Farm Programs Must Keep Trade In Mind, Ag Secretary Says
Last updated Thursday, April 12, 2007 10:23 PM CDT in News
By Doug Thompson
The Morning News
FAYETTEVILLE -- A revision of U.S. government farm programs this year must take World Trade Organization policies into account or U.S. exports will be shut out of foreign markets, the U.S. agriculture secretary told University of Arkansas students Thursday.
"It makes no sense to write farm policy that paints a bull's-eye on the back of our farmers," said Agriculture Secretary Mike Johanns, who spoke at the National Agricultural Law Center at the University of Arkansas School of Law.
The trade organization recently struck down U.S. programs on cotton, declaring them an unfair subsidy, he said. Corn and rice policies are under examination by the group, too, he said.
Such scrutiny is a fact of life in worldwide trade, and ignoring it in the ongoing revision of farming legislation is not wise, he said.
"We're either going to write our policies in the U.S. with this in mind, or we're going to let the WTO do that," defining farm policy by striking out portions it does not approve, Johanns said.
The Farm Bill is the underlying legislation that guides all U.S. government farm programs. It is renewed every six years and comes up for review this year. Johanns, a former governor of Nebraska, is drafting the administration's farm policy proposals and is also, with the cooperation of Congress, planning to release much of it in the form of draft legislation.
The secretary also said that recently released estimates of crop acreage show that U.S. farmers expect to plant 15 percent more corn than last year. Northwest Arkansas' poultry and cattle farms have encountered sharply increased grain prices as more grain goes into alternative fuels, such as ethanol.
"Two years ago, when I was governor, I read articles on the tremendous surpluses of corn," Johanns said. "There was a lot of worry about price and expectations of a bumper crop. People were thinking that farmers were going to have to store some of the corn surplus in their spare bedrooms."
Then fuel prices spiked and demand for ethanol, a fuel refined from corn, spiked too, he said.
"Corn prices went up from $2 a bushel to $3, $3.50 and $4," Johanns said. "Farmers are diverting cotton acreage to corn, and soybean acreage to corn. Although we don't know what growing conditions will be like, we're looking at a very large crop of corn. This is the marketplace working."
Johanns also said that the price of bulk farm commodities make up a very small part of the cost of processed food, so consumers should not fear any sharp increases because of rising demand for those commodities.
Stanley Reed, chairman of the university's board of trustees, said makers and distributors of processed food should not be surprised when farmers take a better deal elsewhere when they find one.
Farmers get about 19 cents out of every food dollar, and must get a better ratio with ethanol, said Reed, president of the Arkansas Farm Bureau Federation.
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