The new Farm Bill may be a double-edged sword when it comes to trade with other countries. With pork exports having grown by 541 percent since 1990, anything that impacts export and imports is of interest to you and the industry as a whole.
New funding for export promotion built into the legislation may help boost U.S. exports, but some countries have charged that a so-called "safety net" for U.S. farmers could distort fair trade.
Parts of the "safety net" for crop producers in particular, has some countries concerned that the United States could breach a $19.1-billion annual cap in domestic supports agreed to in the last round of World Trade Organization talks, points out Texas A&M University agricultural economist Joe Outlaw. "Reality is, we have no way of knowing whether we will exceed our annual cap. Based on current low commodity prices it will be close."
Under the WTO pact the United States committed itself to limits on domestic supports that fit within "amber box" programs. "Amber box" programs are those that are shown to distort international trade.
If the $19.1-billion limit is breached, the Secretary of Agriculture has the authority to scale back farm support payments. Speculation is, however, that would
be politically unpopular and wouldn't occur easily.
The new Farm Bill does include some programs designed to promote trade:
- Market Access Program – "This is directed toward promoting exports of value-added agricultural products," says Outlaw. Funding increases over the life of the bill, starting with $100 million in 2002 and gradually increasing to $200 million by 2007. The program was previously funded at $90 million a year.
- Foreign Market Development Cooperator Program – This is intended to enhance exports through market development activities. Under the previous Farm Bill, funds were directed toward unprocessed bulk commodities. The new bill added language regarding value-added ag products. Funding increased to $34.5 million a year, from $27.5 million previously.
- Food For Progress Program – This provides U.S. commodities to support countries that have made commitments to expand free enterprise in their ag economies. It was re-authorized and funded at $308 million. The program also establishes minimum commodity levels – 400,000 metric tons – to be purchased for food-aid programs.
- McGovern-Dole International Food for Education and Child Nutrition Program – This provides $100 million in mandatory money for fiscal year 2003 to continue a pilot program. Funds for 2003 to 2007 were authorized, but not appropriated. The program
requires procurement of agricultural commodities and spells out financial and technical assistance to carry out preschool and school food for education programs and maternal, infant and child nutrition programs.
Any agricultural commodity is eligible for this program, says Outlaw. The new legislation states that the President will designate one or more federal agencies to carry out the program.
- Country-of-Origin Labeling – Under this program, which is voluntary through 2003 – but mandatory thereafter – meat, fish, produce and peanuts sold in the United States must be labeled as to the country in which the product originated. For a product to be labeled a "USA product", it must be born, raised and processed in the United States.
This program has quickly proven to be controversial. "Many people feel this will not have a big impact [on trade], but that it will generate a lot of paperwork. My short, cynical answer is that it will increase the cost of production [labeling]," says Outlaw.
Two exceptions exist in this program. The labeling requirements do not apply to commodities going into foodservice distribution. Nor does include commodities that are ingredients for processed products.
- Trade Promotion Authority – "This legislation (previously known as fast-track authority) is currently moving through Congress, and the House and Senate versions differ substantially," notes Outlaw.
- Biotechnology and Agricultural Trade Program – The Farm Bill also authorized $6 million to fund this program, which was designed to remove, resolve or mitigate significant regulatory non-tariff barriers to U.S. exports by providing grants to public- and private-sector projects.
- Technical Assistance for Specialty Crops – Funded at $2 million by USDA's Commodity Credit Corp., this program aims to address barriers that prohibit or threaten exports of specialty crops.
Other items written into the new Farm Bill include a Global Market Strategy that establishes a schedule by which the Secretary of Agriculture reports to relevant committees on the formulation of a global-market strategy that identifies export growth opportunities. The "strategy" also ensures that resources, programs and policies of USDA are coordinated with those of other agencies.
Program information, tools and forms relating to the new farm bill can be found on the USDA's Web site, http://www.usda.gov/farmbill.
Kansas State University and the Farm Foundation conference (http://www.farmfoundation.org)