Popcorn Sales Jump Following Trade Deal
The tangible benefits of Congressional actions often take years to have an effect.
But some popcorn farmers have already seen a boon from the Colombia free-trade agreement. The deal, along with agreements with South Korea and Panama, was a major legislative initiative for President Barack Obama and an example of the handful of bipartisan agreements to make it through Congress this year. It’s undoubtedly an achievement likely to be touted by both parties this election cycle.
“These trade agreements prove Congress can work productively in a bipartisan way when our leaders are committed to sound policy over political theatrics,” said Sen. Mike Johanns (R-Neb.), whose state is home to some of the nation’s largest popcorn producers.
And in signing the reauthorization of the Export-Import Bank last week, Obama touted his efforts to get the trade pacts through Congress. “Two years ago, I set a goal of doubling American exports over five years. Today, with the trade agreements that we’ve signed into law, with the help of some … Members of Congress, we’re making historic progress,” Obama said. “Soon, there are going to be millions of new customers for our goods and services in Korea, in Colombia and Panama. … So I’m going to go anywhere I can in the world to create new markets for American goods.”
The Colombia FTA went into effect May 15, and on that day, Norm Krug, CEO and founder of the Chapman, Neb.-based Preferred Popcorn, got a call from a buyer in Colombia looking to buy enough popcorn for about 9 million people.
“We’ve sold them 10 containers of popcorn,” Krug said, adding that it takes about 900,000 people to consume one container.
“That was a direct result of the free-trade agreement,” Krug continued. “They and us are both equally excited about bringing the product in without excess taxation.”
Krug estimates that he will see a 50 percent increase in exports to Colombia, and other popcorn producers are expected to benefit.
The FTA eliminates most tariffs on goods and services between the two nations. More than 80 percent of U.S. exports of consumer and industrial products to Colombia became duty-free immediately, with remaining tariffs phased out over 10 years.
Preferred Popcorn — owned by four farmers and the Aurora Cooperative, a Nebraska-based agriculture cooperative — typically sells to concessionaires, such as movie theaters.
The company is the No. 3 supplier of bulk popcorn in the United States, following Nebraska-based ConAgra and Indiana-based Weaver Popcorn Co. Preferred Popcorn has 32 employees and runs two shifts. The majority of its product is sold in bulk, although the company noted it is getting into the microwave popcorn market. It packs 15,000 to 20,000 pounds per hour, Krug said.
According to the latest Census of Agriculture, conducted every five years, domestic production of popcorn totaled more than 860 million shelled pounds in 2007. Popcorn was grown in 29 states, and the top five major popcorn-producing states in 2007 were Nebraska, Indiana, Illinois, Ohio and Iowa, the report said.
The Colombia FTA took several years to get in place with talks beginning in 2004. Colombia’s Congress approved the agreement and a protocol of amendment in 2007. After a push from the White House and Republicans in Congress, the measure was eventually passed by Congress last year along with agreements with South Korea and Panama. Republicans initially complained that Obama delayed sending the agreements to Congress as he sought a deal on a union priority, trade adjustment assistance.
While there was bipartisan support for the agreements, some Democrats and Republicans spoke out against the deals, especially the Colombian FTA over a spate of violence against union members. Sen. Susan Collins (R-Maine) and Senate Majority Whip Dick Durbin (D-Ill.) opposed the Colombia FTA.
Krug noted that before the FTA, Colombia would typically buy its popcorn from Argentina. “There are popcorns raised in Europe, Argentina and Brazil, so we have to be competitive, but we can be,” Krug said. “We compete against other farmers in the world, but we can’t compete against other governments” who put U.S. popcorn growers at a competitive disadvantage with tariffs.
“Also we are selling popcorn to Korea, which we had done previously, but it is just going to help us increase our sales,” Krug continued.
Krug estimates he will see a 20 percent increase of exports to South Korea, which is the No. 3 market for U.S. corn exports. The Panama agreement has yet to go into effect.
Krug said that during the negotiations of the agreements he spoke and met with the Nebraska Congressional delegation, including Johanns, Sen. Ben Nelson (D) and Rep. Adrian Smith (R).
Smith said the trade agreements “were a major bipartisan accomplishment for the country. I am especially pleased to see Nebraska’s popcorn industry taking advantage of Colombia and South Korea agreements, which have already gone into force. This is proof that by leveling the playing field for our producers and manufacturers, we can expand economic opportunity here at home.”