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David Sparks Ph.d Border Slowdown
by David Sparks Ph.d, click here for bio

Program: Line on Agriculture
Date: April 12, 2019

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Last week, President Trump walked back the threat to close the southern U.S. border, a potential development that had caused a significant amount of concern among the agricultural community. Hindsight is 20/20, but we don't need hindsight to tell us that a shutdown (or slowdown) at the southern border would be disastrous for U.S. ag trade. In 2018, the United States exported more than $19 billion in agricultural products to Mexico. In this Market Intel, we dig into why a border shutdown or even a limited port closure would have affected producers differently based on commodity, season and location. The Department of Transportation maintains detailed statistics on U.S.- North American freight by port, commodity group and mode. That data shows 69 percent of all two-way, U.S.-Mexico trade occurs by truck, 13 percent by rail, 11 percent by vessel, 3 percent by air and 4 percent by other means, including pipeline and mail. Agricultural trade follows a somewhat similar pattern; 69 percent of two-way, U.S.-Mexico agricultural trade occurs by truck, 20 percent by rail, 9 percent by vessel and 2 percent by other means, including air.

On a commodity basis, corn, dried distillers grains and soybeans are the most reliant on rail transportation, while wheat and sorghum are more likely to travel by vessel. In total, 54 percent of coarse grains and oilseeds travel by rail, 34 percent by vessel, 11 percent by truck and 1 percent by other means. As a quick reminder, Mexico is the largest export market for U.S. corn, distillers grains and rice. Mexico is the second-largest export market for wheat and soybean meal.

Beyond coarse grains and oilseeds, the other 87 percent of agricultural trade between the U.S. and Mexico is significantly more dependent on truck transit, with 78 percent of shipments occurring by truck, 15 percent by rail, 5 percent by vessel and 2 percent by other means. The products that ship by truck tend to be value-added, perishable and in some cases, seasonal. Mexico is the largest export market for U.S. dairy, poultry and eggs. It is the second-largest market for U.S. pork and fresh fruit and the third-largest export market for beef 

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