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Biofuel imports anger farmers

(Friday, Dec. 2, 2005 -- CropChoice news) --

1. Free trade is becoming harder to swallow
2. Biofuel imports anger farmers
3. A warning of trade suits over farming
4. U.S., Brazil to reach second suspension agreement on cotton
5. For India, importing food is like importing joblessness
6. French rally around farmers at WTO talks

1. Free trade is becoming harder to swallow

For Immediate Release
Contact: Harvey Joe Sanner (501) 516-7000 ­ HJSanner@aol.com
Soybean Producers of America
P.O. Box 950
Des Arc, AR 72040

DES ARC, Ark., Dec. 1, 2005 -- Recent events involving imports and exports of agricultural commodities are casting shadows on the wisdom of unfettered free trade. The latest revelations include imported soy-diesel (or the palm oil to produce it) when the intent of congress and farmers is to lessen our dependence on foreign energy sources, flies in the face of logic. The Internal Revenue Service has ruled that palm oil produced outside the U.S. is eligible for tax credits intended to foster growth of the home grown fuel industry.

This IRS ruling has raised hackles in the farm community and congress.

This is a classic example of the free marketers having their philosophy biting them in their derriere.

"We think the evidence is building that contradicts the wisdom of free trade, " says Harvey Joe Sanner, Executive Director of the Soybean Producers of America. "First, it’s not free and it’s not fair. The recent squeaker vote on the Central American Free Trade Agreement may be a sign that common sense is finally returning to the trade debate. More free trade seems to lead to more health risks and certain financial losses for American producers.

We’ve seen efforts such as Country of Origin Labeling (COOL) to promote safer foods be attacked and stalled by the meat industry and some free market ‘farm’ organizations during valid fears of imported beef containing mad cow disease."

"While mad cow is still a concern, we now have to contend with the threat of Asian Bird Flu, added Sanner. "This disease has resulted in massive flocks of poultry being destroyed in China. Health officials are very concerned since the disease can be transferred to humans and the fear is that it might be transferred from human to human."

Sanner further stated, "We can’t count on the poultry industry folks for any comfort. It was reported in the Des Moines Register that Mr. Richard Lobb, an official with the National Chicken Council, said that, ‘Free trade benefits our country and if this (the importation of Chinese chickens into the U.S.) comes as a corollary to it, we just have to deal with it.’ I don’t know about y’all but I can cut back on my drumstick consumption if necessary instead of eating Chinese chicken at this time."

"The very idea that we are told that we simply ‘have to deal with it’ in the name of free trade is insulting," concluded Sanner. "The health of our families can’t be sacrificed on the free trade altar. To propose that we would risk importing poultry products or any food product, from a nation that has an infected product highlights a lack of common sense, but of course, true free marketers have never been endowed with common sense or concern for America’s producers. Importing infected cattle, chickens or palm oil are all bad ideas. Someone in government should do something about this, and quick!"


2. Biofuel imports anger farmers

Tax break irks ag-state lawmakers
Pioneer Press

For U.S. agriculture, the energy gold rush is on, and Minnesota's pioneering biodiesel and ethanol producers are in the thick of it. But suddenly, they have foreign competition.

A ship loaded with South American biodiesel pulled into a Florida port this month, and immediately qualified for a new U.S. biodiesel tax break. For the homegrown biofuels industry, it was a shocking notice that their domestic market had gone global.

The American Soybean Association expressed outrage. Angry farm-state politicians vowed to rewrite tax law. And it stunned soybean farmers, who dreamed that biodiesel would become the next ethanol - a corn-fed economic lifeline across Minnesota and beyond, which has turned crops into homegrown fuel, rural jobs and farmer profits.

Ethanol, too, is confronting import challenges. Latin American nations reportedly are ramping up ethanol production for possible export. Suddenly, U.S. farmers are nervous, just when it seemed that the promised land for biofuels was in sight.

"Why would we want to trade our farmers, our jobs, our communities, our tax dollars and our energy security for another dependence on foreign ethanol or biofuels?" said Minnesota Farmers Union President Doug Peterson.

Free-traders see it differently, arguing that farm fuels have enjoyed years of government protection; they welcome the challenge to become more competitive.

The issue is passionately felt in rural Minnesota, a state so deeply invested in farm-based fuels that industry leaders jokingly call it "the Holy Land." Minnesota has more ethanol plants, more farmer-investors, produces more biodiesel and buys more biodiesel than any other state.

This autumn, the future of farm fuels looked white-hot: Crude oil prices soared, corn and soybeans were cheap and abundant, a lucrative new tax credit for biodiesel became law, and the polluting additive MTBE continued its phase-out, further helping ethanol sales. Moreover, Congress passed a new law requiring a big increase in ethanol use.

It didn't take long for the biggest players in agribusiness to see opportunity and jump in, first Archer Daniels Midland, then Cargill, then CHS. But farmer groups were excited, too - so many, in fact, that Joe Jobe of the National Biodiesel Board said this month that he'd received "dozens, if not hundreds, of calls everyday saying we want to build a biodiesel plant."

Then came the competition: biodiesel from Ecuador, made from palm oil, not soybeans. EarthFirst Americas, the U.S. importer, intends to import 45 million gallons in 2006, and more than 100 million the following year, exceeding the 75 million gallons the entire U.S. biodiesel industry will produce in 2005.

Most galling to soybean growers, the Internal Revenue Service ruled that the Ecuadorian biodiesel qualifies for the new $1 a gallon biodiesel credit just passed by Congress. That means the U.S. biodiesel market is wide open to all comers.

"There's no protection there, apparently," warned U.S. Rep. Collin Peterson, D-Minn. "What started last week with Ecuador, I think we're going to see more of that."

Gary Wertish, agricultural aide to U.S. Sen. Mark Dayton, D-Minn., said that Dayton is among lawmakers who think the IRS ruling is wrong.

"One of the reasons the energy bill was passed was to lessen our dependence on foreign oil," Wertish said. "It wouldn't be the intent of Congress to apply tax credits for foreign-based biodiesel."

Vern Eidman, a University of Minnesota economist who specializes in biofuels, expected that biodiesel's moment had finally arrived. Then he heard of the Ecuadorian shipments.

"While it's hard to argue against competition, this may be a lot of competition to go up against, particularly if their oils are much lower in price than soybean oil," he said.

At Florida-based EarthFirst, chief technical officer Peter Calvert saw it otherwise.

"I don't think the soy guys have that much to worry about, frankly," he said, noting that his firm is delivering palm-oil biodiesel to destinations like Florida, Texas and California, where soybeans are hard to come by. "Where palm oil makes the most sense is where soy makes the least."

Besides, Calvert added, "The Energy Act was meant to diversify fuel supplies, and that's what we're doing. ... It was not crafted as a farm bill."

Peterson, the congressman, sees a second threat, this one to the ethanol industry. On his recent travels through Central America, Peterson was concerned to see or hear about dehydrating plants under construction, designed to remove water from Brazilian ethanol.

Under trade rules, watery Brazilian ethanol shipped to the United States must pay a hefty tax. But the if water is removed in Central America, a substantial amount of ethanol can then be imported to the United States with no import tax. Up to 7 percent of U.S. production, or about 280 million gallons next year, could arrive tax-free.

Cargill has dabbled in this practice to a small degree, routing Brazilian ethanol through a plant in El Salvador, to the ire of U.S. farm groups. But with the passage of the Central American Free Trade Agreement, or CAFTA, Peterson sees evidence of someone investing on a much larger scale.

Several Cargill officials denied they had any such activities, beyond their El Salvador experiment. Lori Johnson, a Cargill spokeswoman, noted that Cargill's El Salvador joint venture, "at full capacity, produces about 60 million gallons a year, which is about five days of consumption in the U.S."

By contrast, she noted, Cargill is by far the largest investor in the U.S. corn industry, and this month announced a huge expansion of its own ethanol plant in Nebraska.

Free-traders like to point out that the ethanol and biodiesel industries didn't grow spontaneously; they were planned and encouraged by a web of subsidies, incentives and government mandates. Some sustainable-energy advocates, such as Mike Millikin, editor of the online Green Car Congress, argue that shutting off imports is the wrong reaction to a possible foreign threat.

"With tariffs already in place and demand for ethanol booming, this just seems like a way to continue to shield an industry that has been shielded for 24 years," Millikin wrote. "Where's the competitive pressure to come up with a better, more cost-effective means of producing ethanol? ... The global market for ethanol is rapidly increasing; let's get competitive. Let's go get some of that market for ourselves."

But the threat haunts some farm groups, which have seen ethanol deliver profits, jobs and rural development. At the Minnesota Farmers Union's recent annual meeting, union President Peterson told delegates: "Stop foreign ethanol and biofuels, and stand up for energy security, stand up for food security, stand up for rural America, and stand up for rural Minnesota."

Tom Webb can be reached at twebb@pioneerpress.com or 651-228-5428.

3. A warning of trade suits over farming

NY Times
Nov. 30, 2005

CHICAGO, Nov. 29 - A failure by the United States and the European Union to make significant progress toward reducing agricultural subsidies in trade talks in Hong Kong could bring a legal challenges on both sides of the Atlantic, trade and agricultural experts say.

In a report to be released Wednesday, Oxfam International highlights three American commodity crops vulnerable to lawsuits and eight agricultural products in the European Union that could be sources of cases.

Several independent experts agree with Oxfam's assertion that complaints could be brought against the United States' corn, rice and sorghum programs, while the 25-country European Union could be challenged on subsidies for tomatoes, tobacco, butter, wine and spirits, citrus juices and processed fruits like canned peaches and pears.

According to the report, the subsidies for the 11 crops and products noted by Oxfam total $9.3 billion for the United States out of the country's $19.5 billion in subsidy payments, and $4.2 billion for the European Union out of $44.8 billion, on an annual basis.

Oxfam, a nongovernmental advocacy group involved in world poverty issues, has lobbied strenuously for rich countries to reduce agricultural subsidies so that developing countries in Africa and elsewhere can better compete and grow their economies. But several outside experts agree that more cases are likely if meetings of the World Trade Organization next month in Hong Kong do not produce a substantial agreement toward reducing so-called trade-distorting subsidies.

Brazil's successful challenges to the European Union's sugar program and parts of the United States' cotton program have opened the door for more challenges before the W.T.O., trade experts say. The European Union unveiled an overhauled sugar program last week that cuts support prices 36 percent.

"Those cases point out some of the vulnerabilities that both the E.U. and the U.S. have with some of their present farm programs," said Clayton Yeutter, a former secretary of agriculture and United States trade representative. If negotiations do not produce progress, "it would not be surprising to see additional W.T.O. dispute settlement challenges of this nature," he said.

The talks in Hong Kong are part of a round of trade discussions that began in 2001 in Doha, Qatar. They were termed a "development round," meant to lift the world's poor nations out of poverty by giving their farmers better access to developed world markets.

American trade officials said on Tuesday that they could not comment on the accuracy of the Oxfam estimates, but that the United States is trying to eliminate the kinds of farm subsidies that could run afoul of the W.T.O. rules.

"The very subsidies that they're concerned about are the ones that we're proposing to eliminate," said Christin T. Baker, a spokeswoman for the United States trade representative, Rob Portman.

Anthony Gooch, a spokesman for the European Commission in Washington, said he could not comment on the Oxfam report until European officials had a chance to study it.

Officials from the United States, Europe and major developing countries, like Brazil, are trying to salvage a framework before the talks in Hong Kong. Mr. Portman will leave for Geneva on Thursday for talks that will last until Sunday.

In recent weeks, preparatory trade talks stalled after the European Union failed to match an offer by the United States to lower some trade-distorting subsidies by 60 percent over five years and eliminate them by 2013. Oxfam and other advocates of reducing subsidies have called even the American proposal inadequate and misleading.

The United States and the European Union are still far apart on agricultural trade barriers. The United States proposal calls for much deeper cuts in farm tariffs than European officials have been willing to support. And large developing countries are reluctant to make commitments on opening markets for services and industrial goods unless the wealthy countries do more to open their farm markets.

In the last year, some countries have threatened legal action against American farm programs. Uruguay has been preparing a challenge to American rice subsidies, while Canadian corn growers have been clamoring for their government to fight the sale of American corn in Canada at prices they say are lower than the cost of production.

The Canadian International Trade Tribunal concluded two weeks ago that there was "a reasonable indication that the dumping and subsidizing of unprocessed grain corn have caused injury to the domestic industry." Mike Johanns, the United States agriculture secretary, and Mr. Portman said in a joint response that "U.S. corn exports pose no threat to Canadian corn growers."

The United States corn program is more vulnerable than ever to a trade challenge, trade experts say. Huge harvests the last two years and the lowest prices since the late 1990's are resulting in record subsidy payments to farmers. The United States paid $26.8 billion in corn subsidies the last five years, the most for any single American farm program.

"If there were ever a time for another country to go after our corn program, this is it," said Kenneth Cook, president of the Environmental Working Group, a research organization based in Washington that has criticized farm subsidies. "It is exactly the kind of conditions that prompted Brazil to go after our cotton program."

Eleven corn exporters, including Argentina, Ecuador and South Africa, could have legitimate cases as well, the Oxfam report concluded. And in the case of rice, Mexico, India and Thailand are among 13 countries that could file cases against the United States. Without a formal suit, Mexico has struggled to prevent rice from the United States from being sold at what it says are unfair prices that are damaging Mexican producers. A World Trade Organization panel ruled on Tuesday that Mexico unfairly imposed antidumping tariffs on American rice in 2002.

While the European Union also has programs laden with heavy subsidy payments for farmers of traditional crops like sugar, it is at least as vulnerable for programs designed to encourage the processing of fruits and vegetables into finished products, trade experts said. The European Union provides millions of euros in such subsidies.

So far, no formal challenges on major crops have been filed since the Brazilian won its cases in 2004 and this year. Pedro de Camargo Neto, a former lead farm trade negotiator for Brazil, who led his country's cotton and sugar cases, said he is surprised other countries have not capitalized on the Brazilian precedents.

Fear of retaliation could be part of the reason, Mr. Camargo said in a telephone interview. "Governments are afraid to challenge the Empire."

In one case, Walter Bastian, the United States deputy assistant secretary of commerce, met with Uruguayan officials in August and persuaded them to wait until after the Hong Kong meetings to file a rice complaint.

Most countries see trade negotiations as a faster road to agricultural reform than litigation, which is costly and can drag on for years. But the failure of the Doha talks will probably lead more developing countries to use the W.T.O.'s dispute settlement process, said Gawain Kripke, senior policy adviser for Oxfam. "This hasn't been in their toolbox in the past," he said. "Brazil has shown that these cases are winnable."

4. U.S., Brazil to reach second suspension agreement on cotton

Inside US Trade
November 25, 2005

The U.S. and Brazil are set to agree to a second suspension agreement that would put off an arbitration proceeding for authorizing the level and type of retaliation Brazil has requested to impose on the U.S. for its failure to remove cotton subsidies that were found to have caused serious prejudice to Brazilian producers. Brazil's request for over $1 billion in retaliation includes the controversial demand that it be allowed to "cross-retaliate" against the U.S. by withholding commitments in services and intellectual property rights instead of merely increasing its tariffs on imports of U.S. goods.

Deputy U.S. Trade Representative Peter Allgeier and Brazilian Ambassador to the WTO Clodoaldo Hugueney signed a Nov. 22 joint letter to the arbitration panel, formed just last week, asking that it suspend its work until further notice, according to a copy of the letter. It does not set any deadline for the arbitration panel to resume its work, but says that either party may ask the panel to resume its work.

If either Brazil or the U.S. decides to take this step, the letter, reprinted below, states either party will notify the other 30 days in advance of making the request.

The letter does not refer to any explicit actions the U.S. has promised to make in exchange for Brazil agreeing to suspend the arbitration proceeding, but the Brazilian signature reflects U.S. commitments to implement the decisions of the WTO panel, a government source said. This would require the U.S. to enact changes to its farm programs that would have the effect of eliminating cotton subsidies found to have caused serious prejudice to Brazilian producers.

The agreement follows an earlier deal reached last July that suspended an arbitration proceeding on Brazil's request to retaliate against $3 billion in U.S. imports for the U.S. failure to withdraw cotton subsidies found to be prohibited by the WTO panel. However, that agreement was slightly different in that it said Brazil's request for arbitration would be suspended until after a WTO compliance panel determined whether U.S. actions had brought the U.S. into compliance with the adverse WTO decision.

This was necessary because the Bush Administration took steps to eliminate the subsidies found to be prohibited by making changes to U.S. export credit guarantee programs and by asking Congress to eliminate the Step 2 cotton program, both of which were found to be prohibited subsidies. In contrast, the U.S. has not taken any specific steps to eliminate other subsidies found to have caused serious prejudice to Brazilian producers, although the U.S. government has said the elimination of Step 2 could go some way toward eliminating serious prejudice.

The original panel decision found that a variety of U.S. cotton subsidies, some prohibited and some allowed under WTO rules, had caused serious prejudice to Brazilian producers by lowering world market prices. However, the panel did not specify the extent to which these payments needed to be eliminated, reduced or changed to remove the serious prejudice.

Both the Senate and House have approved repealing Step 2 effective Aug. 1 as part of larger budget reconciliation packages, but they have yet to approve a conference report.

The U.S. has missed deadlines set by the WTO panel for eliminating the prohibited subsidies and for removing the serious prejudice caused to Brazilian producers. The deadline on the prohibited subsidies was July 1, while the deadline on serious prejudice was Sept. 21.

However, the U.S. has said that if the Doha round of WTO talks on agriculture locked in the commitments the U.S. has pledged to make in reducing its allowable limits on trade-distorting domestic subsidies, this would result in lower cotton subsidies that could remove the serious prejudice.

5. For India, importing food is like importing joblessness

By Devinder Sharma

WTO Director General Pascal Lamy seems to be a firm believer in 'fear psychosis.' Knowing well that none of his shrewd trading skills have helped shift the focus of the ongoing negotiations from agriculture subsidies to market access, he is now trying to inculcate fear among the developing countries.

"Developing countries would lose if the Doha Development Round fails," he warned African trade ministers last week at Arusha. "The US can increase its trade-distorting domestic support (TDS) by $5 billion, the EU by $25 billion and Japan by $5 billion." What he forgot to tell them was the developing country agriculture in any case is doomed if the US $1 billion farm subsidies that the Organisation for Economic Cooperation and Development (OECD) pays to its agribusiness corporations and rich farmers are not entirely scrapped.

Fear psychosis is the latest strategy. Bribery and bait are the two other planks of the 'negotiating' strategy that are being applied. Least developing countries are being provided with an 'aid for trade' package, expected to be in the range of US $ 400 million, in the name of assistance to cope with adjustment costs, and also to provide necessary infrastructure. Besides, the promise of a 'development package' contains duty and quota-free access for LDC products, preference erosion; some special and differential treatment proposals, and longer transition periods on TRIPS and investment measures.

All these allurements are not enough to minimise the devastating effect subsidised agriculture has had on the developing countries. If the last ten years of the WTO are any indication, a majority of the developing countries have now turned into net food importer, thereby negatively impacting food security and resulting in a massive loss of farm livelihoods. On the other hand, while the negotiations continue, the developed countries have managed to increase farm exports. Agricultural exports from the European Union, for instance, have gone up by 26 per cent. Every percentage point gained in exports adds $3 billion in export sales and $750 million to agricultural income.

For the developing countries, increase in agricultural imports means further marginalisation of the farming community. In India, agricultural imports have gone up by 300 per cent in the last ten years. While edible oil imports have increased by 398 per cent, cotton imports have multiplied by a whopping 13,153 per cent. Sugar, fruits and vegetables and spices are some other commodities that have poured in unchecked. For a country like India, importing food is like importing unemployment.

In such a depressing socio-economic scenario, what should India do? What strategies it needs to adopt at Hong Kong to ensure that the livelihoods of its 600 million farmers remain protected? Let me provide some action points:

  • Agricultural subsidies in the developed countries need to be segregated under two categories: one which benefits small farmers and the remaining which goes to agri-business companies and the big farmers/landowners.
  • Since less than 20 per cent of the US$ 1 billion farm subsidy a day benefits small farmers, the remaining 80 per cent subsidies need to be outrightly scrapped before proceeding any further on agriculture negotiations.
  • Despite the pressure from the US/EU on providing more market access, India should refuse to even make a mention of market access till 80 per cent of the subsidies (as mentioned above) are not removed.
  • Quantitative restrictions should not only be restored but linked to the removal of agricultural subsidies. QRs should be phased out in the same proportion as the removal of subsidies. If subsidies are removed by ten per cent by 2015, India should also promise a similar phase-out by the same year.
  • July Framework 2004, which Pascal Lamy considers to be 'one step forward', is actually two steps backward. It allows developed countries a cushion to further increase its agricultural subsidies thereby negating the gains of the level of ambition achieved in the past ten years. The framework should therefore be reopened and renegotiated. It should not be allowed to be the foundation for any future recalibration.
  • Agriculture should not be sacrificed for the sake of services. Despite the government's over-enthusiasm on opening of the service sector, the fact remains that it would benefit only a miniscule percentage of population. The future of 600 million farmers cannot be bartered for the sake a few thousand foreign employment visas.
  • India should take the initiative to introduce a new issue: call for a multi-lateral agreement against hunger. Based on the right to food principal, the agreement should seek protection from any trade measure that adds to hunger in any country. This will be an opportunity to bring hunger into the centre-stage of trade for development.

(Devinder Sharma is a New Delhi-based food and trade policy analyst)

6. French rally around farmers at WTO talks: Agricultural subsidies remain sticking point

Noelle Knox
USA Today
November 30, 2005

MONTALET-LE-BOIS, France -- In the late afternoon November sun, Philippe Durand's small fields of young wheat are the picture of French country living. There's only one problem with this picture. Durand's 500-acre farm wouldn't survive without government subsidies and trade barriers.

"I'd be finished," said Durand, 39, who works alone, growing wheat, rapeseed (the source of canola oil) and sugar beets on his farm about 35 miles west of Paris.

And it's not just a problem for him. In fact, the international dispute over farm subsidies and market access could shatter any hopes of reaching a global trade agreement when the World Trade Organization meets in Hong Kong on Dec. 13-18.

This round of trade negotiations is turning out to be a showdown between the United States, which is the world's largest agricultural producer, and France, which is No.2 and the voice for European farmers. And there is a parallel battle between rich countries and such emerging nations as Brazil, India and China. All sides have put offers on the table that the others claim are not enough.

"We can't give everything without getting anything in return," says Christian Ligeard, head of international relations for the French Ministry of Agriculture. "We've said clearly to the (European trade) negotiator, if the package is only agriculture, we will say, 'No.'"

For American farmers, who receive $23 billion in direct farm subsidies plus indirect support, the pain will depend on how deep U.S. negotiators agree to cut. But, in exchange, there could be deals for international services, such as banking and insurance, as well as for manufacturing sectors such as computers and cars.

Also at risk is the WTO's reputation, damaged after trade negotiations in Mexico collapsed in 2003 following a failed trade summit in Seattle in 1999.

Ironically, many French farmers today criticize the subsidies, claiming they make farmers less efficient by growing crops based on the financial assistance they will receive, instead of rotating crops to help replenish the soil, Durand says.

"It's the subsidy that determines whether a certain crop is worth growing or not," he says.

On farms north of the Loire Valley, he says by way of an example, you almost never see sunflowers anymore. That's because farmers are paid the same subsidy for sunflowers and rapeseed, and sunflowers need more sun and attract more hungry birds.

"The subsidy is set arbitrarily by (EU lawmakers in) Brussels, without consideration to regional traditions. Because of that, the face of agriculture in France has changed. Because of that, the sunflower is scratched from the list, just like that," he says, flicking his hand.

Durand admits he also cultivates his land to maximize his revenue (he earns $35,000 a year) and take advantage of subsidies. Because farmers are paid based on what they produce, they produced gluts of butter and milk. In January, the system will change and farmers will be paid a subsidy based on an average of what they produced the last three years.

"It's absurd," Durand says. "In the fourth year, (the farmer) can work less and take less and less responsibility. He will be paid off historical amounts, not how he's working now."

Free trade ideas challenged

But free trade is getting a bad name in France, where unemployment is almost 10% and double that in immigrant quarters (where rioters recently torched cars and schools). Labor unions are being forced to give concessions in order to stop companies from moving factories to Eastern and Central Europe, where wages and benefits are lower.

In May, France voted against a constitution for the European Union, a political and economic alliance of 25 countries, partly out of fear of competition from cheaper labor in Eastern and Central Europe.

"If you work in a factory making textiles, you have to find another job, but what job?" Ligeard explains. "They voted against the referendum because of a concern that we're playing with the rest of the world but not by the same rules so we're not going to gain. We're playing at a considerable handicap."

French President Jacques Chirac, whose approval ratings have skidded to 35%, according to a survey by IFOP published this month in Le Journal du Dimanche, is under severe pressure to protect French farmers, who, despite representing only 2.5% of the workforce, wield a lot of political power.

France, which will be represented in Hong Kong by the European Union, has agreed to an EU proposal to eliminate subsidies for agricultural exports, which account for 8% of the EU's agricultural aid budget of $53 billion. Last week, the Europeans also agreed to cut sugar subsidies by 36% over four years. European governments pay their farmers three times the price of sugar on the world market.

Now, France wants the U.S. to abolish its food-aid program for poor countries, claiming it subsidizes farmers, and instead give cash aid so poor countries can buy what food they need wherever they want.

"If you want us to eliminate our export subsidies, we want you to eliminate your food-aid program and give aid in cash," Ligeard says.

In response, Neena Moorjani, spokeswoman for the U.S. Trade Representative, said, "The U.S. has put forward proposals to put additional disciplines around food aid that will prevent commercial displacement. We are concerned with proposals by the EU that would allow food aid on a cash-only basis."

Moorjani said, "Research shows that when countries move to cash-only policies, the amount of food aid they give declines."

The French also are demanding that developing countries, such as Brazil, India and China, open their markets to French cars and other manufactured products, as well as to banks and other service companies.

But developing countries, which are the majority of the WTO's 148 members, have dug their trenches.

"They're saying to big countries, 'If you're serious about opening global markets so we can benefit from international trade, you have to open your markets to our food products. You promised us you would in (trade negotiations from 1986 to 1994) Uruguay, and you didn't,'" says John Audley, a trade expert at the German Marshall Fund, a trans-Atlantic think tank.

Many Europeans, however, remember the days after World War II, when people starved because there wasn't enough food. That crisis was the genesis of Europe's agricultural policies, which were designed to create and support a self-sufficient food supply.

At Durand's farmhouse -- 6,100 miles from Hong Kong -- he knows French subsidies are on the bargaining table. He knows Europe's agricultural policies will change, if not in this trade round, in another.

"I already made my own revolution," he says. "I must be an opportunist in the face of the system. If the system is absurd, I must be absurd."