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Panel: Supply management is the answer

(Tuesday, July 29, 2003 -- CropChoice news) -- Richard Oswald, DTN, 07/28/03: KANSAS CITY (DTN) -- "Men will not always die quietly. For starvation, which brings to some lethargy and a helpless despair, drives other temperaments to the nervous instability of hysteria and to a mad despair. And these in their distress may overturn the remnants of organization, and submerge civilization itself in their attempts to satisfy desperately the overwhelming needs of the individual. This is the danger against which all our resources and courage and idealism must now cooperate."

-John Maynard Keynes, 1883-1946

The work of John Maynard Keynes comprised a portion of the panel discussion on competition and international trade held at the annual meeting of Organization for Competitive Markets (OCM) July 25. Those participating on the panel were Daryll Ray of University of Tennessee, Minor Sinclair of Oxfam America, Mark Ritchie of the Institute for Agriculture and Trade Policy, and Leo McDonnell of R-Calf USA.

Among Keynes many accomplishments was the establishment of the ITO, an international trade organization which Congress chose to ignore, and the IMF (International Monetary Fund) which still survives today -- even though it does not now function as Keynes intended.

Keynes is most famous for his contribution to the construction of the New Deal. New Deal policies were credited with helping to end the Great Depression. Much of that legislation still survives today but, according to Mark Ritchie, GATT has been successful in gutting many of the laws regarding treaties on foreign trade. Ritchey said GATT and Fast Track allows the administration to circumvent trade law through the use of trade agreements and thereby avoid the use of closely scrutinized treaties. Under Fast Track, Congress may not tinker with trade agreements but must either accept or reject them in whole. This contrasts with treaties which may only be accepted by Congress in part, with portions considered undesirable or illegal being deleted or revised.

Ritchie believes agriculture has been the whipping boy of trade agreements and that large business interests have benefited. It is his contention that when negotiators win concessions for US business, they grant concessions that sacrifice the best interests of US farmers and ranchers. He feels Congress turns a blind eye toward those concessions anytime large corporate interests will benefit. He pointed out that current governmental policy is non-interventionist and has been since Ronald Reagan took office. This is in contrast to the beliefs of Keynes who taught that only through government action could trade and economic imbalances be corrected.

Daryll Ray showed graphs depicting the relationship of US agriculture policy, grain supplies, and price movement to illustrate how the lack of domestic supply management has negatively affected prices received by US farmers. He said that data from the years following the 1995 farm bill shows that farmers cannot hope to produce their way to prosperity. That is because during the past few years of all-out production, both domestic and foreign production has increased, even as world prices decline. Ray pointed out that with the admission of China to the WTO, US farmers had expected corn prices to stay at 1996 levels for many years to come and that US exports of corn to China would average near 500 million bushels annually. However what really happened was that the Chinese increased exports of their own corn by nearly 500 million bushels. To add insult to injury, those exports of Chinese corn came at the expense of US exports resulting in the actual shortfall of nearly one billion bushels of US corn sales.

Minor Sinclair pointed to his experience in the small country of Belize where US corporations bought large tracts of farmland. The presence of companies like Coca Cola and Hershey's was devastating to the local farm economy with the corporate focus on the production of only two commodities, oranges and cocoa, raised to satisfy foreign demand. He said that those land purchases removed many families from their farms and deprived them of their livelihood. He also pointed to the Mexican corn market where producers claimed harm from US imports. Even though those producers were hurt economically, he said, they continued to produce, driving local prices even lower. He felt that imports of US products into Mexico not only hurt small producers in that country but allowed big agribusiness to penetrate into areas where it might otherwise be unable to compete. His opinion was that government intervention on behalf of small producers through supply management was the only solution.

Leo McDonnell helped to establish R-Calf USA about three years ago when he became disenchanted with the treatment of US beef producers. He said membership in R-Calf has since soared to over 8,000 producers. Leo wonders why USDA compares beef imports and exports based on market value when the measurement of every other commodity is based on actual tonnage. He stated that saying US beef exports surpass imports in dollars is misleading when import tonnage is greater by nearly 20%. According to McDonnell, the lower value of beef imports is misleading when it comes to determining the actual harm done by them to US beef producers.

Some may think that the last great government interventionist was Richard Nixon. To have that opinion ignores the current man in charge of the Fed and his interest cutting actions. Keynesian theory still seems to live in US monetary policy and Alan Greenspan. If supply management is the final solution for the US monetary policy, then why -- OCM panel participants seemed to ask -- is it not the answer for US farms?