National Cotton Council Board of Directors Release No. 0180.97 Remarks of Secretary of Agriculture Dan Glickman National Cotton Council Board of Directors Washington, D.C.--June 3, 1997 Thank you, [Chairman] Tom [Smith]. It's good to be here with all the Board of Directors. Tom, your president Bill Lovelady, your Executive Vice President Phil Burnett, and John Maguire here in Washington all serve you very well. It's good to have a President in the White House every day who has deep rural roots and cares about American agriculture. I get calls from him fairly regularly: How are exports? What's going on with dairy ... cotton ... cattle? Calls I'd venture to say few Presidents have called a Secretary of Agriculture about. It's nice to know that we've got a friend in high places especially now as we balance the budget and make major changes in our farm policies. It's really a new world out there for agriculture: -- Global trade is driving agriculture's future, and boosting our farm incomes here at home. -- As we wrestle with how to feed and clothe a growing world from a fixed and fragile landbase, agriculture's much more integrated with hunger and environmental issues ... making products like Bt cotton all the more important. -- And, our farmers have to be increasingly savvy business people as government price supports give way to more lucrative and risky direct relationships with the markets. Last week, I read about your new Cotton Risk Management Network. A while back, you did a demonstration at USDA headquarters ... John, Bill and Phil all came over. Our risk management folks were very impressed. They said yours is among the most sophisticated and forward-thinking systems around. Farmers face significant challenges in making the leap to a more market-oriented and global Information Age. But most farmers are eager to take on the challenge because the rewards are so great: We've had record exports and record farm incomes. Add to that the recent balanced budget agreement, and things look good for agriculture. A balanced budget will bring with it an even stronger economy, spurred along by lower interest rates, which means lower production costs for all of you. The agreement also includes estate tax reform, making it easier for families who are land rich and cash poor to pass on the farm to the next generation. That's important. The average age of today's American farmer is 58. We need to encourage, not discourage, a new generation of farmers. That goal is complicated by a number of hurdles, highest of all being the structure of agriculture. In many ways, what we see in agriculture today -- concentration into fewer farms with more acreage -- is a rapidly paced version of a trend that's working its way throughout our economy -- banking, health care, the defense industry, large retail stores. Everyone's getting bigger. We've got to find a way to be efficient and competitive while keeping our small farm heritage alive. That's why I'm establishing a National Commission on the Small Farm. It will bring together a diverse group of people -- farmers, academics, financial folks. They'll focus on solutions -- on developing a national strategy to save the small farm. We'll ask for your help in doing it right. Alongside the size issue, USDA's also got sizable civil rights problems. This was perhaps the biggest surprise challenge waiting for me when I took this job. It's a decades-old problem, where local folks, especially in the South, are using the flexibility of our farm programs not to tailor federal policies to the needs of their local community, but to discriminate. It's going to stop on my watch. Where USDA has discriminated, we're now making amends. And, I've made honoring our nation's civil rights laws a condition of employment at USDA. You know, Abraham Lincoln founded USDA the same year he freed the slaves. Agriculture was their primary means of making a living. Today, it remains a hard-fought living for many minority farmers. Right now, black farmers are losing their land at a rate three times higher than that of small farms overall. That tells me that we've got to try 3 times harder to be a part of the solution. USDA's busy acting on our civil rights review -- doing everything from rooting discrimination out of our loan and foreclosure policies, to making our field structure more accountable on civil rights to diversifying USDA's leadership. We will change the culture of the department of agriculture, and make sure USDA is in a position to help every farmer compete. All these changes require USDA to reorganize. Especially in the wake of the 96 farm bill, our farm policies have changed dramatically. That means, the field structure that delivers them is going to have to change, too. To best serve all of you, we need to refocus on the challenges of the future. That includes a balanced federal budget. When our reorganization is completed, we'll have saved taxpayers nearly $8 billion. The obvious political reaction is that's fine ... just not in my district. I played that game when I was in Congress myself. But it won't get us to balance, a stronger economy, lower interest rates, and all those other priorities that Americans have made it abundantly clear we want. It will require sacrifice and hard choices. I want you to know that no new decisions will be made until we've talked with local folks and members of Congress. There will be no surprises. And my bottom line will be preserving customer convenience ... your convenience .... and causing the least disruption in our employees' lives. I'd also like to point out that we have on board now a new head of the Farm Service Agency, Keith Kelly. Keith comes from a cotton state -- Arizona -- and from state government, so he adds more local perspective to our national USDA leadership. I like that. It's important. I also want to say to all of you that I appreciate the very serious debates underway within the Cotton Council on how to deal with import quotas. It's a divisive issue. But I think we can all agree that certain provisions of the farm bill have not worked the way they were intended. There's no easy answer. But it's important to try and work through this together. USDA and the Cotton Council have a long history of working together. Just look at our boll weevil eradication effort. We're winning that fight. We're revitalizing the cotton industry in parts of the country, especially the South, where folks were starting to wonder if it was all over. And, once we eradicate, farmers can use less pesticides -- which is good for the environment, and easy on the pocketbook, too. We fought hard and successfully to keep this effort alive in an era of tighter and tighter budgets. The new loan program is now up and running and will continue our work securing the livelihoods of America's cotton communities ... and doing it in a sustainable way. While all the changes these days in agriculture are giving us a more prosperous outlook, the risks involved with the marketplace make these volatile times. We see this right now with cotton. I'd be hard-pressed to call prices this year weak. But clearly they've dropped off substantially from the dream-dollar-a-pound high 2 years ago ... the highest cotton prices we'd seen since the Civil War. The obvious advantage of lower cotton prices, is the opportunity to increase exports. This is the third consecutive year of increases in foreign cotton consumption. And, as our prices become more competitive, we've seen a leap in exports. We're now forecasting a climb in exports from 7 million bales in 96-'97 to 7.3 million bales in 97-'98 -- expanding our already formidable share of world cotton markets. I talked a little bit earlier about risk management. Trade is the ultimate safety net. Nearly 1/3 of our crop acres are exported. That number can only increase as world populations and incomes continue to grow at a much faster rate than our own. This means there is a world of opportunity out there for American agriculture, and we're taking advantage of it. Last year, U.S. agricultural exports hit nearly $60 billion, making agriculture -- for the second year running -- the leading positive contributor to the U.S. trade balance -- not cars, not computers, American agriculture is #1. In fact, if you take the most visible symbol of the U.S. trade deficit -- the American-driven Japanese car, agriculture's $30 billion trade surplus more than covers every Honda, Toyota, you name it, that was imported from Japan last year ... with $7 billion to spare for Mercedes and BMWs. Of course, that's the result of a lot of hard work both on the farm and in Washington. This month, we're celebrating the 50th Anniversary of the Marshall Plan, where the United States helped rebuild Europe and lead the world toward more open, peaceful and prosperous relations. From day one, this Administration has embraced that vision and continued to push for freer trade. Today NAFTA still doesn't win many popularity contests. Yet it's brought record U.S. agricultural exports to Canada and Mexico. 80% of U.S. cotton textile exports now go to North American countries. We can have NAFTA's success throughout Latin America, but only if we get fast-track authority to expand NAFTA to places like Chile, Argentina and Brazil. Without that authority, we can't compete. Many countries already have trade agreements there. Every day we don't is another day we're behind the curve in some of the most explosive markets in the world. GATT, too, has been a success. For one thing, it's given us the World Trade Organization, which allows us to challenge countries that restrict products without any credible science to back them up. We recently won a huge victory in that forum on hormone-treated beef. For 8 years our hormone-treated beef has been kept out of England despite overwhelming scientific evidence of its safety. We took our case to the WTO and won. Soon those markets will be reopened. Today, the heavyweight trade issue is whether we continue to grant China Most Favored Nation trading status. That's really not a good name for it. If you look at it strictly from the economic point of view ... it's a question of whether or not we continue normal trade relations with China, or slap up a wall of across-the-board tariffs that effectively shuts down U.S.-China trade. The chain of events would be tit for tat: We would erect trade barriers. China would do the same. Both sides take their business elsewhere. This would be a catastrophe for American agriculture, especially for all of you. China is our #1 cotton market. And, as they shift more of their own land into food production, we expect that they'll become increasingly dependent on world markets for their fibers. In 1995, China was nearly a billion dollar market for U.S. cotton -- buying well over half of their imports from us. That's a billion dollars that we stand to lose to our competitors if we sever our trade ties. President Clinton does not want to see that happen ... and not just because it's good for the bottom line. Before I became Secretary of Agriculture, I was in Congress for 18 years representing Kansas. During that time, I served on the House Agriculture Committee. I also served as Chairman of the House Intelligence Committee. I can tell you that we having nothing to gain and everything to lose by walking away from China right now. For one thing, in less than a month Hong Kong will once again become a part of China. If we're concerned about human rights, if we're concerned about the pace of democratization, we have to keep our leverage, and that is economic leverage. That is trade. Without it, we've got nothing to bargain with. We need to engage China. We need to encourage them to play a positive role in the world. We've worked together fairly successfully on defusing North Korea's nuclear capacity. We must continue to work together -- on food issues, on security issues, and for humanitarian reasons. President Clinton's made us clear that he wants to press forward with a policy of engagement. There will be a vote in Congress within a month. And, I hope that it is a vote to show China that the United States is serious about leading the entire world toward democracy, toward free trade, and toward peace. Thank you for your commitment to American agriculture. # NOTE: USDA news releases and media advisories are available on the Internet. 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