Tuesday, September 9, 2003

U.S. farmers are worried that a new global agreement that would govern the way they raise and sell crops would include too many compromises with other countries, benefiting overseas competitors.

Ministers from 146 countries are set to meet in Cancun, Mexico, starting today to rework World Trade Organization rules in the hope of spurring global economic growth. A new agriculture agreement is the meeting’s centerpiece.

Across the country, farmers see opportunities but are worried about foreign competition.

Chesapeake Fields, a Chestertown, Md., farm operation, is managing a new project to plant about 2,000 acres of a unique soybean variety on the Delmarva Peninsula and export the crop to Japan.

The company, troubled this year more by local weather than foreign competition, is opening up a niche in the foreign market with a carefully developed product — a win in increasingly global agriculture markets.

“I think there is tremendous opportunity with [international] trade,” said John Hall, Chesapeake’s president.

But, like many U.S. farmers, Mr. Hall is at best ambivalent about plans to liberalize agricultural markets.

“Do we open markets at the expense of the American farmer? Third World countries have become our competitors for commodities, and that’s eroded profitability,” Mr. Hall said.

The Bush administration is keen to reach an agreement that would reduce costs of selling U.S. products overseas and at least change the way governments financially support farmers by eliminating programs that distort trade.

“Year in and year out we produce far more than we need to fully meet the demand here at home, so we naturally turn to the foreign markets,” U.S. Agriculture Secretary Ann M. Veneman said last week in a conference call with reporters.

The Agriculture Department forecasts that exports next year will reach $57 billion, up $1.5 billion from this year. Cotton, rice, wheat, and animal products, such as beef, are major sellers. About 38 percent of all soybeans are sold overseas.

“So it’s obvious that we must have increased access to the fast-growing markets elsewhere in the world, and we have to bring down the trade barriers in order to gain this access,” Mrs. Veneman said.

But some farmers say the proposed solution is not so obvious. Groups that represent family farmers, like Farm Aid, are skeptical of free trade and its effect on farm incomes.

The Institute for Agriculture and Trade Policy in Minneapolis, another free-trade skeptic, blames burgeoning exports for lower prices on farm goods and says that WTO proposals would hurt farmers around the world.

“There is growing evidence that rapid agricultural trade liberalization … has increased rural poverty and food insecurity and devastated livelihoods of millions of small farmers and rural women in the South — and to a lesser but still serious extent, family farmers in the North,” the institute said in a report.

Despite some complaints, a large component of U.S. agriculture has lined up behind the Bush administration’s free-trade agenda — so far.

A coalition of major U.S. farm groups Monday hedged support on easier access to foreign markets, relatively steeper cuts in subsidies for the European Union, continuation of some farm supports, and continuation of U.S. food aid programs, which some blame for lowering world prices.

“The elimination of export subsidies by trade entities such as the European Union continues to be a critical element of any final agreement,” said Bob Stallman, president of the American Farm Bureau.

“The degree to which [American Soybean Association] members will support reductions in trade-distorting domestic programs is dependent on the degree to which market access is improved in both developed and developing countries,” said Ron Heck, association president and a soybean producer from Perry, Iowa.

The United States and the 15-nation European Union last month wrote a joint proposal that would liberalize trade by lowering tariffs.But the two sides were unable to agree on any numbers, and several countries or groups of countries quickly followed with competing proposals on ways to lower some tariffs and cut subsidies.

Other nations complain that the U.S.-EU proposal does not do enough to help poorer nations. All parties hope that by Sunday they can agree on a document that will allow negotiations to move toward a January 2005 deadline.

Subsidies, payments to farmers by governments, are one of the most divisive issues. The European Union, United States and Japan offer some of the heftiest payments to their farmers.

Latin America and the Caribbean lose about $8.3 billion in annual income, Asia loses about $6.6 billion and sub-Saharan Africa loses close to $2 billion from subsidies and protectionism in industrialized countries, according to a study by the International Food Policy Research Institute, a group funded partly by the World Bank.

But U.S. farm groups say that even those countries must open their markets to U.S. goods.

On the Delmarva Peninsula, poultry producers such as Perdue Farms, for example, look to export markets as a significant source of revenue.

“Delmarva is one of the leading poultry-producing areas of the country. Like any of the other regions in the poultry belt, exports have become increasingly important,” said Toby Moore, vice president of communications for the USA Poultry and Egg Export Council, a trade association with headquarters outside Atlanta. Perdue referred trade-related questions to the group.

About 15 percent of all U.S.-produced chicken, by volume, is exported, Mr. Moore said. But much more could reach overseas markets with stronger trade agreements, he added.

“Market access is one of the big issues,” Mr. Moore said.

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