American Farm Bureau Federation Annual Conference Release No. 0013.99 Remarks by Secretary of Agriculture Dan Glickman American Farm Bureau Federation Annual Conference Albuquerque, NM January 12, 1999 "Thank you Dean (Kleckner) for that introduction. It's good to be back with you again this year. I welcome the chance to be here today as an opportunity to get outside Washington and connect with the folks for whom 1998 was quite the topsy-turvy year. "In reflecting on the past year, much of the talk naturally has been of the crisis in farm country. As we prepare to close out the 20th century, I think it's also worth noting that our country is fortunate to have a booming economy. Under this Administration we have the lowest unemployment in a generation, low inflation, low interest rates, record home ownership and a balanced budget. Yet with all this prosperity around us, these remain very uncertain times in agriculture -- even taking into account the $6 billion emergency assistance package that the President pushed for last fall. HELP FOR HOG FARMERS "Look at the situation with declining commodity prices. Just recently we've seen the lowest prices for hogs in five decades. As you know, we've been following this situation closely taking actions on many fronts to help hog farmers through this difficult time. "On Friday, Vice President Gore announced that we will be making approximately $50 million direct cash payments to small, family-sized hog producers hardest hit by this crisis as another way to help cushion the blow. This is some real aid at a time when it's really needed to help family hog farmers buy feed or pay living expenses to get them through this crisis. We will be making an announcement about the specifics of this effort very soon. "These are unusually difficult times for hog farmers. Unfortunately, the situation became critical too late for hog farmers to be included in last fall's $6 billion emergency assistance package for farmers. So we are doing everything we can at the federal level to help, and I want to urge all folks from state and local officials to bankers to local merchants -- to pitch in and do what they can to help our fellow citizens get back on their feet. "By the way, in reading the Reuters wire I couldn't help notice comments made at your convention yesterday which could be taken as a rather personal attack on President Clinton. Those comments struck me as rather odd. I'm sure if you had seen the President discussing hog prices with a group of pork producers in the White House last week for over an hour ... if you heard his later admonition to me to help those in crisis ... if you watched him fight successfully to increase by 40% emergency disaster assistance money for hard hit farmers ... you would recognize that American farmers have a true friend in the White House. This friend and this Administration believe that American agriculture is too important, too valuable, and too politically vulnerable for us not to work together to solve our problems. "You know, when I became Agriculture Secretary nearly 4 years ago, no one could have predicted that in such a short period my tenure would include some of the best of times and some of the worst of times for America's farmers and ranchers. The situation for hog farmers is a perfect example, with prices diving from record highs to their lowest in five decades. "I've thought about this a lot lately and I would like to share my observations with you. CONCENTRATION AND COMPETITION "In every sector of agriculture today -- indeed throughout our economy - - we see a trend toward fewer and larger operations. We are all asking the inevitable question: Is this good or bad? "I believe that is, and should remain, an open question. It's important that agriculture become more productive, more efficient and more globally competitive. But it's also important that these changes do not come at the expense of family farmers and ranchers who also deserve a fair shake in the marketplace. "Again, the situation in the hog industry is a perfect example. Since 1967 the number of hog operations has fallen by 90% with large operators of more than 2,000 hogs representing just under 6% of producers but accounting for over 63 percent of inventory. Add to that the fact that the top four slaughter houses are responsible for about half of all the hogs that are slaughtered and control of the industry falls into relatively few hands. Moreover, the very nature of the industry is changing the relationship between producer and processor. More farmers are raising more hogs under contract for fewer and fewer processors. "With rapid industrialization in the livestock industry, we need to know more about the implications of these changes, so within USDA we've stepped up monitoring and investigation of possible anti-competitive behavior. I have also asked the Department of Justice and the Federal Trade Commission to examine the current record price spread in pork. "As long as I have been in public service, I have been wary of anti- competitive practices. Competition is the key to a free enterprise system. And there can be no competition without an adequate number of competitors giving players, giving farmers in the marketplace adequate choices of action. "In the late 1800s and at the beginning of this century, large meat packing firms had excessive influence throughout the market -- in packing, railroads, retail -- and farmers were at their mercy. It was that kind of concentration of power that led to historic anti-trust legislation - the Sherman and Clayton Anti-trust acts and, in 1921 the Packers and Stockyards Act which gave USDA specific anti-trust powers. Today, the market in meat packing is heavily concentrated with the top four firms controlling approximately 80% of the market. I've been very concerned about concentration in the meat-packing industry since I first became Secretary, and I still worry about individual ranchers' ability to get a fair price in a less competitive marketplace. "And just recently I also asked the Justice Department and the Federal Trade Commission to do a thorough review of the Cargill-Continental consolidation. I do not yet know if this arrangement should be blocked or approved, but I have enough legitimate questions to warrant keeping the rubber stamp in the drawer for now. "As we embrace change and growth, lower costs and increased efficiency, we also must preserve one of America's most fundamental principles fair competition and opportunity for all. These issues are not just limited to agriculture -- whether it's banking, telecommunications, health or transportation -- we need to preserve healthy economic competition. But agriculture and rural America are particularly vulnerable in an economic system where survival of the fittest and strongest and biggest can become the norm. It therefore is critical for you in the Farm Bureau to continue to work with us on ways to strengthen competition in all aspects of American agriculture. TRADE "But whatever the structure of American agriculture, the fact is that the future health of our farm economy is inextricably linked to the global economy. That's why this administration has been very aggressive in pursuing a strong trade agenda. "At the same time, there is growing suspicion among farmers and ranchers that the mantra of free trade is naive and the rhetoric doesn't resonate like it used to. Not withstanding the fact that the U.S. exports over $50 billion in agricultural products annually, many farmers and ranchers believe that they are being taken advantage of by a Canadian style state trading enterprise that some believe permits the dumping of wheat into the U.S. market by European intransigence in complying with WTO decisions by a trade imbalance with China that keeps our wheat and citrus out while we import billions of dollars of consumer goods from them each year. "The truth is that U.S. agriculture cannot survive without free access to world markets. But, the fact also remains that you can't have it both ways -- our markets have to be open as well. But the truth is more complicated than that -- trade must be free, open and reciprocal. The rules of the game must be transparent, easily understandable and universally accepted. It also depends on the acceptance of sound and objective science as an arbiter of a variety of disputes so that political science doesn't snuff out objective science in the sanitary and phytosanitary area. "Certainly the United States will have its work cut out for us as we seek to strengthen and expand global trade. Nowhere will the challenges be more complex than in agriculture -- such as in the upcoming meeting in Columbia in February on biological diversity which could have serious implications for ag exporters. This Administration understands how critical trade talks such as these are to agriculture's bottom line. That is why we have fought so hard to open more markets to more products than any other Administration in modern history, and we will continue down that road. SCIENCE AND TECHNOLOGY "To meet the challenges posed by continued growth and new overseas markets, innovation and technology will remain the driving forces of agriculture. The private sector, land grant institutions and USDA have made major breakthroughs in technology in the past 100 years. To continue to break new ground, adequate funding is critical more partnerships between the public and private sector are critical -- and confronting the questions of the future is critical. "How do we feed a hungry world without depleting our natural resources, without using excessive amounts of water or pesticides? "How do we increase the nutrient value of foods to feed the hungry and protect against disease? "How do we adapt our technology so that family-sized operations can have a meaningful role and so that larger agricultural interests act in a manner giving the farmer meaningful control over his farm? "How do we adapt to changing weather patterns which, if current thinking proves accurate, could dramatically affect where and how crops are grown and livestock is raised? "How do we continue to use science as a friend and aggressively support the future of biotechnology and still maintain and develop public support for the safety of foods produced through these techniques? "None of these questions are easy but they can't be dismissed. This work is too important to be left indiscriminately to the scientists or to the politicians. Government, academia and the private sector must work closely together to sort out all these issues, but we all have a responsibility to keep the public aware and informed for it is the people who will be the final arbiters. SUSTAINABLE AGRICULTURE "But the ability of future generations to meet the demands of new markets tomorrow will depend on how we manage our natural resources today. "I'm proud to say that farmers have responded in a big way. Nobody understands better than the very people who work the land the importance of a clean and healthy environment -- not only to our bottom line, but to the ability of future generations of farmers to carry on the most important work there is feeding our nation. "We at USDA are doing everything we can to be a helpful, supportive partner to your conservation efforts. I'm proud of the way farmers have responded to a whole host of voluntary, incentive-based programs -- from the Conservation Reserve Program, to the Environmental Quality Incentives Program, to the Wildlife Habitat Incentives Program. "On another front we are helping local communities and farmers slow urban sprawl. We are losing farmland to developers at the rate of 1.5 million acres per year. This is a very big problem. The next century is about to happen and the loss of our farmland could really come back to haunt us -- not just in lost ability to produce food for a growing population but in the kinds of communities we create for the future, what Vice President Gore calls "liveability." In advocating smart growth for America, Vice President Gore is calling for a sensible approach which specifically includes protecting America's prime farmland from development. "Programs like these make it easier for farmers to carry on their work in a more sustainable way. But I know that one issue of particular concern to you is the Food Quality Protection Act. It's important to keep in mind one basic truth: safe food sells. The ultimate goal of FQPA is to make the food supply safer, to reinforce this messge with consumers, and to give farmers the assurance they need that registered products are safe and affordable. FQPA was passed by Congress and enjoys strong support from both parties so we need to make it work. "Farmers are key to this process and I want to assure you that we are working hand-in-hand with the Environmental Protection Agency to ensure that these regulations are applied fairly, with due consideration to farmers' interests. As Vice President Gore said to me and EPA Administrator Carol Browner, he wants to make sure this process is carried out with, in his words, "due regard for the needs of our nation's agricultural producers." SAFETY NET "But with all that goes into optimizing the ability of farmers who work hard and do the right thing, the fact is that, sometimes there are factors that are beyond anyone's control and no one knows that better than farmers. "Frankly speaking, last year when we got hit with both bad weather and low commodity prices we were lucky because we have the strongest economy in a generation and that has 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. "USDA's initiatives have helped to fortify the safety net. From massive grain purchases for humanitarian assistance at home and abroad to accelerating purchasing for federal food assistance programs to adjustments in our loan programs to increased export credit guarantees to name a few. But we are in an era where farmers are free to make their own planting decisions, so that puts more of the risk management responsibilities on their shoulders. The Farm Bureau has been instrumental in helping to make farmers aware of all their risk management options and I thank you for your efforts. I also congratulate you on the Revenue Assurance Program you developed which has been very well-received by farmers. "Our most immediate task this year will be to build a strong risk management system anchored in a strengthened crop insurance program that will help farmers protect their downside. On Friday I announced that we will be making a one-time reduction in crop insurance premiums of approximately 30%. In this the 'year of the safety net,' I believe these discounts will help to shore up the crop insurance program as we prepare to overhaul the system for 2000. CONCLUSION 'With all that I've seen during my time as agriculture Secretary, good and bad, I'm feeling very upbeat about the future of American agriculture. "You know last week we announced a historic civil rights settlement between USDA and African American farmers across the nation over complaints of past discrimination. Beyond the terms of the settlement and what it means for thousands of African American farmers, I hope every farmer understands the symbolism for all of agriculture of what we achieved with that settlement. It shows a commitment on the part of USDA to fairness for all farmers, regardless of race or sex of course -- but no matter if you're a big, medium or small farmer, or no matter what part of the country you live in, or no matter what sector of farming you work in. The bottom line is farming is a very important part of our heritage. The way we treat our farmers, all our farmers, reflects on who we are as a nation. After all, agriculture is the backbone of our nation and how agriculture goes, so goes the rest of America. Thank you." ###