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May 4, 2001

The most important priority will be expanding U.S. agricultural trade. That will include reducing farm barriers to U.S. agricultural products and a Free Trade Area of the Americas treaty (FTAA). They will also be working to reduce tax and regulatory burdens on farmers and ranchers, and will encourage development of new uses for agricultural products and research into food safety.

Secretary Veneman made the following points on where the Bush administration will be going on farm bill legislation:

• Farm policy should be crafted in the context of the food and fiber industry as a whole, and should not focus exclusively on commodity production.

• Farm policy makers are struggling to find a new approach, because the farm economy has fundamentally changed.

• There were 7 million farms in the U.S. in 1930, and 70 years later we still speak of the farm economy as if nothing has changed.

• Many links of the food chain change and continue to change. Policy is not yet addressing those changes.

The Bush administration will focus on four primary areas in farm policy:

(1) Boost agricultural trade.

(2) Reduce tax and regulatory burdens while protecting our natural resources.

(3) Support food research to enhance food safety and new uses for agricultural products.

(4 Create a safety net consistent with free market principles for United States producers, but at the same time recognize the fine line between an adequate safety net and an unhealthy dependency.

One of the key questions to be asked by those concerned with ag policy is, "What is the sustainable level of funding for ag-spending?" The secretary does not favor expanding farm programs to include commodities not currently covered by the farm bill.

Veneman expressed concern over the House Agriculture Committee's approach in designing the next farm bill, which has been to solicit specific recommendations from farm and commodity groups. She said she believes the next farm bill must move beyond commodity price programs—a package that moves policy forward for the whole food system.
Source: AFBF Speedline; DTN Washington Ag, April 19, 2001; Pro Farmer, April 21, 2001

U.S. producers embrace biotech
U.S. crop producers continue to embrace biotechnology. Despite the StarLink flap and worries about consumer resistance in Europe, total acreage planted to biotech crops will increase in 2001.

Biotech varieties will jump to 63 percent of all U.S. soybeans this year, up from 54 percent last year, according to the March Prospective Plantings report. Biotech corn will dip to 24 percent of the crop, versus 25 percent last year. Biotech cotton varieties are estimated to increase to 64 percent from 61 percent last year.
Source: Doane's Agricultural Report, April 6, 2001

China seeks WTO developing nation status
China wants to be classified in World Trade Organization (WTO) as a developing nation, which would allow its agricultural subsidies to equal 10 percent of the value of its farm production.

The United States wants China ranked as a developed country for agricultural trade purposes, which would limit subsidies to 5 percent of the value of production.
Source: DTN Midday Cotton Commentary, April 23, 2001

Oranges, beef and cotton, oh my!
First it was oranges, then beef. Then we heard that Brazil could grow enough soybeans to drive us out of the export market.

What could be worse? There's a rumbling that cotton can't be far behind. Why? Because it's the perfect rotation crop for soybeans.
Source: Landowner, March 19, 2001, Vol. 23, No. 6

Keeney urges 'green' farm bill
Dennis Keeney, noted agronomist, is urging a new farm bill that pays farmers for clean water and renewed soils—not for an acceleration toward an industrialized grain-producing system.

He believes we now have the obligation to explore more sustainable, farmer-friendly farm policies, rather than continue producing more grain when it is not needed.

His approach would favor a U.S. agriculture where:

•Small niche market and family farms dot the countryside.

•Farmers are involved in "local food systems," supplying consumers much more of their daily sustenance rather than focusing almost exclusively on grains for meat and export.

Significant amounts of land are used for biomass farming for energy, trees and grass for fiber, and grazing for milk and beef.

Research and demonstration programs in sustainable agriculture are thriving.

Keeney said he believes there's no need to "push our agricultural production to the point of environmental and social destruction to feed the world, because the increase in grain production elsewhere, especially in South America, provides the world with far more of a buffer than most futurists have been predicting."
Source: LandOwner, April 23, 2001

Western Hemisphere trade bloc advocated
At a recent meeting in Quebec, leaders of the Western Hemisphere approved a proposal to create the world's largest free-trade zone. The leaders announced they will begin negotiations for Free Trade Area of the Americas (FTAA) that would be implemented by 2005. The FTAA would stretch from Alaska to Argentina and include roughly 15 percent of the globe's population and an estimated $3 trillion in international trade.

It is doubtful the United States will satisfy Latin American demands and consent to reduce its domestic agriculture subsidies as part of the proposed Free Trade Area of the Americas, according to Agriculture Secretary Ann Veneman.

"The likelihood is that we would not agree to such reductions," she said. "They would be better negotiated probably in the WTO (World Trade Organization).

She said the United States would be open minded about the next round of FTAA negotiations, and that U.S. representatives will enter the discussions "with all of the issues on the table. That is what a negotiating process is all about."

Latin American countries continue to pressure the United States to agree to discussions about reducing domestic farm subsidies as part of the FTAA talks. Latin American producers argue the subsidies, which do not exceed WTO limits, give U.S. producers an unfair advantage.

The United States maintains that negotiations on domestic farm subsidies belong under the realm of the WTO to ensure European Union and Japanese farm programs are included.
Source: Speedline: AFBF, Executive Newswatch, April 23, 2001

Retail beef prices record high in March
Average retail beef prices for choice carcasses set a new record high in March in nominal dollars according to USDA. Every month so far this year, beef prices have set new record highs.

March average beef prices were over 12 percent above 12 months earlier. For the first three months, beef prices have averaged almost 12 percent above the same months in 2000.

All segments of the industry shared in these higher retail prices. Live fed cattle prices for the first quarter were over 14 percent above 2000 while the processor retailer margins were up over 9 percent and the packers margins were up over 10 percent when compared to 12 months earlier.

With production down this much, there is doubt that demand at the consumer level has shown much, if any, growth in early 2001, compared to a year earlier.
Source: Cattle Outlook, Glenn Grimes & Ron Plain, Agricultural Economists, MU, April 20, 2001