Sci Food & Agricultural Policy Conference Release No 0139.99 Remarks As Prepared for Delivery by Secretary of Agriculture Dan Glickman Sci Food & Agricultural Policy Conference Washington, DC March 30, 1999 "Good morning and thank you, J.B. Penn, for that kind introduction. It's an honor to address the Sparks Conference. The Sparks Company's broad expertise makes an invaluable contribution to the national dialogue on agricultural issues. I know that all of us at USDA benefit every day from the insights in the SCI Policy Report. 'These are times of anxiety and uncertainty in American agriculture. A slumping global economy has collided with record global production to produce the worst farm crisis since the mid-1980s. The world is awash in grain and no one can afford to buy it. Our farmers are bearing the brunt of economic circumstances largely beyond their control, and we have to do everything we can to help. "At USDA and in the Clinton Administration, our most immediate concern is softening the economic blow of falling commodity prices. Over the last year, we have launched aggressive relief efforts to see farmers through this crisis. And we've had to be more creative than ever before in how we do it...because, since the 1996 Farm Bill, USDA simply doesn't have the tools and authorities it once did. "Last year, we extended $4.1 billion in GSM export credit guarantees, a 40 percent increase from the previous year. And just yesterday, we announced the allocation of $1 billion in new export credit guarantees to Korea, one of our most historically reliable ag customers and one of the nations hardest hit by the global financial crisis. Just to give you an understanding of how important these guarantees are, they supported nearly 60 percent of U.S. agricultural sales to Korea in 1998. "We're making maximum use of our international food aid, increasing it from 3 million to 10 million metric tons this fiscal year. And that includes the 1 million metric tons of red winter wheat bought last week by USDA's Commodity Credit Corporation for $133.5 million -- the largest single-day wheat purchase ever by the CCC. "We pushed for legislation, which Congress passed last week, that allows farmers with CRCPlus insurance policies to change their coverage and get the protection they need to prepare for spring planting. "We have also been pushing for swift action on the Administration's emergency supplemental request. The bill includes $152 million for USDA, which would allow us to increase our loan capacity by over a billion dollars...and hire the additional staff we need to deliver emergency assistance. But with Congress leaving for recess without passing the bill, we had to get creative. So we shuffled some of USDA's funds last week, transferring $30 million to the Agricultural Credit Insurance Fund, enabling us to finance $333 million in farm loans. This will keep our credit coffers from running dry at least until mid-April. And it should bridge the gap until the House and the Senate can agree on a single omnibus emergency spending bill. "As important as these measures are, most of them are stopgaps. They don't constitute a long-term farm policy agenda. Lurching from one emergency relief bill to the next, damage-control style, is not the most effective way to help our farmers. We have to have a strong, flexible, comprehensive safety net that catches farmers when high prices, global surpluses and bad weather knock them off balance. "In my opinion and the President's, the major failing of the 1996 Farm Bill was that it didn't provide such a safety net. It was, generally speaking, sound legislation. It had strong trade and conservation provisions. It gave farmers more control over their operations, something that was long overdue. But while the bill was perfectly suited to the bullish farm economy of 1996, it offered little protection for when the going got tough. Scaling back the government role is fine, as long as the market is providing for everyone...as long as exports are moving and wheat is at $4 a bushel. "Now that times are tough, even some of the '96 Farm Bill enthusiasts are, interestingly enough, softening a bit. A farm crisis has a way of bringing out the prairie populist in all of us. Some of the most ardent free marketeers are suddenly beginning to sound like William Jennings Bryan, proposing a short-term Conservation Reserve Program and looking to lift the cap on loan rates. "This irony aside, I don't see any movement to roll back the Farm Bill. But I do think it's imperative that we plug its holes. So I've made the safety net priority number one for 1999. The President made a point of this in his State of the Union address. And we are answering his call, working hard with Congress, in a bipartisan spirit, to stitch together a strong safety net. "We're exploring several initiatives that would give farmers more crop insurance options. For example, we'd like to see policies that cover multi- year losses. And we believe there should be an insurance program for livestock, since it is, after all, agriculture's largest sector. "While crop insurance will continue to be the centerpiece of the safety net, we're looking at a broad range of risk management tools. We want to expand planting flexibility so that producers can elect to plant fruits and vegetables without being penalized. We also want to improve marketing flexibility by extending the repayment schedule on commodity marketing loans and helping farmers finance on-farm storage facilities, both authorities that USDA had before the Farm Bill. "These are just a few of our ideas. And we are open to suggestions. There is no pride of authorship here. We will all have to work together to make this happen. It will not come cheap. But as Bill O'Connor's boss, Representative Combest, pointed out the other day, as expensive as crop insurance reform will be -- and it will be expensive -- it's a bargain compared to emergency relief packages. "The safety net is critical. But we're also looking even further out onto the horizon. Because, eventually, the current farm crisis will end. Prices will rebound. Our top export markets will climb out of recession. What then? What will be the principles that guide American farm policy ten...twenty...thirty years from now? These are things we have to think about. We have to examine both the forest and the trees. "The Farm Bill presented both an enormous challenge and an enormous opportunity. The question of the role of government in the agricultural economy is open for the first time in over half a century. And in a world of fast and furious change, it's a more complex question than ever before. "The impact of globalization on American agriculture grows greater every day. It's not a coincidence that we're facing our worst farm crisis in a decade at the very time that nearly one-half of the world if you exclude the United States is in recession. "As frustrating as that is, we can't let it divert us from the task of building a 21st century world trading system in which food and fiber are passed freely across oceans and continents. We will continue that work in November when we launch the next round of WTO negotiations. I won't go into too much detail here because I don't want to steal Peter Scher's thunder. But suffice it to say that Peter and I and Ambassador Barshefsky are going to need some of that extra strong Seattle coffee to get through some long and difficult negotiating sessions. "Part of the challenge is that, for all the very legitimate talk of a global village, different nations still do have very different values and priorities. The nations of the European Union are our very closest allies in the world, but that hasn't kept us out of contentious agricultural trade disputes. "The European reluctance, for example, to accept American beef from hormone-treated cattle flies in the face of empirical science. These products have passed all the tests, stood up to the strictest scrutiny. And if you don't believe us, believe the World Trade Organization, who has ruled in our favor on the beef dispute. By balking at the May 13 compliance deadline, the EU is not only defying the scientific experts, but also challenging the authority of the WTO. We are prepared to retaliate by imposing duties on a number of European imports. "But let me also add that there is some responsibility on the American side. Overcoming the legal barriers that keep our beef out of Europe is only half the battle. If shoppers are going to reject your product once you're in, then the battle waged over market access will have been for naught. It's therefore incumbent upon us to launch a public information and consumer education effort both domestically and internationally -- that will separate the myths from the realities. We have to reassure people that our regulatory process is sound. We have to give them confidence that bioengineered food products are rigorously tested and deemed safe before being brought to market. "When it comes to genetically modified organisms, there are difficult questions not just on the global scene but right here at home. They present very tricky ownership issues, for example. There is a legitimate case to be made that farmers own the seeds they buy and are free to replant them as they choose. But those rights are at loggerheads with the legitimate proprietary interest of the company that pumped millions of dollars into the research that developed that seed. And while we respect their rights, I think we're all a little concerned when we hear about lawsuits filed against small farmers, private eyes cruising the countryside on the lookout for replanted seeds, and toll-free hotlines that make it easier for farmers to turn in their neighbors. "This is all happening against a backdrop of growing concentration in the farm economy. With every new merger and consolidation, we move closer to a kind of agricultural Darwinism, with survival of the fittest becoming survival of the biggest. "And it's not just the small family farmers who should be concerned about a top-heavy farm economy. Everyone who has an interest in a healthy agricultural sector ought to be concerned, for example, when four firms control 80 percent of the steer and heifer slaughter market. When a few large operations wield too much influence, it distorts markets and undermines confidence in their fundamental fairness. Tools like mandatory price reporting, which we continue to seek, would increase transparency and reduce the possibility of manipulation. "Obviously, there is no shortage of challenges for us to address both coping with this short-term crisis and examining the longer-term structural issues that will determine what and how America farms in the 21st century. For us to meet these challenges successfully, all of us in this room will have to work together, and I look forward to that. Thank you very much. #