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Farm groups shocked at UC economist's testimony in WTO dispute

(Sunday, Sept. 7, 2003 -- CropChoice news) -- Harry Cline, Primemediabusiness.com, 09/02/03: California rice, wheat and cotton producers are infuriated at a prominent University of California agricultural economist who testified recently on behalf of the Brazilian government in World Trade Organization (WTO) dispute with the U.S. cotton industry.

"Unbelievable, dumbfounded, disappointed and shocked" are three of the reactions from farmers and other agricultural leaders who learned that Dan Sumner, director of the University of California Agricultural Issues Center in Davis testified in Geneva in late July that U.S. cotton farm programs have distorted world cotton prices to the detriment of Brazilian cotton farmers.

Sumner acknowledged that he was hired by an international law firm representing Brazil in its complaint against U.S. cotton. He said he was acting as a private, consulting economist, not as a representative of the university.

Sumner, a former assistant secretary for economics at USDA and former board member of the Commodity Credit Corporation, said his report to a WTO panel investigating Brazil92s complaints about the U.S. cotton program was an unbiased economic analysis.

"I would write exactly the same report for USDA if it asked me to, but they probably would not use it," said Sumner.

"It was exactly the case the National Cotton Council states when it goes to Congress," said Sumner. "The U.S. cotton program is what keeps the U.S. cotton industry afloat. "Without it a bunch of cotton farmers would not make it. They would shift to other crops, and the U.S. would not produce as much cotton and not export as much cotton."

Distorts trade

Sumner's analysis said the U.S. cotton program distorts world trade.

Sumner has worked with several commodity groups in California. Pistachios are one, and rice is another.

However, Charlie Hoppin, chairman of the California Rice Industry Association, said Sumner may not work with the rice industry again.

"I would be afraid to use him again," said Hoppin. "And I would think many segments of agriculture who now work with the university would start to become reluctant to work with the university that would allow someone to testify for a foreign government against U.S. farm policy."

Hoppin was among a group of representatives from cotton, wheat and rice who met with Sumner in mid-August to express their displeasure over the actions.

"The difficult part of this is Dan92s credentials. He is a widely recognized UC economist; confidant to the administration on trade and other issues with high security clearance," said Hoppin. "There is a real moral issue with what Dan did."

Buttonwillow farmer

Mike Frey, Buttonwillow, Calif., farmer and chairman of the California Wheat Commission, was one of those who met with Sumner.

Sumner provided policy advice to the secretary of agriculture on NAFTA and GATT negotiations and the 1990 farm bill. He resigned earlier this year from the USDA ag policy advisory committee.

"What concerns me is that someone involved with the university of California system who is intimately involved in setting national U.S. farm policy can so easily sell his services to a foreign government," said Frey. "To me it is a clear and obvious conflict of interest. It really surprises me that there is not a system of checks and balances for this type of activity within a university that was built on the backs of California and American agriculture."

Fresno County, Calif., cotton producer Don Cameron and chairman of The Cotton Foundation, said Sumner92s actions "were unbelievable. "I was very disappointed to hear what Dr. Sumner had done," he said, adding that when farmers met with him Sumner did not consider his trip to Geneva on behalf of the Brazilian unethical.

"I think I would do it again if asked," said Sumner. "I called it like I saw it. The correct information helps the policy process."

Sumner acknowledged that a Brazilian win in the WTO could impact federal farm policy on not only cotton, but other commodities as well.

"Clearly, something has to be done, but for the life of me I do not know what we can do at this point," said Frey.

Those angry at Sumner92s actions stopped short of asking that he be fired.

'Serious harm'

Earl Williams, president of the California Cotton Ginners and Growers Associations, said Sumner92s testimony "did serious harm to the U.S. cotton industry - serious harm to other commodity groups as well.

"And we are going to bring pressure to bear on the university that would allow someone from a public, taxpayer supported institution to have such latitude that can reap such harm on the supporters of the university," said Williams.

"Dr. Sumner is a brilliant economist...well respected, but apparently terribly naive when he says things like cotton farmers can plant other crops without the farm program," said Hoppin. "Agriculture is in a very delicate balance right now and a big increase in acreage for one crop at the expense of another crop could be disastrous.

"I would have hoped that if Dan or someone with his reputation who disagreed with U.S. farm policy would use that knowledge to improve farm policy within the American agricultural industry and not go to a foreign country to make his arguments."

Mark Lange, president and CEO of the National Cotton Council has known Sumner for more than 20 years, was "dumbfounded" to learn what Sumner had done. He was particularly surprised to learn of Sumner92s appearance on behalf of the Brazilian government just a month after the UC economist testified that more stringent farm program payment limitations for farmers would hurt American agriculture.

"He may have seen what he had done an academic exercise, but in an international court it is a heckuva lot more than an academic exercise for those of us who have a stake in what we believe is a program that is fiscally responsive and provides a minimal safety net for U.S cotton producers," said Lange.

"The U.S. cotton industry and its farm program are not building stocks and depressing prices and distorting world trade," said Lange.

Extra damaging

Lange believes Sumner's long history with USDA attached more significance to what he had to say and that was double damaging.

"It is one thing to do an economic analysis, but another thing to go before a WTO panel and argue Brazil's case against the U.S. for several hours," said Lange.

Williams had the sharpest words for Sumner's action when he said, "if this had been a military issue, what Dr. Sumner did would be called treason." Williams was particularly incensed that Sumner's anti-American cotton industry stand was taken in a court of world opinion.

"Agriculture is beaten over the head every day by U.S. government foreign policy. American agriculture is upside down more and more in world markets and a lot of it is because of our own government92s foreign policy," said Williams.

As with many trade issues, the Brazilian-U.S. dispute is complex, according to Mickey Paggi, director of the Center for Agricultural Business at California State University, Fresno.

Like Sumner, Paggi has extensive experience in U.S. farm and world trade issues.

Paggi subbed for Sumner at a recent Western Cotton Conference in Fresno when conference sponsors, Western Cotton Shippers Association, withdrew an invitation for Sumner to speak in the wake of his appearance in Geneva.

Brazilian contention

The Brazilians contend that because the U.S. is spending more now than it did in 1992 in support of the U.S. cotton industry, it is violating WTO policy.

The Brazilians are "painting the issue with an awfully broad brush" according to Paggi.

Brazil has greatly expanded its cotton production and farmers there are demanding their government take action against what they perceive as the culprit for lower world prices, the U.S. cotton program.

"The same people in Brazil who are complaining about the U.S. cotton program were not long ago complaining about U.S. soybeans. For some reason they stopped complaining about soybeans and started complaining about U.S. cotton," said Paggi. "Maybe it is because soybean prices have gone up."

"If you look at the numbers in the Brazilian92s argument, you would say they had a case. Iron clad? Maybe not," said Paggi.

"What we are saying is that there are many reasons for the downturn in world prices - the Asian financial crisis, currency values, faltering economies, etc." he said. Paggi added that it is a "fairly large stretch" to say the U.S. cotton program alone is causing the downturn in world prices." It may be a year or more before the WTO rules on the Brazilian's complaint, but if the U.S. loses, the repercussions will reverberate all the way to Davis, Calif.