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April 20, 2001

Stallman: Agriculture must capture market opportunity

Farm Bureau's vision for agriculture's long-term future is one of a dynamic growth industry that depends more on capturing revenue from a diverse marketplace. But in order for that vision to become reality, a number of steps must be taken on the trade, farm policy and regulatory fronts, according to American Farm Bureau Federation President Bob Stallman.

Speaking recently in San Antonio before Farm Credit Bank officials from his home state, Stallman said U.S. agriculture must continue to build export demand, farmers must capture more "value-added" dollars, and market-based solutions must supplant costly regulations faced by farmers.

"We can build demand by continuing to pursue a level playing field in international markets," said Stallman, a Texas rice and cattle producer. "We must finalize the elimination of unilateral trade sanctions and open trade with these markets now. We must increase market promotion and market access. We must pass trade-negotiating authority. We must fight world hunger with increased food assistance programs."

Stallman said one key would be the future ability of farmers to invest in and capture value-added dollars—the process of taking raw agricultural commodities higher up the production ladder before they are sold. He said such farmer-owned ventures would "provide for rural development, increase competition in the marketplace, as well as increase farm income from the market."

The production of renewable fuels, such as ethanol and biodiesel, should be cornerstones of that effort, according to Stallman.

He called for a national energy policy that includes a larger role for renewable fuels made from farm commodities.

"Agriculture can provide fuels that improve air quality and make the nation less dependent on foreign oil," he said. "This energy contribution improves the environment, decreases reliance on foreign oil, creates jobs, dramatically increases agricultural markets, and decreases farm program costs as markets grow."

Market forces, according to Stallman, also can be used to enhance environmental objectives.

"U.S. farmers have historically shown that if the market provides sufficient incentives, we can produce an abundant supply," Stallman said. "Similarly, if a voluntary incentive is offered for a desirable environmental outcome, farmers will overwhelm America with improved soil conservation, water quality, air quality and wildlife habitats."

While Farm Bureau's long-term objective is to enable farmers to capture more income from the marketplace and less from government payments, a current economic gap needs to be bridged, according to Stallman.

"Bridging the gap between where we are now and where we want to be in the future requires an expanded public investment in agriculture," Stallman said.

According to Stallman, part of that "public investment"—in areas such as conservation, research and export promotion—directly positions agriculture for renewed growth and are "needed to lay the base today for responsible growth in our industry."

Another part of the public investment, Stallman said, would recognize the short-term reality that America's farm and ranch families need income support in light of the current farm economy.

"America's farmers and ranchers face decreased prices, increased input costs, increased global competition and increased regulatory cost, and these factors are not expected to change soon," Stallman said. "Each of these factors contributes to the profitability of our farmers and ranchers and their survival in this industry. Farmers and ranchers live in a changing economy and face many situations in which they have no control—prices, weather and disease."

Farmers and ranchers, he said, continue to be faced with falling incomes. The Agriculture Department predicts farm income will decrease to $41.3 billion in 2001, $4.1 billion less than 2000's $45.4 billion, and the trend is expected to continue the next couple of years.

Stallman said Farm Bureau's income assistance proposal is a countercyclical approach, which means support would be available when economically necessary and "would decline as opportunities for market growth are realized." Also, any income assistance provided during these down times must be consistent with international trading rules.

"To get us into the next farm bill, producers will need supplemental economic assistance, an additional $9 billion this year and $12 billion a year more until the new farm bill kicks in," Stallman said.