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February 2, 2001

Farm Bill Debate
Producer concerns are many...

The next farm bill will have to address numerous concerns ranging from providing adequate support levels to farmers and meeting international trade obligations to enhancing the environment and justifying farm spending to an ever-skeptical public, according to speakers at a conference on the 21st Century Commission on Production Agriculture's upcoming report.

Speakers included Missouri Farm Bureau President Charles Kruse, Indiana Farm Bureau Vice President Don Villwock, who are both members of the commission that was created by the 1996 Freedom to Farm law, trade consultant Paul Drazek, and Iowa State University agricultural economist Bruce Babcock. American Farm Bureau Federation President Bob Stallman, also a member of the 21st Century Commission, moderated the session.

A final draft of the commission's report is expected to be approved soon, and was scheduled to be presented to members of the Senate and House Agriculture committees at press time. Since Agriculture Secretary-designate Ann Veneman has won confirmation, the report will soon be presented to the White House.

According to Kruse, the next farm bill must "deliver the levels of help and assistance that are needed by America's farmers ... and provide a maximum amount of pressure, every day, on those countries we compete with."

Kruse says one way to evaluate U.S. farm policy has always been to listen to what competing nations say about it.

"It's interesting to see how the Europeans evaluate our farm policy," Kruse said. "If they do like it, we need to back up and evaluate what we are doing. If they don't like it, then we are probably doing what we need to do."

Through his Farm Bureau and commission involvement, Kruse said he has heard several common themes from the farmers that have contacted him. He said farmers like the flexibility created by the 1996 farm law, because "we no longer have government-mandated (acreage) setasides we have to deal with. We don't have huge government stocks (supplies) hanging over our heads."

Kruse said farmers also want an "automatically-triggered, income safety net, so we don't have to continually go back to Congress" when the farm economy hits bottom. "These ad-hoc ways of getting assistance are not the way to do it," he said.

Kruse said some of the economic difficulties experienced by farmers today stem from unfulfilled pledges, related to tax and regulatory relief and market development, made during the last farm bill debate as trade-offs for a phasing down of guaranteed government payments.

"We certainly wouldn't give A's in all three of those general categories," he said, noting that progress has been made in tax reform and trade development.

But, in the reform of costly regulations, Kruse said the United States has "taken steps backward."

Kruse said farm spending limits mandated by terms of the world trade agreement will be one of the challenges facing farm bill writers. He said the United States needs to be "very, very careful" regarding domestic farm program spending caps in the trade agreement's "amber box" provision. He said Europeans "would love to have us blow the stack off the `amber box', but I believe we can (respect the "amber box" limits) in a way that makes sense for U.S. farmers and in a way that is not trade-distorting."

Villwock said he expects the commission's final draft to be approved soon. He sees one major "universal" belief about the shape of new farm policy.

"Producers around this country think markets should send them the signals, then they can decide what to plant," Villwock said.

Villwock predicted there may be a "rebalancing" of loan rates among commodities, particularly in the soybean sector, but he said the loan deficiency payment system was problematic.

The Indiana farmer said that, depending on the commodity, production from as many as one in every three U.S. acres is exported. That fact, he said, underscores the vital importance of trade as a farm bill priority, and highlights the need to pass fast-track trade negotiating authority for the president.

Another "almost universal" point among commission members, according to Villwock, was the belief that "policies of setasides do not work and return acres to our competitors." He said statistics have shown that during past setaside programs, every U.S. acre taken out of production resulted in an increase in foreign acreage of 1.2 acres.

Villwock does not envision a "massive adjustment" in conservation or CRP programs, but special efforts may be further emphasized in the conservation reserve program to include more filterstrip and waterway acres.

Paul Drazek, of DBT Associates, a Washington, D.C.-based agricultural trade consulting firm, outlined the challenges of crafting a farm policy that will conform to international trade agreement obligations.

"The U.S. takes it very seriously when other countries don't live up to their obligations, so I think it's important that we live up to our commitments," said Drazek, who served as Agriculture Secretary Dan Glickman's trade adviser from 1995-1998.

Drazek said it would be tricky, but not impossible, for the next farm bill to provide a new countercyclical support program that doesn't exceed limits on domestic supports that the United States negotiated with the European Union and other countries. He said that most types of payment mechanisms now being proposed could fall under the "amber box" category, which imposes tight limits on spending.

"The question is whether a countercyclical program can be fashioned to conform with World Trade Organization requirements and still allow the U.S. to press for other nations to reduce trade-distorting payments," said Drazek.

Drazek said his firm has developed for discussion purposes a plan that would provide countercyclical payments based on historic average gross receipts, which would comply with WTO guidelines because the payments wouldn't be tied to current prices or production.

Bruce Babcock of Iowa State said discussion of a new farm bill will raise the profile of agriculture's "public relations problem." He said that's because there is not now any "broad public concern" being addressed by the large government payments to producers made the last few years.

"There will be a price to pay if agriculture receives government payments without the public seeing any benefits," Babcock said.

The economist asserted that two possible justifications the public would accept for continuing farm program payments would involve environmental protection and long-term risk management protection that doesn't duplicate current programs.