Release No. 0497.98 Remarks of Secretary Dan Glickman Kansas Commodity Classic Salina, KS December 1, 1998 Thank you Jere [White]. Thank you for inviting me here today. It's good to be home, even for a day. And, it's good to be back talking to Kansas farmers. Getting out into the countryside gives me a chance to connect with the folks for whom the 'people's department' was created, and to talk about some of the things we're doing in Washington. It also gives me a chance to hear the concerns of people who do the business of feeding the nation. I don't have to tell the folks in this room how hard the work is and how risky the business of farming is. But thanks to America's farmers and ranchers, in every supermarket across the nation the bins are overflowing and the shelves are packed with safe and affordable food. America's farmers do what they do so well that sometimes from afar it looks easier than it is. It reminds me of the words of President Eisenhower, who grew up a stone's throw away from here in Abilene. He said, 'farming looks mighty easy when your plow is a pencil, and you're a thousand miles from the corn field.' Well a ride on agriculture's roller coaster over the past three years gives you a good feel for the difficulties and wild swings in the fortune's of America's farmers and ranchers. From record imports and strong farm incomes and prices to a farm crisis needing a $6 billion emergency cash infusion ... and all in such a short time period. 1998 was a rocky year, but thanks to President Clinton's efforts many more farmers today are planning for a Spring crop instead of a Spring auction. After the President vetoed the original farm aid bill because it didn't provide enough help, this Administration's strong stand got 40% more funds for emergency assistance for family farmers through Congress. $2.8 billion in checks have already gone out to farmers and in the near future, USDA will announce how the final $2.4 billion in crop loss payments will be made. Our goal is to be fair to all farmers in all parts of the country. Our decisions will encourage the use of crop insurance. And, we will be mindful of the fact that when you combine these payments with other things, such as advanced and enhanced AMTA payments and LDP funds, the dollars allocated to agriculture are significant. We will do our utmost to ensure these emergency funds are spent properly, that they go to folks who suffered losses, and that we have a program that is fair to farmers and to taxpayers. These funds are going to help counteract some serious hurt out in farm country. But we also have to remember that a lot of folks outside of agriculture will be scrutinizing our decisions, especially in light of the Year 2000 budget. So we must put our best foot forward and use this help appropriately. This will help ensure that most farmers hold on for now. But this is short-term relief. After such a tumultuous ride, the question everyone is asking is where are we headed? Given the unpredictable events that can impact agriculture, I don't think anyone can give a definitive answer. But we can look at the big picture with a nod toward giving farmers better control and more flexibility in being better prepared for the ups and downs of a market-oriented agriculture. OUTLOOK First we need to take a look at what's expected in 1999. Yesterday, USDA came out with projections that show U.S. agricultural exports going down further in 1999 to $50.5 billion from $53.6 billion last year. That's nearly 16% off the record high of $59.8 billion in 1996. Obviously, for American agriculture this means there will be more bumps in the road. In the past strong farm exports meant strong farm income, but unfortunately, the reverse is true as well. That being the case, what can and what should we do to help American agriculture? I think the first principle that we all recognize is that responsibility cannot rest solely on the shoulders of producers or solely with the government. There are things all of us can do to help -- in Washington on a policy level and out on the farm on an individual basis. SAFETY NET The first order of business is addressing the need for a farm safety net. Now, I know that a lot of folks in Washington like to believe that the '96 Farm Bill was carved in stone. But I think the events of the recent past had the same startling effect as the apple that hit Isaac Newton in the head. Just like apples, prices fall. I don't think we're on the verge of as profound a discovery as the force of gravity, but I think we recognize that there are forces that are beyond the control of farmers -- whether it's the size of the wheat crop in Argentina, the value of the Japanese yen or the severity of the weather caused by El Nino. The fact is that in good times the farm bill worked well enough, but in bad times, as President Clinton warned when he signed the bill, the safety net provisions of the farm bill are woefully limited. Prosperous times in farm country masked the urgency of the need to address the inadequate safety net. Frankly speaking, we were lucky. Under President Clinton we have the strongest economy in a generation and a balanced budget for the first time since the 1960's. That made it easier to come to the aid of farmers. But it might not work out that way every time there is a need. I don't believe we should lurch from expensive relief bill to expensive relief bill, even if the nation could afford it. We need to assure that farmers are protected, so they, like the rest of the nation, can reap the rewards of their hard work and these good economic times. The basic tenet of the farm bill, that government should get out of the business of micromanaging farming, is a good one. But inherent in the freedom to make one's own planting decisions is the individual responsibility that goes with it. But, I believe, due to the risks inherent in agriculture and the importance of agriculture to our nation, that government has a responsibility, too. We need to ensure that no farmer who makes wise, prudent decisions will lose their family land to an act of God. We need to make 1999 the 'year of the safety net.' We need to build a strong risk management system anchored in a strengthened crop insurance program that will help farmers protect their downside. TRADE But to simply focus on the downside would ignore what is most important to farmers -- sharing in the economic success this country has been blessed with. Prosperity for farmers means focusing on the upside, and, as I said earlier, as trade goes so goes farm income. No sector of the U.S. economy is more vulnerable to changes around the world than agriculture. The product of 1 in 3 farm acres is sold overseas and that ratio will only increase as farmers become more productive. We cannot separate what is happening in Russia, Indonesia, Korea, Japan and Brazil from what is happening to U.S. farmers. In the short term, we are making aggressive use of all the tools available to USDA to help farmers get through a lean year. For example, in 1998 we vigorously used export credit guarantees, announcing $5.8 billion worth, to help some of our best customers continue to buy from our farmers. This year we are taking the same aggressive approach. I was recently in Asia where the South Koreans agreed to accept over $1 billion in export credit guarantees for this year, and that's just a start. As a result of our efforts, while our exports in dollars are down, we are holding on to our market share in difficult times. Another way we can help our farmers while bolstering America's humanitarian efforts around the world is through food aid. In 1998, we authorized 4.2 million tons of wheat donations to Russia and elsewhere. These actions have helped contribute to the fact that since September the price of wheat has increased 40%. We are working with all of our trading partners -- one on one -- to open more markets to U.S. food and fiber. For example, as most folks here in wheat country already know, we recently got Brazil to accept the re-entry of U.S. hard red winter wheat. It's a positive step forward and as discussions move along, we believe they also will show that other classes of U.S. wheat also pose no unreasonable risk to Brazil. My deputy, Rich Rominger is traveling in Argentina and Brazil this week exploring ways to further agricultural trade between our countries. We are also aggressively pursuing trade on a broader perspective. One of the reasons President Clinton and Vice President Gore asked me to go to the Asian Pacific Economic Conference with them was this nation wanted to send a strong signal that agriculture is at the top of America's trade agenda. It is important to agriculture's bottom line. But we should not delude ourselves in assuming that America's farmers and ranchers believe 'en masse that more open markets are necessarily good for them. Many continue to believe that the benefits of expanded trade are outweighed by recent balance of trade deficits, as well as particular problems existing between the U.S. and the European Union and the U.S. and Canada. Many times I hear academics and some in the agri-business community bemoan the fact that if farmers really understood the statistics, they wouldn't be so ambivalent about free trade. But the fact is that many farmers perceive that free trade is often not reciprocal or fair. While that perception is often inaccurate and incomplete, the feelings are still there. And, the recent commodity price declines have not helped reverse this lack of confidence. Our job -- those of us in the private and public sectors -- is to better explain the positives of open markets while at the same time continuing our fight against unfair practices wherever they exist. We are working hard to make sure our producers understand what is at stake for them in the global economy. A good case in point is NAFTA, which deserves some long overdue credit. Our exports to Canada and Mexico have posted their third straight record increase up close to $1.3 billion. So even though we lost $4 billion in exports to Asia, the impact to U.S. farm exports was softened by robust trading in our own hemisphere. So NAFTA may get a share of criticism from various sectors, particularly along the Canadian border, but by and large it's making a difference for agriculture that is critical to prices and to farm income. That's why the upcoming round of the World Trade Organization talks are so important. We have a golden opportunity to build up our own economy and the world's by phasing out expensive export subsidies and reducing import tariffs and getting foreign governments out of agricultural production. And we need to address unfair trade barriers head on, particularly those based on on phony science like our recent agreement with Brazil on hard red winter wheat. LESS GOVERNMENT But I don't want to see us put all our eggs in the trade basket. I think we can all agree that less government involvement in the day-to-day decisions of farming is a good thing. But having less government also means working to create less need for government. The question is: what can producers do that will lessen the need for Uncle Sam to come in and dictate what should and shouldn't be done in order to protect agriculture. Farmers' pursuit of risk management strategies is, as I said earlier, rooted in a strong crop insurance program. But what farmers can do doesn't stop there. I'd like to see a stronger emphasis on sound business strategies. I'd like to see aggressive business management that includes marketing plans that might explore innovative approaches such as the use of co-ops. I'd like to see sound financial management tools used, and I want to see farmers stay abreast of and open to changes in technology. I believe that farming has entered a new frontier of technological change. Biotechnology will continue to allow farmers to grow more crops on less land using less water and that are more disease and pest resistant. Genetically engineered crops will bring about new and better uses for plants creating opportunities for niche products or specialized uses whether it's high-oil corn for feed or blue corn for snacks. CONCLUSION A brief look at the last three years tells us that American agriculture is in transition. As we put more control in the hands of farmers, we need to come up with tools that help farmers continue to produce in a sustainable and profitable manner. It's important that folks in agriculture continue to get together, talk about the big picture, make their voices heard and come up with strategies to deal with the future. As has been true since the day the pilgrims landed, the success of production agriculture is critical to the success of our nation. As you well know, there is a lot of work cut out for us protecting what we have and developing for the future. The challenges that lie before us are formidable, but the potential for American agriculture is boundless. Judging by the record of the past 200 years, I believe American agriculture is up to the task. Thank you. #