North Carolina exporters fret over NAFTA’s future at North Carolina Port Cold Chain Summit 2017

NC’s ag industry is intensely export driven.

“Do no harm to trade relations with Mexico in the renegotiation of NAFTA.”

That was the advice given to the Trump administration by Joel Coleman, general manager and vice president for international sales at Butterball, the second largest producer of turkey products in the country. Coleman spoke yesterday, 11/15/2017, at the North Carolina Port Cold Chain Summit 2017, a forum meant to discuss issues of interest to those who move perishables in international trade and to highlight the capabilities of the Port of Wilmington, North Carolina, in that area. Agriculture is the number-one industry in North Carolina, accounting for $84 billion in annual sales and over $3 billion in exports. North Carolina is the number-two turkey producing state in the country, behind Minnesota, and boasts the largest turkey and hog processing facilities in the nation. And, as discussed in yesterday’s forum, many North Carolina agricultural exporters are dependent on NAFTA for their businesses.

“NAFTA is important for the pork industry,” said David Herring, vice president of Hog Slat, Inc., a family-owned producer of live hogs and of equipment used in the hog farming and processing in North Carolina. Forty percent of Hog Slat’s sales go to Canada and Mexico—a number which holds true for the North Carolina hog industry as a whole, according to Blake Brown, an economic professor at North Carolina State University, who also spoke at the conference—and the company would like to see that number grow. In the U.S., pork consumption has been stuck at around 50 pounds per person per year for about ten years and has not risen, despite the best efforts of the industry. Yet pork exports to Mexico have grown dramatically during the same period, even though domestic Mexican production has also increased at the same time. “Mexico had 600,000 sows 15 years ago,” said Herring, “and now they have over one-million. A withdrawal from NAFTA will be a train wreck. All of the growth opportunities in pork come from exporting. “If agriculture is hurt by NAFTA, all related services industries will also be hurt,” Herring added. “Twenty percent of the food we consume comes from Mexico.” Hog Slat is working on opening new markets in Argentina and India and has opened new plants in the United States to increase its output by 10%, all of which is meant for export. The company has been exporting to Mexico for 20 years. Growing sweet potatoes is a booming industry in North Carolina, with production having more than doubled between 2012 and 2015, according to Brown. Ham Farms, a North Carolina sweet potato producer exports to 16 countries and fully one-third of North Carolina’s sweet potato crop is exported, noted Kris Radford, the company’s chief operating officer. “Sweet potatoes are a super food,” he said. “More people are catching on to this all over the world.” Exporting allows Ham Farms to sell more of its output. Larger sweet potatoes are most popular in the United States, but in export markets such as Europe, petite sweet potatoes are also more readily accepted. Europeans are also more apt to try new kinds of sweet potato products, such as chips and fries, than are Americans. North Carolina is a state of specialty crops, according to Brown, with sweet potatoes, peanuts, blueberries, tomatoes, watermelons, strawberries, apples, and cotton figuring among the produce the state’s farmers grow. The state is also known for the diversity of products grown on individual farms—which is not true in some other places—and in the emphasis placed by the state’s farmers on exporting. “Some farms export 60 to 70% of their output,” said Brown. North Carolina is a net exporter of poultry and pork as well as its menu of specialty products. Ham Farms has been exporting for 10 years, but not necessarily utilizing the Port of Wilmington until about two years ago, even though Wilmington is closest to the agriculture intense areas of southeastern North Carolina. “They have a good system,” said Radford. “The rapid turn times contribute to the quality of our product.” The infrastructure improvements the port has made have helped with its efficiency and turn times, but the lack of congestion at the port perhaps most of all, as Wilmington is currently operating at 50 percent of its container capacity. Infrastructure improvements at the port have led to the growth in the container trades at the port and newer investments are positioning Wilmington to take its place among cold chain players. (See sidebar.) Major container carriers are interested in increasing their presence at the Port of Wilmington, and that is heartening to Coleman, who said that a choice among competitive carriers is important to the attractiveness of the port. Butterball generally leaves the choice of ports and carriers to its customers, but Coleman said he talks up the port and its storage facilities and lets it be known that the company would like to be shipping out of Wilmington. Several ports in the southeastern United States have joined the Department of Agriculture’s cold treatment program in the last couple of years, which allows some South American produce to come to southern ports instead of being moved through the northeast for the cold treatment and clearance that eliminates the threat of disease and pests in the fruit. Wilmington will be joining that program beginning December 1, according to Hans Bean, vice president of trade and development at N.C. Ports. The port’s impending certification “will open up more doors for produce imports,” said Bean. “Traditional gateways are farther to the north and down in South Florida and those will stay a big part of the game, but I think we have a great opportunity to create efficiencies and open up Wilmington as a cold gateway.” Also, announced at the summit is that Chesterfield, a real-estate developer based in Jacksonville, Florida, will be building 400,000 square feet of Class A industrial warehouse space in two buildings at the Port of Wilmington. The new cold storage facility was developed as part of a pubic-private partnership, the first of its kind for the state-owned and operated port.