Editors note: The following are excerpts of remarks by Secretary of Agriculture Dan Glickman at the 2000 wheat Industry Conference and Exposition on Feb. 9, in Las Vegas, NV.
While there is a disconnect between the general economy and the farm economy, I think it is worthwhile to look at the general economy for just a moment. It is an interesting phenomenon. We are in the midst of the fatest moving and growing economy since the Second World War.
We are lucky to be living in the most prosperous times for our nation with the longest economic expansion in history, record home ownership, low interest, low inflation and the lowest unemployment in 30 years. And by 2013 we will pay down the national debt and be debt free for the first time since Andrew Jackson was in the White House.
Of course, everyone knows prosperity has nothing to do with luck and everything to do with resilience and sacrifice. Nevertheless, there are times when even the hardest work and the fiercest dedication are in vain, when decent men and women find themselves overwhelmed by forces beyond their control. Such is the case right now in American agriculture.
I don't have to tell you that these are lean times for wheat growers and others who make a living harvesting and selling row crops. As recently as May 1996, the price of wheat had soared to $5.75 a bushel. By July of last year, it had plummeted to $2.23. And we don't expect any kind of significant rebound in 2000. Growers in the Northern Plains, I know, have it particularly rough, because they have few other crop options, limited off-farm income opportunities and continued competition from Canadian imports.
Wheat growers depend heavily on international trade, but the global financial crisis, or course, has made it that much more difficult to penetrate overseas markets.
In fiscal year 1996, we saw wheat export sales reach a record high $6.9 billion. But that figure dropped almost in half by 1999, to $3.7 billion. Even as some key markets begin to emerge from recession, wheat growers continue to confront tariff and non-tariff barriers around the world.
At USDA, we are fighting to help you overcome those barriers. We will not back down from the WTO negotiating principles we took to Seattle. Trade-distorting export subsidies must go, and we believe that the Europeans, now completely isolated on this issue, will have no choice but to eventually give up this practice. Likewise, we continue to call for strong disciplines against State Trading Enterprises like the Canadian and Australian wheat Boards, which manipulate prices, control imports and shut out competition.
We continue to work closely with Canada to implement the 14-month-old Record of Understanding. Canada has eased phytosanitary requirements on the in-transit movement of U.S. grain through its rail system, and they have also recognized 14 states as free of karnal bunt, thus eliminating the need to test each shipment. We continue to exchange grain export projections with Canada, allowing us to resolve conflicts before they become crises.
Late last month, USDA held a public meeting on our new Clean wheat Initiative, where we heard from buyers of U.S. wheat about the purer product offered by other wheat-exporting nations. We want to respond to our customers' demand, and we continue to explore the best way to do that, whether it's through financing of grain cleaning facilities or some other method.
We have made extensive use of our export credit authority over the past year, with credit guarantees supporting more than $3 billion in commercial sales. With white wheat sales to Pakistan lagging well behind last year's pace, we recently extended the term of our current credit offering from two to three years. Pacific Northwest growers especially depend on the Pakistani market, and Pakistan needs export credits to make wheat purchases.
We have been as aggressive as ever in our food aid efforts at USDA, both to help farmers make up for declining exports and to help needy people around the globe. In 1999, we shipped 8 million metric tons of wheat and other commodities to about 50 different nations. That was almost five times the 1998 tonnage and the highest level of food aid in several years. I can't give you any specific amounts, but we will be announcing additional food aid very soon.
Guided by sound scientific principles, we are succeeding in allaying unfounded fears about TCK. We persuaded Brazil to lift its ban on hard red winter wheat in 1998. And last spring, we finally made headway with China. For three years, a dispute over TCK had virtually shut us out of China, as our wheat exports plunged a staggering 89 percent between 1995 and 1999. But with the new U.S.-China Agreement on Agricultural Cooperation, China is easing its TCK rules and reopening its borders to American wheat.
Now, for the first time in over a quarter century, wheat from the Pacific Northwest is able to be sold in China. Chinese wheat imports are expected to soar over the next decade, to an average of 5 million metric tons annually. And with the TCK issue behind us, I expect us to compete effectively for those sales.
Chinese membership in the World Trade Organization would further expand our market access to the world's largest nation whose economy is growing at a 7 percent clip. But it all depends on our granting China permanent Normal Trade Relations status, a decision Congress will make later this year.
The stakes can't be overstated-agriculture tariffs cut in half; export subsidies eliminated; domestic support capped. When it's all said and done, we could increase farm exports to China by up to $2 billion a year. This may be the biggest test yet of our nation's commitment to the global economy. It is critical that Congress pass PNTR.
For all the obstacles preventing us from exporting more American wheat, the fact is that our sales in volume have held steady. It's low prices that are keeping export values down. And while the government is no longer in the business of managing supply, there is plenty we can do to mitigate the effect of low prices. And that is where the Administration's new safety net proposal comes in.
On April 4, 1996, President Clinton signed the FAIR Act, but not with wholehearted enthusiasm. Here is what he said that day: "I am signing (this bill) with reservation because I believe (it) fails to provide an adequate safety net for family farmers. The fixed payments...do not adjust to changes in market conditions, which would leave farmers...vulnerable to reductions in crop prices or yields."
The President was prophetic, of course. There was a shortsighted quality to the Farm Bill. It was written for and during a farm bullish economy, with little thought to the possibility that fortunes could easily shift. A year later, the farm economy took a sharp turn for the worse. And where once there was a forgiving safety net, many farmers found only the hard concrete of financial devastation. Something had to be done, of course. So for the last two years, Congress scrambled to put together nearly $15 billion in ad hoc emergency assistance. Sorely needed-yes. But not exactly the most effective or cost-efficient way to see our farmers through tough times. Congress decided to fix the leaky roof well after the rains had begun. That's not a safety net; it's more like damage control.
We need a better way. That's why the Clinton Administration seeks to enhance and fortify the 1996 Farm Bill by rebuilding the safety net. All told, over the next two years, our plan calls for an $11 billion investment, over and above existing programs, on budget and non-emergency funding. It has four major components.
The centerpiece of the proposal is $6.9 billion in supplemental income assistance. That assistance would be targeted. Those who are struggling the most would receive the most. And payments would go to those who actually work the land, not necessarily those who own the land-in other words, farmers not landlords. The assistance would also be counter cyclical with payments increasing at times of greatest distress and tapering off when the farm economy rebounds.
These payments would be on top of, not in lieu of, existing payments. AMTA participants would continue to receive their full payments, and 98 percent of them would receive an additional check under this proposal.
Also, the proposal would freeze loan rates for wheat, corn, soybeans, rice and cotton for this crop year. And it calls for low-cost financing to build or upgrade on-farm storage facilities. Too many farmers have been forced to dump their wheat and other grain into a glutted market. On-farm storage would allow growers to wait for the best conditions before bringing their goods to market.
The second part of the proposal involves $2.7 billion in increased conservation assistance. A new Conservation Security Program would provide annual payments to farmers who adopt specific practices that curb erosion and protect water supplies from pesticide and nutrient runoff. This program would have a very broad reach, as more farmers in more areas would qualify for these payments. And, of course, it is the classic win-win proposition we enhance farm income, at the same time that we protect our natural resources. For the first time we treat land as a valuable commodity.
We would also raise the ceiling on USDA's successful Conservation Reserve Program to 40 million acres. And the conservation provisions would also increase wetland protection and shield more farmland from development and urban sprawl.
Third, our proposal offers farmers enhanced risk management tools worth $1.3 billion. It extends the premium discount for farmers who purchase buy-up coverage for crop insurance, and it makes multi-year coverage available. It would also launch a pilot livestock insurance program, enhance benefits for non-insured crops and expand USDA's risk management education program.
Finally, the safety net proposal invests $600 million to help create new market opportunities for farmers and stimulate existing ones. That includes, among other things, promoting farm cooperatives and encouraging increased use of farm products in the development of biofuels and biobased products.
The safety net proposal is broad-based. It is national, rather than regional. It is based on the common-sense notion that those who are struggling the most deserve the most help. It moves farm policy beyond commodity-based payments to a strategy that invests in people. It's also a plan that values our land beyond its arability, instead seeing it as our most valuable commodity of all.
This is also a fiscally responsible proposal. I don't have the luxury of going off-budget, as Congress has in passing emergency bills the last two years. The safety net plan fits within the framework of the balanced budget that the President submitted on Monday.
This is not about rewriting the current farm bill...but about patching up some of its holes. On the other hand, I see this as more than a stopgap. My belief is that this plan and its guiding principles represent a new philosophical direction that can help map a course toward the 2002 Farm Bill. I consider this not a set of funding levels, but a set of ideas. I am more than willing to work with Congress, to listen and to be flexible.
As we begin the 21st century, we have to become more creative about maintaining the viability of agriculture...and of the American family farm in particular. Gone are the days of an agrarian society, where farming was the lifeblood of the economy. We live today in an urbanized culture, a new economy of high-tech start-ups, strip malls and office parks.
But still, every man, woman and child on earth has to eat, so there has to be a secure place for farmers in America. That's what this safety net proposal is all about securing that place, protecting our farmers, ensuring that one bad year or one devastating storm doesn't drive them out of business. The men and women who have given us the safest, most affordable, most abundant food supply in the world deserve nothing less.