMCA is a really active committed group of people saying, "We have to torpedo this thing." I think most of them understand that we want to make it better, we want to fix it, or I can't vote for it because the President's for it, but you don't have a lot of people out there saying "It's just a disaster."
Bill Reinsch: I was struck when we did a closed door meeting here a couple months ago, we had someone from the Hill come up and talk and said, "If you want to see how it's going, contrast where the debate was three years ago on TPP when it looked like we were going to have a vote and where it is now." Then you had everybody lined up. You had the unions lined up, you had Democrats lined up against, everybody was marshaling their forces preparing for war, and here you don't have that. You have bunches of people trying to get to yes. You're exactly right, they may fail. I at least hope not, I think as do you, but there are landmines that can detonate, but the mood is different. I think it's different partly because people understand the marketing integration that's already existed, and they don't want to interrupt that. TPP was new and it was easier to oppose something that was new. Sorry for the rant.
Andrew Schwartz: It's a good rant. It's to have you Bill. Lesly, great to have you.
Lesly McNitt: Thanks for having me.
Andrew Schwartz: Scott, great as always to have you. Great discussion.
Bill Reinsch: Wait a minute, wait a minute, wait a minute. It was just good to have me and it was great to have them?
Andrew Schwartz: Well, you had a rant, that's why we had to give you a little you know [crosstalk 00:33:46]
Bill Reinsch: You're getting even with me because [crosstalk 00:33:47] performance.
Andrew Schwartz: Exactly, exactly. I'm glad you noticed the little distinctions there. Lesly, fantastic to have you.
Lesly McNitt: Thanks so much for having me.
Andrew Schwartz: It was a really wonderful discussion about farms, and corn, and future policies that our country's going to have to deal with. We'd love to have you back. Thanks a lot for coming.
Lesly McNitt: Thank you. It was fun.
Andrew Schwartz: To our listeners, if you have a question for the Trade Guys, write us at email@example.com. That's firstname.lastname@example.org. We'll read some of your emails and have the Trade Guys react to it. We're also now on Spotify, so you can find us there when you're listening to the Rolling Stones, or you're listening to Tom Petty, or whatever you're listening to. Thank you, Trade Guys.
Scott Miller: Thanks Andrew.
Andrew Schwartz: You've been listening to the Trade Guys, a CSIS podcast.
PART 3 OF 3 ENDS [00:34:47]