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Senate panel narrowly endorses CAFTA; other news

(Friday, July 8, 2005 -- CropChoice news) --

1. Four current issues that could impact U.S. farm policy
2. Forage acres increasing, threatening prices
3. Senate panel narrowly endorses CAFTA
4. WORC urges House to declare independence by opposing CAFTA
5. NFU commends Senate legislation to implement COOL
6. Agriculture without farmers

1. Four Current Issues That Could Impact U.S. Farm Policy

Update for Monday, July 4, 2005


Over the past few weeks, an interesting confluence of events have come together to influence the debate on U.S. domestic farm policy.

To be sure, from a technical standpoint, none of these events represent legally binding instruments that will actually force the U.S. Congress to change the Farm Bill.

Nonetheless, these events when taken together, do tend to illustrate a trend, or at least a political drift, in a particular direction.

That direction may be positive or negative and will depend on individual views and perspectives.

But generally speaking, these events seem to suggest a move away from the use of crop subsidization as a tool to achieve domestic agricultural goals.

In random order, these four events include:

* The July 1st deadline for the U.S. to comply with the W.T.O. cotton decision.

* The G-8 meeting in Scotland this week, where British Prime Minister Tony Blair has made aid to Africa a chief theme.

* Tony Blair's on going call for the EU to reform, or to "get rid" of the Common Agricultural Policy -C.A.P. (For more on the C.A.P, click here, 36 page pdf).

* And, recent EU sugar reforms, which were driven in part by a W.T.O. ruling against some existing EU sugar programs.

Issue One- The W.T.O. July 1st cotton compliance deadline.

As FarmPolicy noted in Friday's update, the U.S. Department of Agriculture recently announced "changes in three export credit guarantee programs to comply with a recent World Trade Organization (WTO) cotton decision in a dispute with Brazil."

The cotton program known as Step-2 was not mentioned in the U.S.D.A. release.

On Friday afternoon, Reuters writers Sophie Walker and Charles Abbott reported that, "The United States reworked a loan guarantee program that helps farmers export their crops, to comply with a world trade ruling against its cotton policy, but drew criticism for leaving its main cotton subsidy unchanged."

The Reuters item went on to note that, "But the U.S. announcement did not touch the so-called Step 2 cotton subsidy, which pays exporters and millers to use higher-priced U.S. cotton. Step 2 was a target in the WTO case and was thought certain to be eliminated. Step 2 payments have ranged from $182 million a year to as much as $640 million.

"Any change in Step 2 would require action by Congress, said USDA spokesman Ed Loyd, and a decision would be made 'in the near future' on what to do.

"The administration was obliged to act by Friday under a WTO ruling earlier this year that lavish U.S. subsidies distorted cotton trade globally. Brazil, one of the world's largest cotton exporters, brought the complaint.

"A reduction in export subsidies was a good step but the prize is Step 2, said Elio Tollini, executive secretary of the Brazil Association of Cotton Producers.

"'The WTO ruling said the United States must end its Step 2 subsidies. Anything less is not acceptable and insufficient,' Tollini told Reuters on Friday in Sao Paulo."

Also on Friday, Elizabeth Johnson reported via the OsterDowJones Commodity Wire, that, "The Brazilian government will seek permission from the World Trade Organization, or WTO, to retaliate against the U.S. after it failed to reduce subsidies to U.S. cotton in line with a recent ruling, Luiz Claudio Carmona, the head of multilateral affairs for Brazil's Agriculture Ministry, told Dow Jones Newswires on Friday.

"Twelve months ago, the WTO made a landmark ruling condemning U.S. cotton subsidies and subsequently demanded it eliminate export subsidies by June 30.

"'The demands haven't been met and Brazil has no choice but to request permission to retaliate,' said Carmona.

"However, Carmona said Brazil wouldn't necessarily retaliate once they get permission.

"Brazil's farmers are much more interested in enforcing the WTO decision, in order to gain greater access to export markets, than imposing tariffs on U.S. exports of other goods."

Later in the article, Ms. Johnson stated that, "Brazil's cotton growers and government derided the changes in the [U.S.D.A.] announcement, which they said will have no impact on the U.S.'s market-distorting cotton exports.

"'The U.S. measures are purely cosmetic and completely ignore the decision,' said Pedro Camargo Neto, the instigator of Brazil's cotton case in 2001 when he was the production and trade secretary at the Agriculture Ministry.

"'For us, anything less than the elimination of Step-2 subsidies is a big problem,' said Helio Tollini, the executive director of Brazil's Cotton Producers Association, Abrapa."

Also on Friday, Forrest Laws, in an article posted at the Delta Farm Press webpage, reported that, "Reports quoted Brazilian officials as saying they were taking the step to preserve their rights, but that the government had not made a formal decision to retaliate against damages purportedly caused by the U.S. cotton program.

"National Cotton Council leaders have been consulting with USDA and the U.S. Trade Representative?s office on responses to the ruling, but have declined comment on what direction those responses might take."

Alan Beattie, in an item posted at the Financial Times webpage on Friday, added that, "But [the U.S.D.A. announcement] did not reveal plans for the so-called 'Step 2' programme which compensates American cotton millers and exporters for using more expensive US cotton.

"The US Department of Agriculture said a decision would be taken soon. Mike Johanns, the agriculture secretary, said: 'The administration continues to evaluate other steps that could be taken to comply with the WTO.' Both the export credit and Step 2 payments were criticised in the case brought by Brazil to the WTO, which argued that the subsidies lowered the world price of cotton and hurt Brazilian farmers.

"The case was backed by west African nations where the subsidies are estimated to cut cotton farmers' incomes by $250m a year."

Bartholomew Sullivan reported in Saturday's Commercial Appeal (Memphis, TN) that, "'I had hoped Brazil would adopt a more constructive approach to the implementation process instead of moving to retaliate at the first opportunity,' said Woods Eastland, president of the Memphis-based National Cotton Council. 'Brazil is aware that changes to U.S. law do not happen overnight.'

"A persistent critic of cotton subsidy policy, Raymond C. Offenheiser, president of Oxfam America, said the USDA's action was a 'necessary first step,' but he said he was disappointed the Bush administration hadn't moved to eliminate Step 2."

The article also indicated that, "USDA spokesman Ed Loyd said late Friday the agency did what it could do on its own authority but that congressional action was required to address Step 2 and other issues.

"Critics of the USDA's farm subsidy programs said the adjustments to the Commodity Credit Corporation programs were expected. But they said so was the elimination of the Step 2 Program, a subsidy arrangement by which exporters and domestic textile operators are encouraged to buy higher-priced American cotton. The program has paid out as much as $600 million in a single year."

Mr. Sullivan's article also included this political analysis, "Anticipating the bite of trade rulings, the Agriculture Department's 2006 budget released in February proposed a cap on commodity payments, although some state legislators said they'd work to scuttle the plan."

(For more on this political angle, see this FarmPolicy update from Feb. 25, entitled, "Proposed Budget Cuts: Deficit Reduction vs. Trade Promotion").

"Rep. John Tanner, D-Tenn., whose district ranks seventh in the country in cotton production, praised the USDA's hands-off approach to Step 2.

"'We are disappointed that the Brazilians insist on litigating this issue instead of negotiating with the United States,' Tanner said. 'We look forward to working with the administration to ensure any changes in the policy are not harmful to the livelihood of cotton growers in Tennessee.'

"Rep. Marsha Blackburn, R-Tenn., whose district contains rich cotton fields east of Memphis, said the USDA action made sense.

"'Tennessee cotton farmers depend on access to foreign markets to make a living, and whether it's fair or not, we're going to have to comply in order to keep that access.'"

The editorial board at the Atlanta Journal Constitution opined yesterday on this development saying, "Brazil, which filed the unfair trade complaint, has threatened to remove patent and copyright protection at home for U.S. drugs, software and movies unless the subsidy issue is resolved. Legislative changes by Congress will be needed for the United States to comply completely with the WTO ruling and avoid retaliation. The export aid issue has been fixed administratively.

"Agriculture accounts for less than 1 percent of the U.S. economy's output, yet it has political support out of proportion to its size. That makes it difficult to change farm policy and eliminate taxpayer-funded support programs.

"The 1996 farm bill was to have phased out most crop subsidies by 2002, in return for greater financial support during the transition period. But the 2002 farm bill turned policy upside down and added billions more in subsidies. Before passage of that legislation, then-Agriculture Secretary Ann Veneman was quoted by the Washington Post as saying the bill 'creates pressure for more government payments, thereby creating a self-defeating and ultimately unsustainable cycle.'"

In conclusion, the AJC editorial stated that, "The problem -- whether with Brazil's complaint or subsidies in general -- won't be fixed overnight. Sen. Saxby Chambliss (R-Ga.), chairman of the Senate Agriculture Committee, has been quoted as acknowledging the need to satisfy the WTO ruling but wanting to spare cotton farmers the related disruption. It's not clear that's possible. American farmers accustomed to government support since the Depression deserve some help adjusting to fair global competition. But they can't make the jump with one hand in Uncle Sam's pocket."

On the other hand, Mark Lange, President and CEO of the National Cotton Council, also authored an Op-Ed on this topic which was also published in yesterday's AJC.

Mr. Lange noted that, "The ruling by the World Trade Organization does not require elimination of the U.S. cotton program, and an appropriate response to it will not fundamentally change the significance of cotton to Georgia and the United States.

"Contrary to media reports, the U.S. cotton program is not responsible for low world cotton prices and has not damaged the interests of the world's cotton farmers, including Brazil's. Over the past five years, Brazilian cotton acreage has increased by 60 percent while cotton acreage in the United States is essentially unchanged.

"Changes in the U.S. cotton program will not have the kind of international impact trumpeted by Brazil and others. Five independent studies have analyzed the U.S. cotton program and found that its impact on world prices ranges between 0 and 3 percent. Those studies were generally based on the U.S. ending all subsidies to cotton ? not just those judged by the WTO panel to need adjustment."

In conclusion, the item noted that, "While it complains of U.S. subsidies, Brazil takes advantage of the research and promotion programs paid for by U.S. cotton growers since the 1960s that helped make the United States the leader in per capita consumption of cotton products. The United States does not drive down cotton prices ? U.S. promotion programs actually support prices by influencing consumer preferences and increasing demand for cotton products.

"Despite a ruling that it strongly disagrees with, the U.S. cotton industry continues to value the international system of trading rules embodied in the WTO. The system benefits all those who depend on international markets. The National Cotton Council is working with Congress and the administration to find a way to comply with the WTO decision while maintaining workable cotton programs and a healthy U.S. cotton sector.

"It is clear, however, that effective reform can only be done on a multilateral basis involving all subsidizing countries and all commodities. WTO negotiations should be the forum for paring back all trade distorting practices. The best way for U.S. negotiators to foster trade rules that benefit all Americans while ensuring equitable treatment for American farmers and ranchers is to work from strength, not after having unilaterally 'disarmed.'"


Issue 2- The G-8 meeting in Scotland this week, where British Prime Minister Tony Blair has made aid to Africa a chief theme, and widely repeated arguments that domestic crop subsidies in the developed world harm some African economies.

Probably the best place to start with news representing this particular issue is with an article that was written by the Chicago Tribune's Africa correspondent, Laurie Goering, which was published in yesterday's paper.

This article starts by saying, "For decades, developed nations have been hatching grand plans to bail out Africa. Years of World Bank and International Monetary Fund loans, emergency food deliveries, hefty aid donations, special trade deals and pop star charity concerts, however, have left the continent as poor as ever.

"Now developed-world leaders, who meet this week in Scotland, say they have a clearer idea of how to genuinely help Africa--and they're ready to act on it.

"Their finance chiefs have signed a deal to forgive $40 billion in debt run up by 18 of the world's poorest countries, most of them in sub-Saharan Africa. They also hope to double foreign aid to the continent to an eventual $25 billion a year.

"But after years of negotiations and promises, rich nations show few signs of lifting one of the biggest obstacles to better times on the continent: their massive agricultural subsidies."

The article went on to say that, "The United States government last year paid 7,500 of the country's biggest cotton growers $3.2 billion in production subsidies--nearly a half-million dollars per farmer on average. The subsidies are necessary, producers argue, because foreign cotton growers, in places like West Africa and Brazil, can grow cotton much more cheaply than those in the United States. Without the help, they argue, they would be out of business.

"Europe, similarly, pays about $3.2 billion dollars a year in subsidies to its sugar producers, guaranteeing them prices for their crops that--like cotton in the United States--give them an income three times higher than what they would get selling their products on an open world market.

"The subsidies promote overproduction, cost taxpayers billions and artificially push down crop prices worldwide. In Africa, where governments can't afford to give their farmers such assistance, the subsidies create a disaster."

Similarly, Heather Stewart, in an item posted yesterday at the Guardian Observer, opined that, "Giant combine harvesters humming across the sunbaked plains of the Midwest; vast prairies of wheat; and cornfields stretching as far as the eye can see - American farmers are envied across the world for their super-efficient production and market muscle. But they don't do it alone: last year, US taxpayers spent more than $90 billion propping up agriculture.

"Like Europe, the US is guilty of failing to practise the free trade mantra it preaches to the rest of the world, and threatening the livelihoods of African farmers who cannot compete against subsidised rice, cotton and wheat flooding into their markets at less than cost price. If next week's Gleneagles summit is to transform the future of the world's poorest countries, as Tony Blair hopes, then Washington, as well as Europe, will have to promise to wean its farmers off subsidies."

On Saturday, the editorial board at the Minneapolis Star Tribune stated that, "It is difficult for many Americans to wrap heads and hearts around the plight of the world's desperately poor. That an estimated 20,000 die every day due to poverty -- many of them children in Africa -- seems unfathomable. Such misery seems too overwhelming to grasp or to change.

"Yet world leaders will take on that critical challenge next week, when presidents of the largest industrialized nations meet in Scotland for the G8 summit. With British Prime Minister Tony Blair's urging, the leaders will make African aid a centerpiece of their talks. Developed nation leaders are growing into understanding that their countries helped create the problems in Africa, and that it is in the best humanitarian, economic and security interests of the world to help Africa become self-sufficient."

And, the editorial board at The New York Times yesterday added that, "At this point, America's total worldwide spending on all forms of foreign aid still amounts to only a relatively stingy 0.16 percent of this country's gross national income, one of the lowest proportions in the developed world. Most European countries represented at this week's summit meeting are already giving substantially higher percentages of their smaller national incomes. Many have promised to double those percentages between now and 2010. Mr. Bush needs to commit Washington to a substantially faster rate of increase to make America once again a leader in global development.

"A brighter future for Africa will require more than just increased aid. The other recommendations made by Mr. Blair's commission are just as important. Rich-world agricultural subsidies make it possible for high-cost American, European and Japanese farmers to undersell efficient African producers even in their home markets; they must be phased out. Attention and money must be devoted to strengthening peace agreements and preventing conflicts before they erupt - a far cheaper and more humane approach than waiting to send help only after genocide and other atrocities start appearing on international television screens."

Brian Brady, writing at the Scotsman online yesterday noted that, "'The true cause of Africa's poverty is the continent's long history of crippling misgovernance - a problem that is exacerbated by rich countries' trade protectionism, particularly with respect to agriculture,' said Christopher Preble, director of foreign policy studies at the Cato Institute. 'While advocates of current market-distorting agricultural policies do not intend to harm developing nations, the collective effect of US farm policies is devastating for producers of agricultural goods worldwide.

"'US tariffs, quotas, and export subsidies exacerbate poverty in regions like sub-Saharan Africa, where people are heavily dependent upon agriculture.'"

The article went on to say that, "But Bush, in spite of the rhetoric, remains unwilling to move on a subsidy programme worth at least $3bn every year to the powerful American agricultural lobby. The depth of the hostility towards any attack on the subsidies was demonstrated by the demands of some Congressmen for the US to withdraw from the World Trade Organisation rather than cave in to pressure for fairer trade.

"Preble added: 'Even though the United States is hardly the worst offender in the developed world when it comes to unfair trading practices, it should lead by example and eliminate its market-distorting agricultural policies. They render useless US efforts to alleviate poverty in the poorest corners of the globe.'"

And, an Associated Press item which was posted at The New York Times webpage yesterday noted that, "Pope Benedict XVI expressed hope Sunday that leaders at the G-8 summit will take concrete action to help wipe out poverty in Africa and share the costs of reducing the continent's foreign debt."

Furthermore, a Reuters item, which was also posted yesterday at The New York Times webpage, indicated that a Live 8 concert featuring music stars was also held to draw attention to the needs of Africa before the G-8 summit.

The article said, "They rocked the world in the largest live concert ever held. Now the stars of the Live 8 extravaganza are looking to leaders to respond by doing more to help the poor when they meet later in the week."

Meanwhile, Emily Wax, writing in yesterday's Washington Post pointed out that, "On the world's poorest continent, however, feelings about debt relief and aid money are far more nuanced than many Westerners may realize. Africans interviewed this week, from farmers to artists to health workers, say they are grateful for the outpouring of sentiment, and glad to hear that glamorous musicians and actors are championing their cause and that college students are wearing bracelets with the slogan, 'Make Poverty History.'

"But they also said there was a dangerous disconnect between what the industrialized nations see as solutions and what Africans believe they need. Instead of debt relief and more aid, many Africans said they wanted the G-8 to focus on ending corruption and on improving roads, courts, banking and secondary education.

"Another useful step, many Africans said, would be to end Western countries' trade subsidies for their own farmers, which make it impossible for African industries to do much more than survive. Debt relief, some asserted, is actually hush money to get free trade advocates off the backs of European countries, the United States and Japan, which offer huge subsidies to their corn, cattle and cotton farmers and thus undercut African farmers' ability to enter the market."

Dean Kleckner, in an item that was posted on Friday at the Truth About Trade & Technology webpage, offered a somewhat different perspective on debt relief and Africa.

"Let's not kid ourselves, however. The world's poorest countries aren't poor because of unfair lending practices, but primarily because of the political instability. Debt is not the problem ? it is a symptom. Will any of the Live 8 performers mention the fact that Zimbabwe confiscates land from property owners, including farmers, and shuts down its critics in the press? I hope so. Behavior such as this--rather than G8 usury--lies at the heart of Africa?s poverty crisis.

"There are no easy solutions to this dilemma, which won?t go away anytime soon no matter how sincerely we commit ourselves to them. Improvement will require a mixture of bold political reforms, measures to fight the spread of AIDS, and integration into the global economy. Another critical piece of the equation, I believe, involves biotechnology.

"A generation ago, the Green Revolution improved farming practices on every inhabited continent. Today, we?re in the midst of a 'Gene Revolution' that promises even greater transformation.

"But not everybody is taking advantage of it. Consider the case of cotton. A new report released by Rabobank Groep claims that within two years, more than half of the world?s cotton output will be grown from genetically-enhanced crops. This is already the case in the United States. In Australia and China, more than three-quarters of the cotton farmers now use biotechnology. Their peers in Brazil and India are racing to catch up.

"And what about Africa? Tragically, it?s been left in the dust. But, that may be changing. The Bill & Melinda Gates Foundation is providing a grant of $16.9 million to Africa Harvest (one of the 43 announced as part of the $436 million Grand Challenges in Global Health Initiative) to support a project that will improve sorghum for human consumption. Researchers with Pioneer / DuPont will take the scientific lead, using biotechnology to develop a more nutritious and digestible sorghum."


Issue Three and Issue Four- Calls for EU C.A.P. reform and recent EU Sugar Reforms.

Tony Blair's ongoing call for the EU to reform, or to "get rid" of the Common Agricultural Policy -C.A.P along with recent proposals to change the EU sugar program, have also contributed to the drift towards political pressure to eliminate domestic crop subsidies as a policy tool for use by the developed world.

Along these lines, a Reuters item posted yesterday indicated that, "European Union farm export subsidies will not be abolished but they must be reformed, EU Trade Commissioner Peter Mandelson said on Sunday.

"Farm subsidies under the bloc's Common Agricultural Policy (CAP) are at the heart of a European dispute over a long-term budget that has pitted Britain against France and Germany.

"Mandelson, speaking two days after Britain assumed the six-month presidency of a bloc that is facing financial paralysis and political uncertainty, said of the CAP:

"'I don't think we want to see it dismantled and it won't be,' he told BBC Television. 'It serves very real key European as well as international needs, but it is not going to remain the same.'"

Forage Acres Increasing, Threatening Prices

by Paul Beingessner
Canadian farmer, writer

The Canadian prairies are awash in rain as June gives way to July. In parts of all three provinces, crops are showing the effects of this. Cereals and oilseeds here in southern Saskatchewan show promise almost greater than anyone can remember. Pulses also look good for the most part, but those planted on heavier lands are beginning to suffer from excess moisture. Hay crops are thick, luscious and waiting the return of the sun so they might explode in growth. The biggest worry for forage farmers is whether they'll be able to start cutting before the alfalfa becomes too rank and coarse.

Crops in other parts of the prairies are not so blessed. Excessive rains have prevented seeding, drowned crops and created perfect conditions for plant diseases in parts of Manitoba, Alberta and eastern Saskatchewan. <>There is a lot of forage being planted in my part of southern Saskatchewan. Much of this is going on marginal land. These soils were mostly broken a century ago. When input costs were low, weed problems were not as large and the natural fertility of the land was still sufficiently intact, they could provide a positive net return to farmers. But one hundred dollar a tonne cereals and four hundred dollar a tonne nitrogen now make positive returns a distant memory.

The lure of forage crops is simply that of reduced inputs. The secondary benefits include decreased soil erosion and increased fertility. The trouble is the volatility in prices for forages. Two years ago, trucks moving hay were an epidemic on prairie roads, as drought brought high demand and staggering prices. Last year, you could hardly give hay away.

The BSE problem in Canada, and now North America, is likely to result in reduced Canadian cattle herds, although no one wants to admit that. However, the new federal government strategy for dealing with BSE would seem to indicate the feds don't expect the border to open anytime soon. Fewer cattle mean fewer markets for hay.

You could argue that the situation will resolve itself in time: if hay prices are too low, production will drop as farmers shift this land back to annual crops.

The only trouble with that idea is that the economics of cereal crops are not likely to improve. The poorer lands now growing forages may simply be abandoned. Farmers in every part of this province can tell you stories of land that is now abandoned, as no renters or buyers could be found. Alternately, they may just continue to grow forages, producing the chronically low prices that have plagued much of the rest of agriculture.

There is, of course, a further problem with forages that exacerbates the price problem. While farmers will sometimes hold on to grains when prices are low, hay doesn't store well from year to year.

While we continue to hear frequent doom-and-gloom scenarios about the world's food supply and burgeoning population, I am continually amazed at farmers' ability to produce to surplus. The shift to forages is appropriate on some of the land here. Salinity, solonetzic soils, erosion, low fertility - all these make forages a better choice agronomically, environmentally and economically than annual crops. However, forages still have to produce a positive return. A shift to more backgrounding and fattening of cattle on grass would improve the economics of these operations. This would fit with organic livestock and crop farms but consumer preferences and grading systems might need some adjusting to the tastier but somewhat older animals that would be produced.

Along with government strategies to increase slaughter and processing of livestock in Canada, marketing strategies to increase the demand for "natural" beef might save some of these marginal lands from being lost to the economy.

© Paul Beingessner (306) 868-4734 phone 868-2009 fax beingessner@sasktel.net

3. Senate Panel Narrowly Endorses CAFTA

The Associated Press
Wednesday, June 29, 2005

WASHINGTON -- A Senate committee on Wednesday approved a trade agreement with Latin American nations, moving Congress a step closer to a decision on an accord that may have minimal effects on the U.S. economy but is of considerable political import to the Bush administration.

The Finance Committee approved the agreement by a voice vote, although it was closely divided on the issue. The bill now goes to the full Senate for a vote as early as this week. Passage in the Senate, traditionally more sympathetic to trade agreements, could give the measure some momentum in the House, where there is stiffer opposition.

The Central American Free Trade Agreement, or CAFTA, would end trade barriers now encountered by U.S. goods in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. It also would ease investment rules, strengthen protections for intellectual property and, according to supporters, solidify economic and democratic stability in the region.

But the agreement has run into vigorous opposition from labor groups, and their Democratic allies, who say its provisions on labor rights are weak, and from the U.S. sugar industry, which claims that an increase in Central American imports, while small, could open the door to ruin.

Sen. Jeff Bingaman, D-N.M., a key undecided vote on the Finance Committee, announced he was supporting the pact after the administration answered some of his concerns about the "serious lack of attention to the enforcement of worker rights."

He said he had pledges of $160 million over four years to promote labor and environmental laws. The administration also told him it will spend $150 million over five years to help subsistence farmers in three Central American countries who might be displaced by an increase in U.S. agriculture imports.

The Bush administration has waged a relentless lobbying effort in the past month. President Bush invited all six CAFTA presidents to the White House and hailed the agreement in several recent speeches to Hispanic-American and other groups. U.S. Trade Representative Rob Portman and Agriculture Secretary Mike Johanns are constantly on Capitol Hill, talking to undecided lawmakers.

Johanns met Monday with senators and representatives of the sugar industry, and again on Tuesday with lawmakers, to discuss proposals to assure that CAFTA will not undermine the industry's future viability. Those plans included the government buying up increased sugar cane imports from Central America to be used in the production of ethanol. Republican Sen. Craig Thomas, whose state of Wyoming has a large sugar beet industry, told the Finance Committee that "it distresses me a little" that only now, when a final vote on CAFTA is looming, is the administration getting serious about the sugar issue.

But Sen. Trent Lott, R-Miss., suggested that there could be repercussions for the industry, always well-protected by Congress, if it succeeded in scuttling the agreement. "This could be devastating to them if not handled right," he said.

The top Democrat on the committee, Sen. Max Baucus of sugar beet-growing Montana, opposes CAFTA, breaking with his usual support of trade agreements.

In addition to saying that the agreement was bad for the sugar industry, he criticized the administration for rejecting a proposal to help U.S. service industry workers who lose their jobs because of foreign competition and for not consulting more with Congress.

"They appear to want to win by the thinnest of margins," he said.

4. WORC urges House to declare independence by opposing CAFTA

FOR MORE INFORMATION, CONTACT: Dena Hoff, 406-939-1699, or Kevin Dowling, WORC staff, 406-252-9672

The U.S. Senate approved the Central American Free Trade Agreement last night by a vote of 54 to 45. Dena Hoff, Chair of WORC, the Western Organization of Resource Councils, issued the following statement. Hoff is a farmer from Glendive, Mont.

Based in Billings, Mont., WORC is a network of grassroots organizations representing farmers, ranchers, and consumers in Colorado, Idaho, Montana, North Dakota, Oregon, South Dakota, and Wyoming.


The U.S. Senate passed the Central American Free Trade Agreement, or CAFTA, last night by the narrowest vote for a recent trade agreement, 54 to 45. This vote foreshadows a fight in the House of Representatives. It also reflects significant regional opposition and grassroots rejection of the trade pact in Colorado, Idaho, Montana, North Dakota, South Dakota and Wyoming. Eleven of the 12 Senators from these states opposed CAFTA.

We want to thank Senators Ken Salazar (Colo.), Michael Crapo (Idaho), Larry Craig (Idaho), Max Baucus (Mont.), Conrad Burns (Mont.), Byron Dorgan (N.D.), Kent Conrad (N.D.), Tim Johnson (S.D.), John Thune (S.D.), Craig Thomas (Wyo.), and Mike Enzi (Wyo.) for their vision and leadership in opposing this attack on democracy disguised as a trade agreement.

Since the North American Free Trade Agreement, or NAFTA, went into effect, trade policy has weakened our sovereignty and local community control, driven family farmers and ranchers out of business, and outsourced manufacturing and high tech jobs. This policy lets a foreign corporation sue if protections for human health, food safety, clean air and water hurt profits. The administration and the Senate want to expand this policy through CAFTA.

This agreement promotes a race to the bottom - to the lowest wages, lowest commodity prices paid to producers, and to the lowest protections for human health, safety, and welfare. Only the trade pact sponsors, the multinational business interests, win this race. The average citizens of all the CAFTA countries are the big losers.

The House of Representatives now has the power and duty to stop this expansion of a dangerous globalization policy. We should replace this policy with one that strengthens, not weakens, the public health, environment, food sovereignty, working conditions, labor rights, and transparent competitive market principles of this country and all countries. Trade policy should respect the right of every country to provide needed public services and to protect the health, safety, and welfare of its people.

We urge farmers, ranchers, consumers, and workers to send a clear message to their representatives. A vote for CAFTA is a slap in the face to all Americans who believe we live in a sovereign nation governed by the rule of law. Tell your representative to vote 'No' on CAFTA.


5. NFU Commends Senate Legislation to Implement COOL

For Immediate Release: June 29, 2005
Contact: Emily Eisenberg, (202) 314-3104

WASHINGTON (June 29, 2005) - National Farmers Union commended the bipartisan efforts of several U.S. senators for their work to speed up the implementation of country-of-origin labeling (COOL).

The senators introduced legislation that would require the implementation of mandatory COOL by January 2006. Mandatory COOL can provide producers with the opportunity to gain a greater share of the food dollar, while providing consumers with a greater understanding of the food they feed their families.

"President Kennedy challenged America to put a man on the moon in a decade, and that amazing feat was accomplished," said NFU President Dave Frederickson. "It has taken longer to put a label on our meat than it did to put a man on the moon. That simply does not make sense."

A flood of imported food products continue to find their place on America's grocery store shelves, and consumers have no way of distinguishing U.S. food products from imported ones. An NFU nationwide poll found that over 80 percent of consumers support mandatory COOL, and would purchase U.S.-labeled products if given the choice. Still, the U.S. House of Representatives voted once again to delay the implementation of COOL for meat.

"It is unfair to keep a marketing and promotion tool like COOL from American producers, while continuing the negotiation of trade deals like the Central American Free Trade Agreement that will further open U.S. markets with little expected return for U.S. producers," said Frederickson.

Sens. Tim Johnson, D-S.D., Craig Thomas, R-Wyo., Michael Enzi, R-Wyo., Byron Dorgan, D-N.D., Conrad Burns, R-Mont., co-sponsored the legislation.

6. Agriculture without Farmers

ISIS press release, 06/07/05

The WTO and EU agricultural policies are sweeping farmers off the land in droves and threatening world food security.

By Rhea Gala

References to this paper are posted at http://www.i-sis.org.uk/full/AWFFull.php

Farming has evolved over thousands of years with the farm as the basic unitof local community and culture. Its practice was shaped everywhere bygeography and the creative skills of the farmer to be optimally productive.Since the arrival of the tractor and the industrial Ôgreen revolutionÕ ofthe 1940s, small family farms have lost out to big industrial farms, andmuch of the local knowledge accumulated over the millennia has disappeared.

Trade policies benefit agribusiness: Small farmers everywhere areimpoverished

In industrialized countries like the UK where the population is largelyurban, 200 000 farms have disappeared between 1966 and 1995 [1]. The annualUK Common Agricultural Policy budget of £3bn gives 20 percent of farmers(large agribusinesses) 80 percent of subsidies. Government figures show that17 000 farmers and farm-workers left the land in the year 2003, havingfailed to make a living [2].

While only 5 percent of the population in the European Union (EU) are stillfarming [3], at least half a million farm-workers were still leaving theland annually before the EU was enlarged by 15 new members in May 2004. Itis now likely that Poland alone will lose up to two million agriculturallivelihoods as a result of joining the EU [1]. EU figures suggest that halfof north European agriculture will disappear within a generation [4], as itcontinues to be squeezed out by the institutions that claim to give itsupport.

In the US, between 1950 and 1999, the number of farms decreased by 64percent to less than two million, and farm population has declined to lessthan 2 percent. Ninety percent of agricultural output is produced by only522 000 farms [5]. Canadian statistics similarly reveal that farm numbershave decreased by 10 percent between the 1996 census and 2001; there wereless than 247 000 farms in the country in 2001 [6].

This relentless process of consolidation drives the heart out of thecountryside, causing social and economic decay, and replaces it with anintensive industry that cares nothing about plant or animal diversity,quality or compassion in farming, but is solely interested in bringing downprices [1,7].

ÔFree tradeÕ policies made by and for the rich countries of the North notonly destroy the livelihood of small-farmers at home, they also encouragethe dumping of subsidized goods (selling at less than the cost ofproduction) from the North onto the markets of the poor South, distortinglocal markets, and leaving farmers in developing countries also unable tocompete [1, 7, 8].

This has become a global scandal, as 75 percent of the population in China,77 percent in Kenya, 67 percent in India, and 82 percent in Senegal stilldepend on farming for their living [3]. These numbers are plummeting,however, as families dispossessed of their land are driven to the cities,where they may find themselves unable to afford to pay for the food theyused to grow.

Agribusiness degrades the environment while governments do nothing

ÔFree tradeÕ policies of World Trade Organization (WTO) promoteoverproduction of agricultural commodities causing damage to wildlife,depleting soil, water, and fossil fuels; and at the same time compromisingfood quality, with substantial repercussions on public health [1,7]. Theyalso greatly exacerbate global warming in many ways, not least the millionsof unnecessary food-miles added to agricultural commodities. Professor JulesPretty of Essex University estimated that the total external costs forconventional agriculture in the UK, paid for by the taxpayer, added up to£2.34bn for the year 1996 [9].

The UK government remains a chief obstacle in the fight againstinternational poverty and environmental degradation, despite its seeminglygreen credentials on climate change, and its recent high profile in tacklingpoverty in Africa. That is because the UK continues to espouse an economicmodel that promotes privatisation and trade liberalisation as the key toreducing poverty and protecting the environment, although that model hasproved to have the opposite effects. The UK has been at the forefront of EUefforts to push through an aggressive Ôfree tradeÕ agenda at the WTO [10].

Transnational corporations (TNCs) have been allowed to gain control ofsupply chains and exert a stranglehold on global food security through aprocess of ownership of seed, proprietary chemicals, and other inputs, aswell as virtual monopoly of food processing and retail outlets [2,7,11]. Yetour governments are refusing to rein in the increasing power of TNCs thathave been swallowing each other up until only a handful remain.

The Agreement on Agriculture of the WTO and the Common Agricultural Policy(CAP) of the European Union are largely responsible for precipitating thisglobal catastrophe in our food production system.

The Common Agricultural Policy of the European Union

When the EU introduced the CAP in the early 1960s, it struck a deal with theUS under the framework of the General Agreement on Trade and Tariffs (GATT)negotiations. The US accepted the new border protection mechanisms put inplace by the EU for food, in return for a commitment by the EU to allowunlimited import of feedstuffs from the US at zero tariff. The EU agreedbecause it was still a net importer of food and feedstuffs; but only 15years later, the EU itself was producing large surpluses of grain and animalproducts as a direct result of this deal [12].

The zero tariff for feedstuffs enabled EuropeÕs huge surpluses of the 1970sto be dumped on developing countries, creating a major global problem.Feedstuff imports from the US had led directly to the industrialization ofanimal production in the EU and its associated environmental problems [12].

The CAP, which aimed to "ensure a fair standard of living for theagricultural community" [2], has many years provided direct aid to farmers based on area, production, and number livestock units (animals) [13]. This policy gave large monocultural farms enormous subsidies, caused massive overproduction that lowered prices, drove small out, consolidated the power agribusiness. TNCs have become vast selling seed, pesticide, machinery etc at great profit, buying produce below costs farmers, it consumers huge scale profit [7,14]. >

The CAP reform of 2003 introduces a new system of single farm payments that ‘decouples’ the link between support and production. It comes into force in 2005-6 except for new member states, and its stated aim is to ensure greater income stability for farmers, leaving them free to decide what they want to produce in response to demand, without losing their entitlement [13]. However, this is not the effect it will have.

Farm business consultants Andersons and the National Farm Research Unit predict a further 30 percent decrease in British cereal growers and another 35 percent decrease in dairy farmers when the new single farm payments kick in. These payments will be lower than the previous payments made to smaller farms; yet prices for produce currently remain near or below the cost of production [14].

A survey of English farmers showed that 87 percent did not want subsidies, only a fair return on their costs of food production. DEFRA figures showed average farm income in 2002 at £10 000; with farm-gate prices having risen just 2 percent in the last seven years. Meanwhile, supermarket prices have risen by 21 percent, and in 2002-3, Tesco’s profits were 60 percent of total UK farming income [2].

CAP reform was also greeted with dismay abroad. NGOs such as the Catholic aid agency CAFOD and Oxfam said it would mean "dumping as usual" for developing countries [15].

CAP has positively encouraged the most senseless and environmentally destructive "food swaps"

* Britain imported 61 400 tonnes of poultry meat from the Netherlands in the same year that it exported 33 100 tonnes of poultry meat to the Netherlands. Britain imported 240 000 tonnes of pork and 125 000 tonnes of lamb, while it exported 195 000 tonnes of pork and 102 000 tonnes of lamb [16]

* In 1997, 126 million litres of liquid milk were imported into the UK and at the same time 270 million litres of milk were exported out of the UK. Twenty three thousand tonnes of milk powder were imported into the UK and 153,000 tonnes exported out [17]

* In 1996 the UK imported 434 000 tonnes of apples, nearly half of which came from outside the EU. Yet over 60 percent of the UK’s own apple orchards have been grubbed up since 1970, largely as a result of EU subsidies [18]

The WTO Agreement on Agriculture

US agricultural policy has traditionally promoted cumulative growth [19] and privatisation of seed at taxpayer’s expense [20]. That has wrung all the profit out of farming and into trading, processing, and retailing, controlled by a few TNCs [11,19, 21]. Research shows the share of the US agricultural economy going to farmers declined from 41 percent in 1910 to 9 percent in 1990, while farm input and marketing industries’ shares increased by a similar amount [21].

As small farmers are pushed out, others enlarge their operation, for example, in the US pig industry a quarter of all producers went out of work between 1998 and 2000, leaving just 50 businesses controlling 50 percent of all US production. Yet, independent pig farmers produce more jobs, more local retail spending, and more local per capita income than larger corporate operations; and profits generated by small producers (of any commodity) are more likely to remain in the community and benefit the local economy [21].

As in Europe, these policies have led to low plant and animal genetic diversity, low prices, many failing small farms, and environmental degradation, and because they are geared towards maximising export, similar effects are spreading all over the world. Seventy percent of the world’s poorest people, who directly depend on the land, are forced to compete with the rich nations [11].

The 1996 Freedom to Farm Bill followed by the 2002 US Farm Bill produced a vast structural price-depressing oversupply of major agricultural commodities in an attempt to comply with WTO rules [19, 22]. The Agreement on Agriculture (AoA) came out of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations between the US and the EU (1986- 94) that led to the founding of the WTO [12]. It provides the rules governing international agricultural trade and, by extension, agricultural production [8].

The AoA is based on the firm ideological belief that trade liberalization brings net benefits to all participants. By removing barriers to trade, regional specialization will increase and regions will specialize in whatever their agriculture can produce more cheaply than others. It dictates that when products are exchanged, everybody gains because the combined cost of production is less than if each region had produced its own. In practical terms, this means promoting exports and limiting the right of countries to follow a policy of food self-sufficiency [12].

The aim of the AoA is to reduce the use of the following three methods that favour domestic production

* Border protection against imported products (the cheapest and most widespread method used)

* Internal support measures for domestic producers (mainly used by developed countries with taxpayers money)

* Export subsidies (used exclusively by developed countries) [12]

But the US negotiating position claims the right to spend tens of billions of dollars to compensate farmers for market failures rather than addressing those failures directly [8, 19]. In 2003, over half of the compensation went to less than 2 percent of farmers, again benefiting only very large businesses [23]. Furthermore, developed countries maintain the right to continue with several forms of support that are now illegal for any other country to introduce [12].

The US, with its chronic overproduction in major commodities, always needs new export markets, and its policies therefore affect production everywhere. For example, rice, the staple of most of the poor nations, is grown on around 8 000 farms in the US; half of it in Arkansas where the biggest 332 rice farms, each over 400 hectares in size, produce more rice than all the farmers of Ghana, Guinea, Guinea-Bissau, Niger, and Senegal combined [24].

In 2003, the US’s crop of 9m tonnes of rough rice cost farmers $1.8bn to produce. Farmers received only $1.5bn from rice millers, but were sustained by government subsidies, which totalled $1.3bn. Between 2000 and 2003 it cost on average $415 to grow and mill one tonne of white rice in the US, but that rice was exported around the world for just $274 per tonne and dumped on developing country markets at a price 34% below its true cost [24].

Surpluses may also be designated ‘food aid’ and monetized, i.e., sold on the recipient country’s market to generate cash. Most US programme food aid is sold to recipient countries through concessional financing or export credit guarantees. The US is nearly the only country that sells ‘food aid’ to recipient countries; other donors give it in grant form [25], but both strategies reduce prices both for developing country exporters and for smallholders in importing countries, and deepen and prolong the depression in world market prices [24].

Current agriculture policies undermine human rights

The WTO’s stated aims are to raise living standards, ensure full employment, and raise incomes; and the AoA is specifically meant to further the WTO’s aims by "establishing a fair and market oriented agricultural trade system". But a report by the Institute for Agriculture and Trade Policy released in March 2005 accused WTO agriculture policies of undermining human rights; by promoting a trade liberalization agenda that overrides efforts to improve livelihoods in four ways [26].

* Promote the ‘right to export’ over human rights

* Fail to tackle corporate control

* Allow export dumping at artificially low prices to continue

* Lock developing countries into an uneven playing field

Using data from the US Department of Agriculture and the Organization for Economic Cooperation and Development (2003), the report describes how exports from US-based global food companies were dumped onto world agricultural markets [22].

  • Wheat exported on average 28% below cost
  • Soybeans exported on average 10% below cost
  • Corn exported on average 10% below cost
  • Cotton exported on average 47% below cost
  • Rice exported on average 26% below cost

This dumping has greatly increased since the inception of the AoA [22], and prices have dropped to new lows [12]; but as all WTO members have ratified at least one of the international human rights treaties, these instruments could be used when designing trade policies [26].

The policies of international agribusiness

The laws that bind international trade derive from the ideology of international agribusiness whose common interest lies in opening up developing country markets. Close links with governments and academia are exploited to persuade policy-makers and the public that trade liberalization is clearly in the best interest of developing countries [24].

Agribusiness is at the heart of creating US trade policy, thanks to the Agricultural Technical Advisory Committees for Trade. Members appointed in 2003 were selected, according to former US Trade Representative Robert Zoellick [24], to "coincide with the continuation of the Bush Administration’s aggressive push to open foreign markets to US agricultural products.... Coordinating with our agricultural community will continue to be important as the tempo of negotiations for global, regional, and bilateral trade agreements intensifies."

In the US, as in many countries, there is a fast-revolving door between top posts in agro-industry and government; and agribusiness sits in the top ten of industry donors to candidates and political parties in US elections, contributing over $340m to campaign funds since 1990 [24].

Policies reinforce industrial agriculture at the expense of sustainable agriculture

During this multinational bonanza, industrial agriculture and its policies are placing enormous stress on the world’s small farmers and the renewable resource base, especially water and soil. Moreover, the local knowledge and plant genetic diversity most needed to truly sustain the world are being lost. Recent research has demonstrated the resilience and productivity of many traditional agricultural practices that have withstood the test of time [7, 21,27, 28].

It has also documented the damage done when small, diverse organic farms, that have only one third of the hidden costs of non-organic agriculture [29], are pushed off the land by distorted markets, and replaced with large monocultures oriented towards export production [8]. But government policies tend to emphasize a handful of major crops that require large fertilizer and pesticide inputs, and ignore resource conserving crop rotations for which farmers receive no government incentives, or sustainable practices such as growing clover or alfalfa to enhance soil fertility. They also perpetuate chemical-intensive agriculture by funding research on chemical fixes for agricultural problems, to the exclusion of research on more sustainable options [21].

Sustainable systems are especially able to compare favorably with conventional systems when the comparison includes a full cost accounting of the environmental and public health harms and benefits of each system; but these costs are usually externalized, or paid by society rather than the polluter [21].

There needs to be dedicated support for sustainable food production by small farmers who have served us well for thousands of years; and a curbing of the power of multinationals who serve only themselves. In spite of spin from politicians about ‘making poverty history’, their trade liberalisation policies can only continue to ruin local economies everywhere while serving the global elites.

The International Commission on the Future of Food and Agriculture suggests the following changes to agricultural trade policy that would help make the world a much fairer and healthier place [7]:

1. Permit tariffs and import quotas that favour subsidiarity. This means that whenever production can be achieved by local farmers using local resources for local consumption, all rules and benefits should favour that option; thus shortening the distance between production and consumption. Trade should be confined to whatever commodities cannot be supplied at the local level, rather than export trade being the primary driver of production and distribution.

2. Reverse the present rules on intellectual property and patenting. These strongly favour the rights of global corporations to claim patents on medicinal plants, agricultural seeds, and other aspects of biodiversity, even when the biological material has been under cultivation and development by indigenous people or community farmers for millennia.

3. Localize food regulations and standards. Rules that benefit global food giants, such as irradiation, pasteurization, and shrink-wrapping also negatively affect taste and quality; and industrial processing has led to an increased incidence of food poisoning and diseases in farm animals. Each nation should be allowed to set its own high standards for food.

4. Allow farmer marketing/supply management boards. These let farmers negotiate collective prices with domestic and foreign buyers to help ensure that they receive a fair price for their commodities. Less than two years after the North American Free Trade Area (that dismantled the government price regulation agencies) went into effect, Mexican domestic corn prices fell by 48% as a flood of cheap US corn exports entered the country. Thousands of farmers have been forced to sell their lands

5. Eliminate direct export subsidies and payments for corporations. Although the WTO has eliminated direct payment programmes for most small farmers, they continue to allow export subsidies to agribusinesses. For example, the US Overseas Private Investment Corporation funded by US taxpayers, provides vital insurance to US companies investing overseas. Even loans from the IMF to Third World countries have been channeled into export subsidies for US agribusiness

6. Recognize and eliminate the adverse effects of WTO market access rules. Countries need new international trade rules that allow them to re-introduce constraints and controls on their imports and exports. These would prevent heavily subsidised Northern exports from destroying rural communities and self-sufficient livelihoods throughout the South. Many people now working, for example, for poverty wages at Nike and other global corporate subcontractors are refugees from previously self-sufficient farming regions.

7. Promote redistributive land reform. The redistribution of land to landless and land-poor rural families is a priority. This has promoted rural welfare at different times in Japan, South Korea, Taiwan and China. Research shows that small farmers are more productive and more efficient, and contribute more to broad-based regional development than do the larger corporate farmers.

This article can be found on the I-SIS website at http://www.i-sis.org.uk/AWF.php