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Trade distorting subsidies in the crosshairs; 40 acres and a mule denied; other stories

(Friday, Nov. 19, 2004 -- CropChoice news) -- Below are 8 stories dealing with agriculture and trade policy:

1. 40 acres and a mule, denied
2.Ag experts propose farm policy overhaul
3.Potato growers learn a lesson about competition
4. Raw deal for rice; DR-CAFTA threatens Central American farmers already in poverty, says Oxfam
5. New patent regime: Concerns centre around rise in prices
6. Export measures often need to be put into context to reflect reality
7. Put all trade distorting subsidies in the crosshairs
8. China, Argentina aim to head off WTO spat over soy trade

1. 40 Acres and a Mule, Denied40 acres and a mule, denied

Damien Jackson, AlterNet. Posted November 17, 2004

The Department of Agriculture has admitted to discriminating against African American farmers and paid out hundreds of thousands in damages. But for many farmers, the damage can't be undone.

All the Johnson brothers ever wanted to do was farm. After all, for Leon, Milton and Shade Johnson, it was their birthright. Born on a 44-acre plot in the thriving African American farm community of 1950s Tillery, N.C., the hard-working threesome spent endless days harvesting corn and peanuts alongside their mother and uncle in this cotton-clad northeastern corner of the state. By the early 1970s, Leon ­ the oldest of the three and the first to have farming aspirations of his own ­ had accumulated an adjacent 74 acres of land while renting out another 1,200, making him one of the most prominent black landowners in Halifax County. Upon their mother's death in 1974, Milton and Shade went to work for their older brother.

Though he now controlled large amounts of land, one thing Leon could not control was nature. Like many southern farmers, the Johnson brothers were plagued by the relentless drought and low crop yields of the 1970s and 1980s. In 1978, Leon began borrowing money from the Farm Services Agency (FSA) ­ a local arm of the US Dept. of Agriculture (USDA) ­ for disaster assistance, operations and equipment.

It was the worst move he ever made.

Despite his large amount of land and collateral ­ and his uneventful credit history ­ the Halifax County FSA placed Leon on a "supervised" loan account, a time-consuming status that severely limited the farmer's ability to act in his own best interest. "You'd have to go to the farm supplier and have them write out a bill, and then go back to the FSA to sign a check for it," says brother, Milton. Since the checks were made payable to both Leon and his creditors, the farmer lost entire days in the field running between FSA and suppliers ­ something, the Johnsons later found, area white farmers with less land and worse credit were not required to do.

The ongoing drought and the mounting debt from supervised and chronically delayed loans -such delays are costly for farming due to its seasonal nature-put Leon in a financial bind. In March of 1983, the desperate farmer sold a bin of corn outside of his supervised arrangement in order to make payments on his home and tractor. "The USDA sent federal marshals to my home and handcuffed me for selling mortgaged crops," recalled Leon, in a 2001 interview with Insight magazine. He was convicted a year later and spent four months in a federal prison, while FSA foreclosed, selling off his property and equipment.

His brothers fared no better. By the time of Leon's conviction, Milton had already purchased and lost a large plot of land, his house and equipment after FSA subjected him to supervised loans, high interest rates and an accelerated foreclosure. Shade ­ who FSA unjustly denied an attempt to buy land in 1979 ­ was eventually and unsuccessfully brought up on similar charges as Leon.

Unfortunately, the Johnsons' plight was no anomaly. In 1997, they joined black farmers throughout the South and West in a class-action discrimination suit against the USDA, alleging a variety of biased practices including unjust loan denials and delays, high interest rates, accelerated foreclosures and unnecessary supervision. In April of 1999, after admitting to discriminatory practices, the government settled Pigford vs. Glickman and created a two-tiered framework for compensating those affected between 1981 and 1996. Track A provided $50,000 and possible debt relief for claimants. Track B had a higher burden of proof while offering compensation for actual damages. Judge Paul Friedman wrote that the landmark settlement will "serve as a reminder to the Department of Agriculture that its actions were unacceptable" and "deter it from engaging in the same conduct in the future."

It didn't. Today, five years later and well past the claim-filing deadline, the damage has yet to be undone. A recent national report by the nonprofit Environmental Working Group found that three quarters of the $2.3 billion agreed to in Pigford had not been paid, and that close to nine out of every ten claimants had been denied, some on such technicalities as incorrect spelling. On Oct. 12, the farmers and attorney James Myart, Jr. were granted a preliminary motion by a U.S. District Court that the lawyer hopes could ultimately get 80,000 denied claims reconsidered. "We'll get justice by any and all means necessary," says Myart. Recent black farmer protests in Alabama and Washington D.C. showed the farmers' willingness to engage both judicial and activist courses. "These farmers are so angry they are ready to engage in civil disobedience all over this country."

USDA spokesperson Ed Lloyd feels this is unnecessary. "The USDA has been moving forward and implementing a lot of initiatives that go beyond Pigford," says Lloyd. He cites a number of recent initiatives including a USDA-brokered arrangement between Marriott International and black producers, and proposed revisions in the election procedures of County Committees, the powerful local bodies administering farm programs.

But the farmers aren't buying it. Myart recently filed a new $20 billion lawsuit on behalf of 25,000 black farmers affected in the post-Pigford years between 1997 and 2004.

As for the Johnson brothers, the damage can never be undone. Upon the 1999 settlement, Leon, whose health had deteriorated since losing his farm, filed a claim under Track A. He died two years ago without receiving a penny.

Milton asked for $695,000 under Track B to cover his liquidated property. Seven months before his brother's death, he received a check for $140,000, the full amount of his settled case but an amount less than what he still owes the government from their bad loan practices. "They sold my house, they sold my equipment and everything, and they say I still owe them $162,000," says Milton, of the debt the USDA could have written off in the settlement. "There ain't no way in the world that can be right."

For African American farmers, it hadn't been right for a long time. Along with the decline of agriculture, black migration trends and many farmers poor record-keeping, such unscrupulous government tactics contributed to the sizable loss of African American farmers in the 20th century. In 1910, USDA data had nearly one million black farmers owning 15 million acres of land, or 14 percent of the country's farms. Today, 18,000 black farmers collectively own less than 1 percent of all farms. African American farmers have disappeared at three times the rate of their white peers.

"The bottom line is it's all about the land," says Dexter Davis, a soybean farmer from Sondheimer, Louisiana. "They (white farmers) are getting our land." Davis began farming in the late 1970s, purchasing 80 acres with his father. By 1987, five years after his dad passed, the then 23-year old had accumulated 220 acres. "Farming was real good to me when I first started," recalls Davis.

That would change. In 1988, the black FSA loan officer Davis dealt with was replaced by a white one. "All of my problems began there," he says. Over the next decade, despite his early success, Davis was subjected to exorbitant interest rates, costly loan delays and denials. Then, in 1999, the FSA tried to block his purchase of an additional 360 acres by low-balling its appraised value, a tactic used to make the transaction undesirable for the seller. Upon realizing this, the incensed white female seller sold the property to Davis anyway, ate the lost profit, and composed a written affidavit to accompany the lawsuit Davis was already filing for earlier FSA transgressions. "It was a racial vendetta," he says, one that "totally disrupted my livelihood." The suit is ongoing.

Leonard Cooper, a former USDA county agriculture director, recently echoed Davis's contention that, ultimately, its all about the land. "If you've got land, you've got wealth," says Cooper, a longtime farmer. "They (USDA) want to keep black farmers from thriving and owning land. This is their goal."

2. Ag experts propose farm policy overhaul

Joy Powell
Star Tribune, November 17, 2004

Two experts presented their visions Tuesday for overhauling U.S. farm policy that ranged from redesigning farm subsidies to setting up federal savings accounts for farmers.

Kenneth Cook, president of the Environmental Working Group, an advocacy database based in Washington, D.C., and Barry Flinchbaugh, an agricultural economist at Kansas State University, spoke to nearly 600 agricultural bankers in Minneapolis.

Cook said commodity programs should be scaled back and targeted at working farms rather than giant agribusinesses, absentee land owners and others.

Nationwide, 10 percent of the biggest, and often the most profitable, subsidized crop producers collected 71 percent of all subsidies between 1995 and 2002. Sixty percent of farmers received nothing, according to Cook.

"You can't say farm subsidies are saving the family farm when most farmers get no subsidies," Cook said.

Cook, whose online publication of subsidy data helped shape the 2002 family farm policy debate into one about equity, said the debate building over the next farm bill in 2007 is really about globalization.

U.S. farmers export 20 to 40 percent of production and Cook said the policy framework should move away from farm subsidies toward broader "trade adjustment assistance."

Rather than the biggest agribusiness owners reaping unlimited subsidies, Cook said, the United States should combine trade-related commodity subsidy payments with assistance programs for all workers, from farmers to textile workers and others who lose jobs to outsourcing.

Both support more conservation and insurance programs for farmers.

Flinchbaugh, whose expertise influenced the 1996 "Freedom to Farm" bill, said that for conservation efforts to succeed, the United States cannot exclude the biggest farmers from the subsidy programs. That's because 3 percent of farmers, he said, produce half of all U.S. farm commodities.

He also urged the continued "decoupling" of direct payments to farmers from how much a farmer produces and the market price. That decoupling was accomplished in the 1996 farm bill, which the professor said helped stabilize the markets and met World Trade Organization rules.

He told bankers that Congress should eliminate certain market loans and counter-cyclical payments, which are aimed at helping farmers weather bad markets and low prices.

Instead, Flinchbaugh suggests the creation of a nationwide "Farmers Savings Accounts," similar to Canada's, into which farmers contribute during good years and draw from in bad years. The accounts would earn interest.

Today's crop insurance protects a farmer's yields from weather disaster and other perils. Flinchbaugh suggests government-backed "revenue insurance" that insures both yield and price. It should be available to all farmers, he said, rather than certain commodity producers.

"It would put the risk back on the farmer, even though the government would have to subsidize it for many years to get it to work," Flinchbaugh said. "We're not talking about new money. We're talking about redirecting old money."

Joy Powell is at jpowell@startribune.com.

3. Potato growers learn a lesson about competition

by Paul Beingessner, Canadian farmer, writer
Nov. 14, 2004, beingessner@sasktel.net

In the poorly attended all-candidate meetings for this year's Canadian Wheat Board elections, proponents of "dual marketing" reassured audiences that competition would bring prosperity to western Canadian farmers. They seemed to think they were talking about competition among the buyers of wheat. In their version of reality, allowing farmers to opt out of single desk selling would increase the number of buyers for wheat from one - the Canadian Wheat Board - to several. These would include, I guess, the four or five grain companies that now control the private grain trade in Canada.

In reality, ending single desk selling would not increase the number of buyers of wheat. They would stay roughly the same. They are, after all, the countries and companies that buy wheat to mill it, or grind it or whatever. Ending single desk selling would, however, increase the number of sellers of Canadian wheat from one - the Canadian Wheat Board - to about 100,000. This is the number of farmers in western Canada that grow wheat.

We would have competition, all right. But that competition would not drive the price up. It would drive the price down, as always happens when lots of people are selling a product.

While some Canadian farmers have trouble grasping that concept, Idaho potato farmers are catching on. Recently, 400 potato growers, who provide about one of every five potatoes Americans eat in restaurants or buy in stores, formed the United Fresh Potato Growers of Idaho. This growers' group collectively decided that none of its members would sell potatoes below a price the group established. It has succeeded in its first week of existence in moving the price up from 60 cents to 62.5 cents a pound.

Nor are potato growers worried that these price increases will be passed on to consumers, since grocery stores already sell the potatoes for two to three dollars a pound. The idea seems like it will catch on. Already, growers from six other potato growing states have met with organizers of the new Idaho co-operative to study their approach. Idaho growers think a multi-state federation may some day be formed.

Maybe it's something stone fruit growers in California should look into. In the day of many grocery stores, they could sometimes negotiate good prices for the peaches and plums they grow. Now, the retail food sector has been taken over by a few mega-grocers. The price the farmer receives for these fruits has fallen while retail prices have gone up continually.

Small fruit growers can survive on farmers' markets and road-side stands and the largest ones own their own packing companies and capture this margin. The medium sized fruit grower is the one hardest hit. Fruit packers have wondered out loud how to get a bigger share of the retail price. They might just take a hard look at the potato growers of Idaho.

The real puzzle for western Canadian farmers is this: when Idaho farmers are trying to reduce competition among themselves in order to drive prices up, why would Canadian farmers want to increase competition among themselves? Why would they want to destroy their own cartel?

4. Raw deal for rice; DR-CAFTA threatens Central American farmers already in poverty, says Oxfam

Contact: Laura Rusu of Oxfam America, 202-496-3620 or 202-459-3739

WASHINGTON, Nov. 16 /U.S. Newswire/ -- International agency Oxfam warned that the Free Trade Agreement between the United States and Central American countries together with the Dominican Republic (DR-CAFTA) endangers the livelihood of thousands of small farmers who already live in poverty.

Today, Oxfam released a new report, "A Raw Deal For Rice Under DR-CAFTA," based on independent research, which exposes how the free trade agreement could devastate Central American rice farmers by opening the region's borders to massively subsidized US rice exports. The trade agreement is expected to come up for a vote in the US Congress early in 2005.

"There's a great potential for trade to reduce poverty in developing countries, but DR-CAFTA would be a serious blow to Central America's small agricultural producers, especially in rural areas where 60 percent of poor people are concentrated," said Stephanie Weinberg, trade policy advisor at Oxfam. "DR-CAFTA is a bad deal for countries in the region as long as it exposes farmers to unfair competition from subsidized US exports and denies them the right to protect themselves from such export dumping."

The US rice industry receives more than one billion dollars in government subsidies each year, an amount greater than Nicaragua's entire national budget. This amount is also far more than the U.S. crop's total value, which in 2002 was estimated at 844 million dollars.

The free trade agreement will require countries in Central America to rapidly lower import tariffs on agricultural products, including rice. Oxfam looked at the experience of Honduras, which opted to rapidly eliminate protections for its rice producers in the early 1990s. As a result, Honduras was flooded with cheap US imports and Honduran rice production collapsed. The number of Honduran rice producers fell from 25,000 to fewer than 2,000, employment from rice dropped from 150,000 to fewer than 11,200 jobs, production contracted by 86 percent and foreign currency spending on rice imports jumped from one million to more than 20 million dollars annually. Consumers didn't benefit from lower prices either: they actually paid 12 percent more for rice in dollar terms.

"Sinking rice prices (paid to farmers) due to massive imports from the United States had a terrible impact on us: it was like Hurricane Mitch," said Maria Angeles Amaya, a farmer from Santa Cruz de Yojoa in Honduras. "My husband had to go to the United States for years, and we survived with the money he sent."

There are an estimated 80,000 rice producers in Central America and the Dominican Republic, and 1.5 million jobs depend on rice production. Rice has become a strategic crop for most of the countries in the region as it is an essential part of the basic diet, along with corn and beans.

"Instead of establishing fair and equitable rules for trade, the DR-CAFTA will institutionalize an uneven playing field that will leave thousands of small farmers in the region without protection even for their basic food crops," continued Weinberg. "The case of Honduras shows that consumers may not benefit either."

Despite the public image that US farm subsidies go to help the family farmer, the new report points out that the system of supports for rice provides highly concentrated benefits for the largest industrial-sized producers: 80 percent of beneficiaries receive only 15 percent of supports.

Oxfam believes that agricultural trade can help reduce poverty if it is governed by a system of rules that are fair. The organization has supported the effort to reject the DR-CAFTA by encouraging thousands of US citizens to express their concerns to their Members of Congress. Oxfam's partners in Central America have mobilized across the region to demonstrate their opposition to DR-CAFTA to their elected officials. Oxfam calls on political leaders to carefully weigh the projected benefits of new trade agreements against the serious risks they pose for millions of the most vulnerable citizens.

For more information, please call Laura Rusu, 202-496-3620 or 202-459-3739

Note to editors: the Oxfam report is available at http://www.oxfamamerica.org

5. New patent regime: Concerns centre around rise in prices

Posted online: Monday, November 15, 2004

India may be heading towards a high-cost economy with the new product patent regime coming into effect from January next year.

The proposed third amendment to the Patent Act, 1970 will cover food, drugs, chemicals, including agro-chemicals and transgenic seeds and products. As the new law will cover basic sectors like food, health and agriculture, the rise in cost will have a bearing on the overall economy. The effect may not be felt immediately, but gradually as increasing number of patented products start dominating the market.

Added to this is another concern. Some developed countries are insisting on creating new treaties in the World Intellectual Property Organisation (WIPO), like substantive patent law treaty and the broadcasters‚ rights treaty, that would harmonise‚ the developing countries IPR laws with that in US and other developed countries.

At a recent conference on the ŚFuture of the World Intellectual Property Organisation‚ organised by the Transatlantic Consumer Dialogue in Geneva, several experts have questioned the liberal way in which patents are granted in the US, distorting the patent system in that country. Liberal patent regime has resulted in a hefty rise in prices. Thus the US model, if incorporated by other countries, is bound to spell disaster. Besides, a harmonised patent law will amount to an infringement on countries‚ sovereignty.

Concerns expressed at the conference relates to IPR system hampering free flow of information, raising the cost of computer software, hampering scientists from advancing research, reducing the public access to information and raising the cost of medicine. Majority of the patent rights and copyrights holders are multinationals based in developed countries.

There is, therefore, a need to learn from global experiences, before we finally decide to amend our patent laws. At the same time, the third amendment to our Patent Act has become necessary as part of our commitment to make it TRIPS consistent.

Some means can, however, be adopted to avoid granting of patents too liberally. A suitable mechanism for scrutiny should be put in place to examine the novelty, innovativeness and utility of the product applied for according patent rights. The second amendment has already put in place a provision examination of patent application before and after the granting of patent. The application for examination can be filed by any interested person other than the applicant. In this context, executive director of Indian Drugs Manufacturers Association (IDMA), Gajanan Wakanker, rightly said: "Both pre-grant and post-grant opposition listed in section 25 should be retained on all grounds. This provision is not against our scientists. They will, in fact, benefit. MNCs will not be able to stop all research after publication of their application under sec 11A."

Another aspect is to make the commercial terms and conditions under compulsory licensing more reasonable to check monopoly control.

The provision for disclosing the source of geographical origin of biological materials should be retained. Also the depositories for biological inventions should be notified. There is also a need to strengthen the emergency provision in light of the Doha mandate on TRIPS and public health and also in light of food security.

Many processed foods will become patentable. The agriculture sector too will come under patent regime as novel genes and transgenic seeds will be liable for patenting. Claims for gene patent applications may include genes or partial DNA sequences like cDNA, EST, SNP, promoters and enhancers, proteins encoded by these genes and their functions in the organism, vectors used for transfer of genes from one organism to another, genetically modified micro-organisms, cells, plants and animals, processes used for developing a transgenic product, use of genetic sequences or proteins which include genetic tests for specific genetic diseases or predisposition to such diseases, drugs developed on the basis of knowledge of proteins and their biological activity, industrial applications of protein functions and the substance of DNA.

There may be multiple players in developing these items which may be ultimately used in producing a specific transgenic product.

This would raise the cost of the final product and a heavy royalty is likely to be paid by the farmers.

An example of multiple actors is the case of Golden Rice. Here 3 genes inserted to complete beta crotene biosynthetic pathway. The methodology involved the use of a number of plant transformation vectors, promoters and antibiotic markers, for which patent rights were held by different owners. In all about 70 items were held by about a dozen patent holders. However, with the interference of IRRI, the Golden Rice is now available for research and adoption by public sector research bodies.

We hope the new amendment to the Patent Act would consider all the aspects to ensure that no unnecesssary rise in prices of live-saving drugs, essential food and farm inputs take place.

6. Export measures often need to be put into context to reflect reality

by Daryll E. Ray, Ph.D.
Agricultural Policy Analysis Center

The quest for ever increasing exports of agricultural products is the mantra that has driven U.S. agricultural policy for more than two decades now. The rationale for this quest is the argument that the growth in the U.S. domestic markets is limited to the growth in population and that with increasing incomes in other countries like China the growth potential for U.S. farmers is to service those markets. After all, it is argued, 95% of the world's consumers live outside the borders of the U.S. What is ignored is the fact that 99.8% of all farmers also live outside the U.S. borders, but that is another story.

We are not arguing that exports are not important to U.S. farmers, particularly in some specific sectors like corn and soybeans, poultry and increasingly cattle and hogs. What we have argued over the years it the fact that increasing exports over the long-term is not the pattern that we have seen. In the last century, export stimulated agricultural prosperity has been episodic and limited to relatively short periods of time and have taken place in response to other factors than changes in U.S. agricultural policy.

To counter this contention and to bolster their arguments, pro-export proponents often recite a litany of statistics to argue that exports are increasing to the benefit of U.S. farmers. And depending on the measure one uses at any given moment in time it can be argued that indeed exports are increasing. For instance it could be argued that increasing exports between the 1995 crop year and the 1999 crop year benefited soybean farmers as exports increased from 849 million bushels to 973 million bushels, and increase of 14.6% over four years. According to that measure soybean farmers should have been very happy, right?

Well, no. Actually for the 1999 crop year soybean farmers were collecting emergency payments and LDPs in record amounts. How can this be? The season average price of a bushel of soybeans dropped from $6.72 in 1995 to $4.63 in 1999. As a result, in spite of exporting an additional 124 million bushels of soybeans, the value of exports dropped from 1995's $5.705 billion to 1999's $4.505 billion.

So, were soybean exports increasing or decreasing during that period? The answer depends on the measure one uses. In terms of volume, soybean exports did increase. But, in terms of the value of exports, soybean exports decreased.

The picture we see in soybeans in this time period is not unique. It can be applied to most agricultural exports and various time periods. One not only has to be aware of the fact that there is difference between export volume and export value, and the two may not tell the same story, one also has to ask what the base is against which the increase is being measured. In the example you just read, we deliberately chose to use a year of record sales value as the base against which the change was measured. One thing you can be certain of is that many times when someone is touting a gain in exports they have probably been very careful in choosing both the time period and the measure - value or volume.

Another measure to take into consideration is market share. In the case of soybeans, while the export volume increased in the 1995-1999 time frame, the U.S. market share dropped from 72.3% to 57.5%, a share decline of almost 15%. Meanwhile Brazil increased its share from 11.4% to 23.9%. Can one meaningfully talk about the increasing importance of exports when the U.S. market share dropped by 14.8%?

While the numbers are easy to come by for storable crops like corn and soybeans, a similar comparison could be done for the meat industry, poultry, pork, and beef. In addition to the questions raised above, livestock producers have to ask about what is being exported? Are the exports, high value prime cuts, or are they variety meats that might otherwise be put to other use in the U.S. thus adding little extra value for the producer.

For instance in one of our local supermarkets, ten pound bags of chicken leg quarters sell for a price that ranges from 10 CENTS a pound to 39 CENTS a pound. How much extra value do chicken producers receive from the export of these cuts, or do the exports simply reduce the cost of extracting the breast meat?

International trade implies a two-way street. Imports are often ignored when discussing exports, especially in the case of meat animals. Reporting exports net of imports would better reflect the trade component of some commodities than a singular focus on exports.

When tackling international trade in agricultural products, one needs to read the press releases with some care. What is the measure being used? How was the time period selected? What is happening with domestic demand? What is happening to market share? What impact does imports have on dampening the demand for domestic production? Yes, exports and international trade are important and always will be, but it is important to view them realistically rather than searching of ways to present all changes in a positive light.

Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT's Agricultural Policy Analysis Center (APAC). (865) 974-7407; Fax: (865) 974-7298; dray@utk.edu; http://www.agpolicy.org . Daryll Ray's column is written with the research and assistance of Harwood D. Schaffer, Research Associate with APAC.

7. Put all trade distorting subsidies in the crosshairs

I am sending this Farm Bureau press release around because it helps clarify Bob Stallman's and the Farm Bureau trade perspective. Their focus is not on profitability, economic sustainability, or economic justice for family farmers in the U.S., or around the world. They focus on the list of market distorting subsidies, which the UP.S. based international grain trade cartel has identified and Farm Bureau enthusiastically accepts. They use the WTO to eliminate the subsidies without doing anything whatsoever to eliminate the need for the subsidies, which is a blueprint for the destruction of the world's historical and traditional system of family farmer agriculture. 

It is not an accident or coincidence that the primary economic winners of this strategy is the U.S. based international grain trade cartel, who is able to buy more of the world's ag production for less money by using the WTO to dismantle all of the traditional public policy tools governments have used to equalize the inherently unequal economic relationship between the handful of raw material ag processors (the cartel), and the raw material ag producers. Since 1996, using 1996 as a baseline, the U.S. ag processors have paid U.S. ag producers $14.6 billion less per year on average for U.S. produced corn, wheat, soybeans, grain sorghum, cotton, and rice, a total of $102.45 billion that did not go into family farmer pockets, or rural communities. 

The Farm Bureau trade and farm policy reminds me of the story of the two farmers who lived side by side near the Highway, and each had a pair of work horses: 

The one farmer, a Farmers Union member, took good care of his horses, and kept them well groomed, trained, and worked. The other farmer, a Farm Bureau member, starved his horses, and did not groom, train, or work them. 

Over time, as people drove by on the Highway, they noticed the deplorable condidtion of the team of work horses of the Farm Bureau farmer, and they would stop in to ask him what was wrong with them, and him. 

After awhile, this got on his nerves, and he drove into his neighbors yards while he was feeding and grooming his horses. He described the problems and complaints he was having with the drive by traffic visitors. "

What do you want me to do about this problem of yours?" the Farmers Union member asked. His Farm Bureau neighbor, scratched his head for a while and said, "Well, if you would stop taking such good care of your horses all the time, I think that would fix my problem."

At the end of the day, if everyone's horses starve to death, all is not either better or well. NFU President Dave Frederickson is exactly right when he describes our trade policy as a race to the bottom.

The Farm Bureau has put a great big smile on the face of the U.S. grain traders. In fact, they continue to laugh all the way to the bank, at the expense of family farmers and ranchers.  Tell me again, how much does that Farm Bureau Insurance you bought really cost? 

All the best,

John K. Hansen, President Nebraska Farmers Union
PO Box 22667, Lincoln, NE 68542


FB: Put All Trade Distorting Subsidies in the Crosshairs

ATHENS, GA, November 17, 2004 - In order to make significant progress, World Trade Organization negotiators must advance specifics on how all nations of the world subsidize and protect their agriculture sectors, according to the American Farm Bureau Federation. With the facts in hand, the Doha Round of negotiations can be completed with trade agreements equitable to all farmers of the world, said AFBF President Bob Stallman.

"The world's farmers and ranchers - whether they work the soil in a developed or developing nation - all will benefit from trade reform that advances fairly through open and honest negotiation, rather than through legalistic maneuvering," Stallman said in a speech at a trade conference at the University of Georgia.

The Agriculture and the WTO - Subsidies in the Cross Hairs conference on Tuesday featured noted experts from government, the private sector and the legal profession. Stallman presented a view of the current import/export situation of agriculture on behalf of the nation's largest farm organization.

"I caution those who interpret subsidies to mean only domestic supports in the United States," Stallman said. He pointed out how market barriers like tariffs, non-tariff barriers and state trading enterprises are just as trade distorting as U.S. supports. Stallman explained that a lack of wealth causes poorer nations to protect their farmers with tariffs or comparable non-tariff barriers rather than domestic support payments.

"If the world wants us to decrease our domestic supports, we must be met in-kind with increased market access for all farm goods. Tariffs and other barriers to trade must also be targets in the crosshairs," Stallman said.

He noted that the U.S. farm bill already has led to a direct budget savings of $15 billion from expected spending levels, and most government farm payments going to farmers have actually declined.

Brazil has tried to sidetrack multilateral negotiations by going to WTO dispute resolution panels, Stallman said. The Brazilian contention is that U.S. cotton support programs are illegal subsidies. The recent WTO panel ruling is that export credit programs are export subsidies, but this is contrary to the Uruguay Round Agreement. The ruling could impact any U.S. commodity sector where export credits exceed the allowed export subsidy base, Stallman said. The ruling is under appeal from the United States.

Stallman pointed out that the WTO panel ruling further treaded into U.S. production programs for most major field crops. The ruling contends that production flexibility payments and direct payments are not exempt from WTO limits on trade-distorting subsidies. Again, U.S. trade officials see this as contrary to the Uruguay Round Agreement.

Stallman said farmers of the world should compete in a freer and fairer global market where developing countries reform their tariff subsidies as the U.S. addresses its domestic supports programs.

Some countries use the developing nation designation as a shield, to the ultimate detriment of their own farmers and ranchers, from making tariff cuts and liberalizing trade, Stallman asserted.

"True knowledge lies in being able to determine how other nations subsidize and protect their agriculture sectors through trade distortion. And then winning reform through negotiations," Stallman said.


Contacts: Richard Keller, (202) 406-3640, keller@fb.org>keller@fb.org

8. China, Argentina aim to head off WTO spat over soy trade

Nov. 17 (Bloomberg) -- China agreed to set up a working group aimed at averting a halt in $5 billion of soy trade with Argentina and Brazil to prevent the issue from becoming a dispute under the World Trade Organization framework.

Growers in Argentina and Brazil may ask the world trade body to investigate rules China implemented on Oct. 1 that bar crude soybean oil imports, said Raul Padilla, President of the Edible Oil Industry Chamber of Argentina. China cut the maximum permissible solvent residue content in imports of edible oil by half, to a level that producers in the two countries can't meet.

Argentina may lodge a complaint if an agreement isn't reached ``within weeks or months,'' Padilla, also chief executive of Bunge Ltd.'s operations in Argentina, said in an interview in Buenos Aires. ``We don't have much time.''

Li Changjiang, head of China's Quality Inspection Bureau, on Nov. 15 met Alejandra Sarquis, a director at Argentina's Agriculture Secretariat, before Chinese President Hu Jintao's visit to the South American country. The meeting was aimed at addressing concern among South American soybean and soy oil producers that they will lose their largest market.

China's soybean oil imports, nearly all from Argentina and Brazil, fell 16 percent in September to 242,984 metric tons, according to Chinese customs data. They rose 71 percent in the first nine months to 2 million tons.

China's economy grew at an annual rate of 9.5 percent in the first nine months this year, giving the nation's 1.3 billion people more money to buy beef and chicken raised on soybeans. This has also boosted the country's demand for soy beans and oil used in food such as tofu, instant noodles and potato chips.


The working group will also discuss inspection criteria implemented by Li's bureau that blocked shipments of more than 300,000 tons of soybeans from South America this year on grounds of contamination. That's helped drag September imports down by 52 percent from a year earlier and by 21 percent in the first nine months this year.

``We need China to let us know ahead of time exactly what its standards for quality are and not inform us on arrival that we are not meeting them,'' said Alberto Rodriguez, executive director of the edible oils chamber. ``They impose these technical trade barriers when prices go up, and will probably do it when prices go up again.''


China, which in the past year has become Argentina's fourth- biggest trading partner, buys 75 percent of the South American country's soybean production, the main source of foreign reserves for the government from a 23.5 percent tax on the export of agricultural commodities.

``It would be helpful to strengthen the cooperation in policy-making for agricultural sanitary measures to increase the access of products,'' Argentine President Nestor Kirchner said in a joint press briefing with Chinese President Hu Jintao, without specifying products. ``A lack of coordination becomes a barrier even more difficult to surmount than taxation.''

China's imports of Brazilian soybeans fell 23 percent in the first nine months to 4.5 million tons, while Argentine soybean imports fell 44 percent to 3.1 million tons. Imports of soybeans from the U.S., China's biggest supplier of the crop, were unchanged at 6.3 million tons in the same period.

Officials at China's embassy in Buenos Aires weren't immediately available for comment.

``Both sides will have a chance to talk about any outstanding differences about quality inspection procedures,'' Yang Ping, manager of the bureau's international affairs office, said of Li's visit to Argentina in an interview on Nov. 3.

China imports about half the soybeans it consumes and will only increase demand for foreign-grown beans in the years ahead, the U.S. Department of Agriculture said in a report last month.