U.S. Secretary of Agriculture Dan Glickman 2000 Commodity Classic Release No. 0072.00 Remarks As Prepared for Delivery by U.S. Secretary of Agriculture Dan Glickman 2000 Commodity Classic March 6, 2000 Orlando, Fla. Thank you, Lynn. It's a pleasure to be with you in person this morning, especially since I've only been able to address you electronically for the last few Commodity Classics. I'm sure some of you were beginning to wonder if I was anything more than a digital image. I would have liked to spend a little more time down here, whether to participate in some of your sessions and activities...or just to catch a Braves spring training game. But the fact is that I can do a lot more for you by returning to Washington tonight for an important meeting about our efforts to pass Permanent Normal Trade Relations (PNTR) and ease China's accession to the World Trade Organization. I want to spend a minute talking about this because I believe it is the most important trade issue facing the agriculture community this year. And furthermore, it's an issue that has implications beyond agriculture, and even beyond just trade and commerce. Agriculture is very dependent on exports, more than twice as dependent, in fact, than the overall economy. And no nation offers more export potential -- and has delivered fewer results -- than China. We're talking about the world's largest country, home to one out of every five people on earth, with an economy growing at 7 percent a year. Yet last fiscal year, every man, woman and child in China consumed less than 1 dollar's worth of American agricultural goods. In one year...less than a dollar a person. But by joining the WTO, China would agree to open its market to us as never before. They would cut tariffs dramatically, to a point lower than many of those levied by our traditional trading partners. Florida oranges, for example, would face only a 12 percent tariff, as opposed to the current 40 percent. China would bind the tariffs on soybeans and soybean meal at 3 and 5 percent respectively. We expect that trade in soybean oil would be completely liberalized by 2006. And a new tariff-rate quota would allow Chinese corn imports of up to 7.2 million metric tons at a mere 1 percent duty by 2004. On the non-tariff side, China would: eliminate export subsidies; cap and reduce trade-distorting domestic support; lift trade barriers that couch protectionism in scientifically questionable health standards; allow business to be done between private individuals without the interference of State Trading Enterprises. And, of course, China would agree to accept the authority of a rules-based multilateral trading system. We'll be right there to ensure that China honors its commitments. Passing PNTR does not mean going soft on China and just assuming that they'll live up to their obligations. Quite the contrary. The Administration intends to be vigilant about monitoring China's progress and enforcing the terms of the accession deal. When it's all said and done, we estimate conservatively that China's accession to the WTO will mean an additional $2 billion a year in total U.S. farm exports to China by 2005. China will go from being a net corn exporter to a net corn importer before the decade is out, and there's every reason to believe that American farmers will get a healthy share of that business. What's more, fewer Chinese corn exports will mean less competition for us in other Asian markets like Korea and Japan. It's the same story in soybeans, as WTO accession figures to increase average annual Chinese soy complex imports by $171 million dollars during the next ten years. This deal is really a no-brainer. The first question most Americans ask when our trade negotiators bring home a new agreement is: "What did we give up?" Well, the answer in this case is: "Absolutely nothing." Because our market is already open to the Chinese, as evidenced by our current 5-to-1 trade deficit with them. This is not like NAFTA, where we had to give in order to get. In this case, all the concessions are on their side, and all the benefits are on ours. We've got nothing to lose by passing PNTR and bringing China into the WTO. Perhaps more importantly, we've got everything to lose by rejecting it. American farmers and workers would lose the benefits of increased exports to China, while China's WTO concessions would be extended to our competitors. The European Union, Canada, Brazil, Japan, Australia and others would eat our lunch. They'd be more than happy to fill the orders that we lose, and it would take us years to regain any kind of foothold in China. Now, there are some who object to PNTR and the WTO agreement because they're concerned about China's human rights violations, or their lax labor standards, or their aggressive posture toward Taiwan. We share these concerns, and we're addressing them through appropriate channels. But in the long run, the surefire way to ensure that China does not change is to walk away from this bilateral relationship. If we want to open China, if we want to expose China to our values...to democratic principles...to the concept of religious freedom...then we have to bring them into a rules-based global system. If we help China become a more open economy, eventually they will become a more open society. As important as it is to boost exports, there's more at stake here than dollars and cents. We cannot continue to be the world's only superpower if we disengage from China at precisely the moment that it stands on the precipice of wholesale political, economic and social reform. Let's remember also that China has access to weapons of mass destruction, that China holds the key to peace and stability in Asia. We simply cannot afford to isolate such a regional and emerging global power from the world's trading system. For our national security as well as our economic security, we have to engage China. * * * * * * * * * * * * * * * Of course, trade is just one piece of the farm policy puzzle. Access to the Chinese market alone won't turn the farm economy around. We're two years away from the drafting of a new farm bill, but it's not too early to start thinking about what it should include. In fact, at this very moment, the House Agriculture Committee is holding a field hearing in Lubbock, Texas to begin to gather ideas for 2002. In my opinion, the current farm bill has not provided an adequate safety net. Sure, it was working fine when prices were high and global demand was strong. But when the bottom fell out of the farm economy, there was very little there to break our farmers' fall. For the last two years, what Congress has done is hope things get better...and when they don't... round about September or October...simply double AMTA payments. Now, that money certainly helped a lot of people get through the year. But there was a desperate, ad hoc quality to this approach. It was more of a quick fix than a real solution to a deep-seated problem. We applied a very expensive tourniquet, when the situation actually called for a blood transfusion. The Clinton Administration's new safety net proposal is designed to provide that transfusion. At its heart is a multibillion dollar countercyclical, targeted, income assistance package. The idea is that those farmers with the lowest incomes, those experiencing the greatest struggles, get the most help. But I believe this can be more than a safety net proposal. I think it can be a philosophical compass that steers us toward a new farm bill in 2002. I think it's time we broke out of some of the farm policy paradigms that have hemmed in our thinking for several years. I've come up with 5 broad principles many of them reflected in our safety net plan that I think should guide the next generation of farm policy. The first is that farm programs should support farmers, not just commodities. That's why the income assistance in our safety net plan is tied to income, not just commodity prices. After all, it's income not just price that allows farmers to pay the bills, upgrade their equipment and have a decent standard of living. The commodity-driven system we've had for decades has done very little to stop massive agricultural consolidation and the depopulation of rural America. Our countercyclical income assistance would come in addition to, not instead of, AMTA and other farm payments. AMTA participants will continue to receive their full payments, and 98 percent of them would be eligible for an additional check under our proposal. Let me also briefly mention two administrative actions that I'm taking, which don't require congressional approval. First, I am freezing loan rates for the 2000 crop year on corn and soybeans, as well as wheat, rice and cotton. We're also making low-interest financing available for on-farm storage facilities, so that farmers have the marketing flexibility they need. Second, we need a farm policy that is national in scope. What we have right now is a narrow, seven-crop, regional system that doesn't support or reward farmers for branching out into new and specialty crops. Last summer, when the drought hit the Northeast and mid-Atlantic states, the nation woke up, picked up the newspaper and realized that there are actually farmers in these parts of the country. Now the irony is that the eastern drought was the catalyst for last fall's emergency bill, but eastern producers managed to get only a very small share of those emergency dollars. Nevertheless, for once, the spotlight shone on the 200,000 farmers who live from Maine to Virginia. They too deserve support and protection, and our safety net begins to provide it. Don't get me wrong, I'm not proposing that we take away from any one group of farmers to give to another. I'm just saying that we need some recognition that agriculture is a 50-state enterprise. Not just because it's the right thing to do...but because, quite frankly, a regional farm policy in the long run is politically unsustainable. So what tools do you use to direct more resources to less traditional growers? One way is to shake up our risk management programs, to make them more inclusive, which is my third principle. So our safety net plan includes various ideas to make risk management tools more affordable and accessible. That includes: extending the premium discount on buy-up crop insurance coverage; offering multi-year coverage; making coverage available to more kinds of farmers and more commodities, including livestock; and expanding our risk management education program. We also want to lift the area-wide trigger on our Non-Insured Assistance Program, making it easier for farmers of uninsurable crops to receive assistance after a major loss. I was very pleased last week when the Senate Agriculture Committee approved a bill that is consistent with these priorities. We hadn't seen much action on crop insurance since the House bill was passed five months ago. But now it looks like the effort has been jumpstarted, and I hope that crop insurance reform will be the law of the land by year's end. Our fourth principle is this: conservation must be a centerpiece of farm policy, not an afterthought. By creating incentives for farmers to be environmentally responsible, we can increase farm income at the same time that we protect our natural resources. The land is not something that can be replaced like a piece of machinery. We need to respect it above and beyond its arability; we must recognize it for what it is: our most valuable commodity of all. So our safety net plan calls for a new program that provides payments -- direct, not on a cost- share basis -- to farmers who help curb erosion and protect water supplies from pesticide and nutrient runoff. Among other things, we also want to raise the ceiling on the Conservation Reserve Program to 40 million acres and increase investments to protect wetlands and shield farmland from development. My fifth principle involves integrating rural development into farm policy. Instead of just the wheat program, the rice program, the cotton program and so on, farm policy has to address the more fundamental question: how can we help preserve the nation's agrarian tradition by providing more rural economic opportunity, whether it's in farming, retail, tourism or Internet start-ups? Today, many rural Americans simply cannot make a decent living in production agriculture alone. I wish they could, but the fact is that many farmers need to supplement their income with off-farm opportunities; often that's the only way for them to stay on the land. So we need a diversified rural economy, one where entrepreneurship can flourish, one with roads and bridges as well as state-of-the-art information systems. Rural communities must also have the solid tax base, the clean streets, the safe neighborhoods, the good schools, the skilled labor pool everything that would make someone want to bring their family or business to a community. Thanks to information technology, in fact, there's actually never been a better opportunity for rural communities to close the economic gap that separates them from the cities and suburbs. No longer do you have to be in a major population center to do business with the world. With the right tools -- with a modem, a fax and on-line capability -- you can do it from a barnyard. We just have to make sure that small towns and rural areas have access to those tools. That's what President Clinton is doing with his effort to close the "Digital Divide", in which USDA is playing a major role. * * * * * * * * * * * * * * * The bottom line is this: agriculture has changed dramatically over the last 60 years; it's time for a farm policy that responds and adapts to that change. Simply bringing bulk commodities to market no longer provides adequate economic stability for most farmers. Today, about a quarter out of every consumer dollar spent on food actually makes its way into farmers' pockets. So we need to give farmers more ownership in the marketing and processing of their commodities. That means providing greater opportunities in value-added, consumer-ready goods and promoting co-ops, direct marketing and farmers markets. We have to make it easier for farmers to penetrate new markets, like organic agriculture, which is worth nearly $5 billion. Look at the market that ethanol has created for corn growers. You know, whenever I hear someone bash ethanol, I think to myself: this is someone who never had to stare down the barrel of two-dollar-a-bushel corn. We need to build on the ethanol program, exploring potential uses of other crops in the production of renewable energy sources and industrial goods. The President's budget for next year, in fact, includes a proposed $150 million initiative to promote increased production of biobased fuels, including ethanol and soy-based additives. We also cannot afford to be afraid of biotechnology. It will be one of the keys to feeding the world in a sustainable manner. But we must also do a better job of educating people as to its benefits. We must never, ever underestimate the importance of building public confidence in the food supply. At USDA, we have recently appointed an Advisory Committee on Biotechnology, to ensure that we're getting a broad range of advice on this issue. And we've also asked the National Academy of Sciences to conduct a review of our biotech approval process. A new century calls for a more holistic approach to farm policy, one that reflects the diversity of American agriculture...one that respects and supports the immigrant farmer growing water spinach in Massachusetts just as it does the grain belt family operation that has been on the land for five generations. A new farm policy must continue to celebrate farmers, their contribution and their unique role in society. And it must do that by embracing a more complete vision of the American farmer: farmer as effective risk manager...farmer as conscientious land steward...farmer as bold innovator ...farmer as resourceful, multi-faceted, flexible businessperson. But that new farm policy must be as fair and inclusive as possible. It must go beyond commodity-based programs. It must be national in scope, encompassing more regions, more farmers and more crops. It must be focused less on historic crop prices and bureaucratic formulas...and more on people and their dreams. Thank you very much. #