Remarks As Prepared for Delivery by Secretary of Agriculture Dan Glickman National Turkey Federation Summer Meeting Washington, DC July 20, 1999 Release No. 0292.99 Remarks As Prepared for Delivery by Secretary of Agriculture Dan Glickman National Turkey Federation Summer Meeting Washington, DC July 20, 1999 "Thank you very much for that kind introduction. I want to welcome you all to Washington. I understand that this is the first time you've brought your summer meeting to the capital. And as glad as I am that you're here, I can't help but wonder if anyone warned you about the humidity. "Many of you know that Benjamin Franklin was beside himself that the turkey was spurned in favor of the eagle as the choice for national bird. Here's a man who was one of the nation's architects -- someone whose leadership we followed on everything from daylight- savings time to the catheter and yet we rejected his advice on this critical matter of national symbolism. "I have nothing against the eagle, of course. I think we all respect it as an emblem of freedom, courage, and American values. But I think it's unfair that the turkey, meanwhile, acquired an unjustified reputation as an ungainly and less-than-intelligent animal. What's more, the term "turkey" managed to slip into American slang, denoting something that's a dud. "But as the soft drink commercial says: "Image is nothing; taste is everything." The good news is that none of this is keeping people from eating turkey. Americans have in fact embraced turkey as a unique part of their culinary and dietary culture. "It is, of course, our traditional holiday fare Easter, Christmas, and my favorite holiday, Thanksgiving. But over time it's become so much more. Tastes have changed, and many people now want lower-fat meats, so turkey has become more than a seasonal treat. It's now a year-round staple of the American diet -- turkey burgers, turkey sausages, turkey bacon, turkey ham. If you went to your butcher 20 years ago and asked for these things, he would have looked at you funny. But now they are a major source of sales and profit. "I will address issues specific to turkey producers and processors in a minute. But I want to talk a bit about the one issue that we wrestle with at USDA more than any other. That is the state of the general farm economy and the price and income problem that is devastating many of our producers, especially small and medium-sized family farmers. "The national economy is booming -- low inflation, a high rate of job creation, and so on. But then you look at agriculture, and you don't see the same success story. We're now into our fourth consecutive year of record worldwide grain production, with fairly soft overseas demand. With growing stockpiles and slack exports, the outlook for prices is pretty grim. "Our USDA analysts now expect 1999 corn prices to average a mere $1.85 a bushel. Wheat has picked up, but only marginally. Soybean and cotton prices are the lowest they've been since the early 70s. We anticipate that average 1999 hog prices will dip to $31 per hundredweight from $35 in 1998, which was itself a weak year. The drop-off is even greater with rice, as average '99 prices could end up one-third lower than '98 levels. Cattle prices should go up slightly, but that's something of a shallow victory, given that we've been liquidating the nation's cattle herd for four straight years. "And now this is beginning to have an impact on land values. Farmers are being forced to further leverage themselves. Private lenders are more and more wary of issuing credit to farmers, thus putting more pressure on USDA as the lender of last resort. This year, in fact, USDA lent more than it had in any year since 1986 and still we were unable to keep pace with loan demand. "All this is exacting a toll that goes beyond the financial. Just a week ago, I was in Iowa for a listening session about the upcoming round of WTO negotiations. And even though there were plenty of people who wanted to discuss trade issues, a lot of farmers had more immediate short-term concerns on their minds. One gentleman got up to speak, and I noticed as he approached the microphone that he was shaking. It wasn't stage fright. He was simply overtaken with emotion because of what the current farm situation is doing to him and his community. "We've taken several actions to try to cushion the blow. Last fall, we passed a $5.9 billion emergency spending package that included $2 billion in Crop Loss Disaster Assistance payments and $400 million to help lower crop insurance premiums, among other things. "In May, the President signed a supplemental appropriations bill, which helped address farmers' credit needs and provided natural disaster relief. "Last December, we responded quickly to the needs of our pork producers with a package that included $50 million in direct cash payments, $80 million to accelerate our pseudo rabies eradication program, and increased purchases for federal food assistance programs. "We issued a staggering 1.5 million loan deficiency payments last year - - most of them to row crop farmers -- after only 2,000 in 1997. "And we also increased food aid shipments abroad to 10 million metric tons, to help farmers cope with shrinking global demand. "But for all our efforts, the fact is that there is only so much we can do under existing law. Previous farm bills were countercyclical when prices went down, payments went up and vice versa. But our current farm bill was written during -- and written for -- a period of strong prices. While it has many good provisions that I wanted and that I continue to endorse -- like planting flexibility and stronger trade and conservation programs -- it didn't leave a strong enough safety net. And now that the farm economy has gone south, the program doesn't have the flexibility to respond adequately. "I'm not advocating a return to government micromanagement of the farm economy, where we told producers what and when to plant. But we are working hard, trying to be creative, marshaling whatever resources we have to see farmers and ranchers through this period. "But we can't do it alone. Congress has to be there too. We are working with Congress to assemble a strong safety net by reforming crop insurance and offering other risk management tools as well. I have also asked Congress to grant me the authority to extend commodity loans, so farmers don't have to dump their grain on to an already glutted market. That's especially important now, and it will be so in the coming months. I have pushed Congress on this matter repeatedly, and I can't emphasize the urgency enough. "The President has said that he sees no other alternative but to work with Congress to pass another major assistance package before the year is out. Because low farm prices mean shrinking incomes -- and, in some cases, bankruptcy -- for our producers. In fact, we project that the 1999 aggregate net income among major field crops will drop 14 percent from already-low 1998 levels. "We need what the '96 farm bill didn't have -- a countercyclical mechanism that kicks in when prices drop. And it has to be done in a way that targets those sectors that are struggling the most, instead of simply sending out checks willy-nilly. Finally, we have to respond in a way that addresses the longer-term, more deep-seated problem of rising surpluses, so that we don't have to come back and revisit the price and income issue over and over again. "Not every commodity, of course, is taking a hit. In fact, after two and a half years of declining returns and the first drop-off in production since 1982, the turkey industry is indeed turning the corner and, in many cases, doing quite well. "USDA estimates that processor returns for the month of June will average nearly 11 and a half cents per pound above cash expenses, contrasted with average losses of over 3 cents a pound in June of last year. We expect production to go up slightly in the second half of this year, with another modest increase forecasted for 2000. And although plenty of challenges lie ahead, I'm confident that our partnership will lead to continued strength and prosperity for your industry. "Nowhere has that partnership been more evident than on food safety issues. The bottom line on food safety is this: without consumer confidence, no one will buy anything. I was just in France recently, and the problem in the EU is that there is no strong regulatory system to ensure consumers that their food is safe. "But here there is just such a system, and HACCP is becoming a big part of it. As the final, smallest plants prepare to come on line in six months, I can say that this effort has been a big success. USDA and the smaller plants have worked together to ensure a smooth transition to HACCP oversight. Performance standards have been a major reason for HACCP's success, and I was pleased that in March, for example, we released new data showing a 27 percent decline in positive salmonella tests in plants where HACCP is in place. "Not only has HACCP allowed us to take advantage of cutting-edge science to ensure meat safety, I think it has really created a new regulatory paradigm. No longer do we have a command and control structure aimed at finding every oil drop on the floor. We do continue to have inspectors, who carry out our responsibility under the law, and they remain a critical part of the operation. But HACCP has been successful because the two sides are beginning to act according to their long-term responsibilities the industry to examine its processes and take responsibility for producing safe food; and the government to give the people confidence that industry is carrying out those responsibilities. "Of course, there's more to our food safety strategy than HACCP. As we've adopted more of a farm-to-table approach, we've been particularly aggressive about consumer outreach. Industry has played a major role here as well, with consumer guidance on things like safe food handling and proper cooking temperatures. You know, as I go around the country, the most frequent questions I get are not about farm programs. Instead people want to know: "At what temperature should I be cooking my food?" "We have a new system called FoodNet, which has helped build a network for foodborne illness reporting. And a new computer network called PulseNet, has enabled the Centers for Disease Control to fingerprint pathogens and find the patterns of related illness across the country. This has created an improved rapid response capability. And thanks to FoodNet and PulseNet, we can identify the risk; that was how we identified the extent of the recent listeria outbreak. And USDA and industry together have been able to find ways to diminish that risk even further. "I don't want to seem like a Pollyanna, because I know that there are still issues to be worked out. I know that you have concerns about potential inspector shortages, among other things. We need to be as vigilant as ever when it comes to listeria, an illness that we thought we had conquered only a few years ago, only to see the outbreak late last year. With so much of your business coming from cooked, ready-to-eat products, the risk of listeria becomes a problem. But overall, I am pleased about the work we've done together on food safety, and I look forward to continued progress. "Like every agricultural sector, the competitiveness of the turkey industry depends on access to foreign markets. Mexico continues to be a strong customer for our turkey. However, as with most commodities, turkey exports have been hamstrung by the global financial meltdown we've seen over the last two years. The problems in Russia and South Korea in particular have hurt your trade prospects. In fact, during a six-month period in 1998, Russian imports of American turkey dropped from over 8.1 million pounds in carcass weight to only 131,000 pounds. And we see the same trend in other meats as well. "But looking at the bigger picture, that's just a speed bump along an otherwise smooth road. A decade ago, turkey exports were so small as to be a non-factor. But according to recent numbers, you now ship 10 percent of your product overseas, with export sales having increased approximately sevenfold since 1990. At the next round of WTO negotiations, we intend to address the various tariff and non-tariff barriers that hold back U.S. exports and tilt the playing field against us. "Despite some of the tension in our trade relationship with the European Union, there's good news today. Just a few hours ago, in Brussels, we signed a U.S.-EU Veterinary Equivalency Agreement, which will affect U.S. transatlantic animal and animal product exports worth $1.5 billion. The Agreement, which is the culmination of six years of negotiations, allows the U.S. and the EU to recognize and honor certain of each other's standards on public and animal health, treating them as equivalent even if they are not identical. "Whether it's food safety, trade barriers, environmental issues or anything else, we must maintain a strong public-private partnership to ensure the continued growth and strength of the turkey industry but also consumer confidence in our food supply and the overall strength of American agriculture. "Ultimately, the agriculture community will go up or down together. Your leadership is needed if agriculture is going to be a source of prosperity in the 21st century. "Thank you." #