Remarks by U.S. Secretary of Agriculture Dan Glickman Agricultural Outlook Forum 2000 February 24, 2000 - Arlington, Virginia Release No. 0058.00 Remarks As Prepared for Delivery by U.S. Secretary of Agriculture Dan Glickman Agricultural Outlook Forum 2000 February 24, 2000 Arlington, Virginia "Good morning. First, I want to thank USDA Chief Economist Keith Collins and his team. Every year, they do an outstanding job of organizing this forum. And every day throughout the year, they provide invaluable counsel to me and invaluable service to the American people. "You know, at the risk of sounding like Rodney Dangerfield, USDA and agriculture in general have had a hard time getting respect lately. I don't know how many of you have heard of Craig Kilborn he hosts the talk show that's on after David Letterman, which means his viewing audience consists mainly of insomniacs and college students. Well, right after the First Lady appeared on the Letterman show, this Craig Kilborn started joking that he's going to one- up Letterman by getting the Secretary of Agriculture to come on his show. "The Secretary of Agriculture," he said, as if there couldn't possibly be anyone more obscure on the face of the earth. And he put my face up on the screen three or four nights in a row. "Well, we called his bluff, and I appeared on his show, and I held my own if I may say so myself. But the kicker is and I'm not kidding here that night, with me as a guest, Craig Kilborn tied his high-water mark in the ratings. You may say it's a coincidence but I think not. "Nevertheless, the disrespect keeps coming. In Sports Illustrated a few weeks ago, one writer compared USDA to the listless feeling around the perennially mediocre Washington Wizards basketball team. The article called the Wizards "the sports equivalent of the Department of Agriculture: Everyone knows it's located in the nation's capital but no one really cares." "My response is simply that the Washington Wizards have a record of something like 16-40, so perhaps it's not surprising that no one cares about them. But there are about 2 million farmers and hundreds of millions of consumers out there who care a great deal about the work of USDA and the state of American agriculture. And that's what I'm here to talk about today. "This is my fifth appearance before the Outlook Forum as Secretary of Agriculture. During these five years, to paraphrase from Dickens, we have seen the best of times and the worst of times. "When President Clinton asked me to become Agriculture Secretary in December of 1994, how could I refuse? The farm economy was as bullish as ever. Prices were reaching record heights. Exports were strong. It would have been like turning down the chance to be CEO of Cisco Systems. "But I knew even then that fortunes could easily shift, and sure enough they did. For about three years now, many American farmers and ranchers have been battered by rock-bottom prices, shrinking global demand and record worldwide production, not to mention a slew of natural disasters. "During the last two years, Congress and the Administration were compelled to act -- $6 billion in emergency aid in 1998, followed by another $9 billion last year. This certainly helped many farmers. Plenty of them would not have made it without that assistance. Nevertheless, I believe it was more of a quick fix than a real solution. We applied a very expensive tourniquet, when the situation actually called for a blood transfusion. "Scrambling at the last minute to throw together ad hoc assistance is not best way to help our farmers. Why can't we have all the assistance mechanisms in place, ready to kick in when the farm economy heads south? Why can't we fix the leaky roof before it starts raining? "I think we can, and that's why we've unveiled a new safety net proposal that offers a fairer, more efficient and more cost-effective way to protect farmers. At its heart is several billion dollars, over the next two crop years, in countercyclical income assistance -- payments go up when incomes go down, and vice versa. This assistance is also targeted. Targeted to smaller producers who generally have smaller incomes. Targeted to those farmers suffering the greatest hardship. And unlike the last two emergency bills, targeted to the farmers who have actually grown the crops. "That seems like a pretty common-sense notion that those who are struggling the most deserve the most help. But the AMTA formula that we've been living by for nearly four years, with its fixed payments, has no such logic. Thanks to AMTA, recent supplementary farm payments haven't been tied to need, to size or to current production. "Still, we're not looking to replace AMTA with our plan. Our proposal lays over the top of the 1996 Farm Bill. The new income assistance will come in addition to not instead of AMTA payments and other '96 Farm Bill payments. AMTA participants would continue to receive their full payments, and 98 percent of them would also be eligible for an additional check under our proposal. "There's more to our plan, of course, than income assistance. It includes new direct conservation payments -- direct, not on a cost-share basis -- that reward farmers for being good environmental stewards, and it enhances existing conservation efforts like the Conservation Reserve Program, the Wetlands Reserve Program and the Farmland Protection Program. "There are certain steps I can take administratively, without congressional approval. So I've decided to freeze loan rates for wheat, corn, soybeans, rice and cotton for this crop year. And we're also giving farmers more marketing flexibility by providing low-cost financing to build or upgrade on-farm storage facilities. "On the risk management front, we're looking to make crop insurance more affordable and more accessible, by extending the premium discount on buy-up coverage, offering multi-year coverage, making coverage available to more kinds of farmers and expanding our risk management education program. We also would like to see Congress pass wholesale crop insurance reform, consistent with the principles we announced last year. "We also want to create and expand market opportunities for farmers. On the domestic side, that means promoting the growth and development of farm cooperatives; exploring alternative uses of crops through a new bioenergy program; and funding for rural Empowerment Zones and Enterprise Communities. On the trade side, for the third year in a row, I am seeking the authority to redirect unused money from the Export Enhancement Program to more effective trade-supporting initiatives like international food aid. "And while we're talking about trade, I can't pass up this opportunity to talk about China. Approving permanent Normal Trade Relations -- and thus easing China's accession to the World Trade Organization is the most important trade issue facing the agriculture community this year. "We're talking about the world's largest country, home to one out of every five people on earth, with an economy growing at 7 percent a year. Yet last fiscal year, every man, woman and child in China consumed less than 1 dollar's worth of American agricultural goods. In one year...less than a dollar a person. The bilateral trade relationship is wildly out of balance, with the Chinese selling us five times more in total goods and services than we are selling them. We simply cannot afford such limited access to a market this large and this fertile. "In joining the WTO, China would agree to eliminate many non-tariff barriers and to cut tariffs dramatically. The tariff on frozen beef cuts, for example, would fall from 45 percent to 12 percent. Cheese tariffs would drop from 50 to 12 percent, and oranges from 40 to 12. When it's all said and done, based on conservative estimates, Chinese membership in the WTO will mean an additional $2 billion a year in U.S. farm exports to China by 2005. A no vote on NTR is a vote to cede this lucrative market to the EU, Canada, Australia, Argentina and others. It would be a kind of unilateral economic disarmament. "This may be the biggest test yet of our nation's commitment to a global economy based on fair trade principles. We all know how vocal and intense the opposition can be on trade issues. We saw it in 1997 with fast track. We saw it just a few months ago in Seattle. The President will devote considerable time, energy and political capital to the NTR fight. And I hope the agriculture community will as well. "Whenever you come forward with something new and ambitious like our new safety net plan, you might as well be putting a bullseye on your back. And that's fine; people have a right to critique any proposal. But I can't help but note the irony. Many of the people calling this proposal insufficient are the very same people who masterminded the 1996 Farm Bill, which cut holes in the safety net in the first place. Amazing how a farm crisis can turn everyone into a prairie populist. "To those who find fault with the Administration's plan, I say: come forward with your own ideas. I think it was Harry Truman who said that any jackass can kick down a barn door, but it takes a statesman to build the barn. Now, I'm not calling anybody a jackass. I'm just saying that it's a whole lot easier to make criticisms than to offer constructive solutions of your own especially when you're free to pass off-the-books emergency bills and don't have to operate within the framework of a balanced budget. My message to Congress is: let's build the barn together. And let's not allow our farmers to become an election-year political football. "I am more than happy to be flexible and to work with Congress. Our proposal is meant to be the first word, not the last word, on these matters. It is not about rigid funding levels, but about a set of ideas, a new philosophical compass that can steer us toward a new farm bill in 2002. "I think it's time we broke out of some of the farm policy paradigms and assumptions that have hemmed in our thinking for several years. I've come up with 5 broad principles many of them reflected in our safety net proposal that I think should guide the next generation of farm policy. "The first is that farm programs should support farmers, not commodities. In other words, let's base our payments and government assistance on farm income rather than crop prices. After all, it's income not just price that allows farmers to pay the bills, upgrade their equipment and have a decent standard of living. The commodity-driven system we've had for decades helps some people, but it allows many others to slip through the cracks. It also seems to have encouraged the massive consolidation we've seen in agriculture. Because when farm support is issued on a crop-specific or per-bushel or per-pound basis, the larger you are the bigger your payment. "Second, we need a farm policy that is more comprehensive and national in scope. I've always thought it was curious that the '96 Farm Bill was supposed to encourage planting flexibility, and yet we continue to have a narrow, seven-crop, regional system that doesn't support or reward farmers for branching out into new and specialty crops. "It wasn't until last summer's drought, which was centered in the Northeast and mid-Atlantic regions, that certain people -- like the national media, for example -- began to realize that there are actually farmers in these parts of the country. In fact, from Maine to Virginia, there are 200,000 farmers. They too deserve support and protection, and our safety net begins to provide it. "So what tools do you use to direct more resources to less traditional growers? One way is to shake up our risk management programs, to make them more inclusive, which is my third principle. Under the federal crop insurance program, we still do not have the authority to provide affordable protection for livestock, even though ranchers account for about half of all agricultural sales and proceeds. So our safety net plan includes a pilot livestock insurance program, which I hope we can expand in the future. Another thing we want to do is lift the area-wide trigger on our Non-Insured Assistance Program, making it easier for farmers of uninsurable crops to receive assistance after a major loss. "Fourth, conservation -- the preservation of our land and soil -- must be a centerpiece of farm policy, not an afterthought. By creating incentives for all farmers to be environmentally responsible, we can increase farm income at the same time that we protect our natural resources. The land is not something that can be replaced like a piece of machinery. We need to respect it above and beyond its crop-producing capability; we must recognize it for what it is: our most valuable commodity of all. Long after this year's crop is grown, harvested and sold...and the next year's and the next year's...what still will remain is the land. We must hand it to the next generation in as good a shape as we found it. And we can do that while still having an agriculture sector that is productive and profitable. "My fifth principle involves integrating rural development into farm policy. In today's world, most people in rural America cannot make a decent living in production agriculture alone. I wish they could, but the fact is that many farmers need to supplement their income with off-farm opportunities; often that's the only way for them to stay on the land. So we need a diversified rural economy, one where entrepreneurship can flourish, one with sound physical and information infrastructure. Rural communities must also have the solid tax base, the clean streets, the safe neighborhoods, the good schools, the skilled labor pool everything that would make someone want to bring their family or business to a community. "At USDA, we have programs that address these issues. We offer loans and grants for rural business, rural housing and rural utilities. We also have a Distance Learning and Telemedicine program that allows rural students, for example, to use information technology to connect long-distance with museums, libraries and other classrooms. The program also allows rural citizens to get proper medical care by consulting electronically with specialists thousands of miles away. We must make sure that small towns and rural areas have the modern information infrastructure that the cities and suburbs have. In today's world, you can start a business from anywhere and still be able to access and communicate with people around the globe...as long as you have the proper tools. "A new farm policy must go beyond just the wheat program, the rice program, the cotton program and so on to address the more fundamental question: how can we help preserve the nation's agrarian tradition by providing more rural economic opportunity, whether it's in farming, retail, tourism or Internet start-ups? "Over the last 60 years, agriculture has been dramatically transformed, and yet farm policy has remained relatively stagnant. People generally do not and cannot farm the way they did in the 1930s and 40s, so government's role in helping them has to change accordingly. "The days when most farmers could make ends meet by simply bringing bulk commodities to market are over. That's why a new farm policy must highlight new and different ways for farmers to make money and capture a greater share of the consumer dollar. That means promoting farm cooperatives, direct marketing and farmers markets. It means encouraging the use of crops in the production of renewable energy sources. It means providing greater opportunities for farmers in value-added, consumer-ready goods, organics and so on. It means not just "freedom to farm" but freedom to market. And it means government must be there to help ensure that the markets are free and competitive by actively enforcing our anti-trust and price discrimination laws. "Of course, traditional row crop farming will continue to be the heart of American agriculture. And the government will continue to support the people who grow traditional crops. But a new century calls for a more holistic approach to farm policy, one that reflects and embraces the diversity of American agriculture. "For example, new immigrants from places like Southeast Asia, Africa and Latin America are finding opportunities in agriculture. They're settling not just in Iowa, Nebraska and Kansas but in places like Virginia, Massachusetts and Washington state. And they're growing and -- exporting -- specialty crops like apples, blueberries, strawberries and water spinach. Shouldn't they have the same opportunity for support as traditional heartland row crop producers? "A new farm policy must continue to celebrate farmers, their contribution and their unique role in society. And it must do that by embracing a more complete vision of the American farmer: farmer as effective risk manager farmer as conscientious landsteward farmer as bold innovator farmer as resourceful, multi-faceted, flexible businessperson. "Looking ahead to the 21st century that's just begun, the future for agriculture is bright. Within the next quarter century, we expect that there will be 8 billion people on earth, many of them with higher incomes and more varied diets than ever before. A new farm policy can help American farmers reap the benefits of this extraordinary opportunity. "But that new farm policy must be as fair and inclusive as possible. It must go beyond commodity-based programs. It must be national in scope, encompassing more regions, more farmers and more crops. It's time for a farm policy that is focused less on historic crop prices and bureaucratic formulas and more on people and their dreams. "Thank you very much." #