Agriculture and forest industries provide more than $100 billion to Virginia’s economy. They also create nearly half a million jobs in the state. And Virginia exports products, such as cattle and wood commodities, around the world. So how is President Trump’s trade war affecting that? WMRA’s Ayse Pirge reports.
Can you guess how many cattle share the land in Virginia? The number is roughly 1.3 million, and that’s a huge industry both for cattle producers and for livestock markets, especially in the Shenandoah Valley. Brandon Reeves is the executive director of the Virginia Cattlemen’s Association.
BRANDON REEVES: The majority of the cattle in Virginia are up and down the I-81 corridor, and in, just over the mountain in Central Virginia… There are a lot of counties that have more cattle than people. And it's a huge production area. The mountains give us really good grazing land, especially, you know, in the spring and summer… Virginia, the Valley, and Central Virginia region are ideally situated for the production of cattle…
Reeves says producers in the state export a lot of feeder cattle, and that Canada is a big market for them. For now, cattle providers are glad that cattle and beef are exempt from tariffs with Canada and Mexico.
REEVES: We’re very relieved that that doesn’t seem like it’s gonna be an issue for us. You know, overall, the tariff situation I think we’re, we’re supportive of strengthening the integrity and the viability of domestic production. We think food security is national security and we want to be able to be competitive on the international, in the international space. You know, because there are a lot of countries that have lower cost of production, lower standards of labor and things like that, that make it harder to compete if there’s not some type of way to level the playing field.
Reeves says the challenge for producers, as always, is to stay profitable. That’s been more challenging in recent years because of higher input costs which can include things like fertilizer prices or feed costs. But he says that since cattle prices are really high, producers have been mostly able to withstand those costs. But if the cattle market goes the other direction, those profit margins could change quickly.
Reeves also points to potential changes in supply and demand. He says if other countries are able to export to the U.S., and we import more feeder cattle – or more beef – that would increase supply, and maybe lower prices for consumers, but also drive down the value of domestic production. In short, it’s complicated.
REEVES: … the trading world for beef is complex, because we actually do need a lot of the lean trim that we import, and we export a lot of high value cuts. And so it’s not necessarily cut and dry, like we really do need that lean trim that comes in, or at least, you know, some level of it. But absolutely, the more beef and cattle that are imported into the states, the lower our producers’, you know, profitability is.
Reeves also points to the relationship between the economy and demand for beef.
REEVES: Our industry is really dependent on beef demand, and so a lot of times, you know, how well the economy is doing directly impacts how well our industry is doing because as consumers have more money that they can spend– you know, beef isn’t always the cheapest thing in the grocery store but they’re more willing to spend on beef when times are good.
Virginia’s natural resources also include forest products, especially lumber and paper products. Terry Lasher is the executive director of the Virginia Forestry Association. He says the state’s forest industry accounts for about $23 billion in economic impact.
TERRY LASHER: The proposed tariffs, we expect would have some sort of a market impact, but with the pause that’s been put on for 90 days we’re not seeing an impact quite yet. There’s opportunity, or potential for opportunity, with the markets should the tariffs go into place. And that would be an increase in domestic production to make up for the differences of what we do not import from Canada. But at the same time, that ramp up to meet those production standards, or those amounts, would take some time to build.
Lasher says the association has been hearing concerns about Trump’s trade war on another big part of the forest products market.
LASHER: We’ve been hearing concerns that it could impact pulp and paper… there still is a large pulp and paper industry here in Virginia. So we obviously trade on a world market, as well as our biomass markets and our lumbers. So we do see that there is some concern about what may happen, but it is still sort of a waiting game to try to determine what those actual impacts would be.
Lasher says they’re seeing some challenges in the industry, regardless of the tariffs, but he thinks that tariffs will probably cause some more consolidation in the market.
The bottom line is that, for now, the outcomes of Trump’s tariffs are a waiting game for two of Virginia’s natural resource exports.
