New Farm Bill--Slow Death
for Family Farmers

The
AGRIBUSINESS
EXAMINER
April 29, 2002 #159
Monitoring Corporate Agribusiness
From a Public Interest Perspective

EDITOR\PUBLISHER: A.V. Krebs

ADDRESS: PO. Box 2201, Everett, Washington 98203-0201
E-MAIL: avkrebs@earthlink.net
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COMMENTARY:
2002 FARM BILL AWAITS FINAL CONGRESSIONAL VOTE
FAMILY FARMERS ASK SELVES "WHO NEEDS ENEMIES
WHEN WE HAVE FRIENDS LIKE THESE"

A.C. Townley, the co-founder of the early 20th century progressive populist
Non-Partisan League once reminded a farm audience:

"I have been told all my life that you are independent American farmers. I
know that you are independent farmers, because all those fellows that handle
the wheat and potatoes say you are. They tell it from morning until night,
that you are independent American farmers. You know that they never lie. I
heard a farmer the other day say that his interpretation of an `independent'
American farmer was that he was `in' about as far as he could get, and
`dependent' upon everything in sight."

If anyone doubts Townley's wry observation all they need to do is look at
the results of the House-Senate conference committee farm bill now awaiting
both houses approval and President-select George W. Bush's signature.

ADM got what it wanted, the Big Four meat packing companies got what they
wanted, corporate agribusiness got what it wanted, the National Pork
Producers Council got what it wanted. Meanwhile, conservationists, food
stamp advocates and farm state politicians up for re-election this year
managed to also scrape a few crumbs off of the table.

Yes, everybody, including the so-called "friends" of family farm
agriculture, seems to have gotten something from this new farm bill, however
odious other parts of the bill may have been to them, everybody that is with
the exception of the nation's family farmers !!!

Indeed, many farmers might well be asking themselves right about now, "who
needs enemies when I've got friends like these???"

That question, however, is destined to be asked again and again in the
future when it comes to farm legislation until such time as a bill comes
before our lawmakers that is a bill of the family farmer, by the family
farmer and for the family farmer.

Such a bill has been written --- Food From Family Farms Act (see Issue #124)
--- and it is now incumbent that family farmers begin to move heaven and
earth to not only get the thinking behind and the language contained in that
bill before the public and the two major issues it addresses --- a fair
market price for farm-produced goods and the increasing threat of corporate
agribusiness consolidation --- but to educate both friend and foe alike,
beginning at the grassroots, on the economic and social fundamentals of
family farm agriculture.

The stakes are high for the very survival of family farm agriculture hangs
in the balance. In short family farmers are going to have to embark on a
massive education and public relations campaign, aimed not only at their
heretofore passive neighbors, but their elected representatives, consumers
and environmentalists. And in embarking on such a crusade they need to make
a simple political axiom abundantly clear to one and all:

If you are not part of the solution, you are part of the problem!!!!

NEW SENATE-HOUSE FARM BILL TESTAMENT
TO CORPORATE AGRIBUSINESS POLITICAL INFLUENCE

DAN MORGAN, THE WASHINGTON POST:
House and Senate negotiators [Thursday] jettisoned a six-year attempt
to wean farmers off government subsidies and approved a high-priced
farm bill that would expand payments to producers of basic agricultural
commodities by nearly $50 billion over the next decade.

The bulk of the extra money would go to some of the largest and wealthiest
wheat, corn, cotton and rice growers in 10 central and southern states. The
measure would also sharply increase funding for environmental and land
conservation programs and extend food stamp benefits to adult legal
immigrants who have been in the United States for at least five years and to
all children of legal immigrants.

The agreement is a testament to the continuing political influence of the
agriculture lobby, even as the number of full-time commercial farmers has
dwindled to a few hundred thousand. With world and domestic farm prices
often fluctuating, the lobby has argued that hefty government payments
remain essential to a wide range of rural interests. The new six-year
legislation would replace the 1996 Freedom to Farm Act, a radical measure
that was supposed to phase out 60 years of hands-on government management of
agriculture.

The House and Senate must ratify the deal before it can be sent to President
Bush. Given the importance of farm states in this fall's battle for control
of the Senate, GOP aides said Bush is virtually certain to sign it.

But Agriculture Secretary Ann M. Veneman said the administration still needs
to study the details. Although the farm legislation itself covers only the
next six years, the conferees allocated 10 years of spending for farm
programs. Yesterday, the Congressional Budget Office was still studying the
price tag on such things as a new national dairy program and a
9-cents-a-bushel increase in corn price supports.

Adding drama to the process was the knowledge that thousands of farmers were
delaying decisions on what to plant pending final word on the subsidy levels
being set by negotiators meeting behind closed doors on Capitol Hill.
"They've been on pins and needles," said one farm consultant.

"We've done it," said Sen. Tom Harkin (Dem.-Iowa), chairman of the Senate
Agriculture Committee. He said the bill would put a strong safety net under
farmers. "I hope this stems the tide of those going out of farming," he
said. Some outside experts were less enthusiastic.

"It's a disappointment to those of us who hoped [the previous farm bill]
would lead to a smaller government role," said University of Maryland
economist Bruce Gardner. "It clearly hasn't done that."

The Freedom to Farm Act ended the mandatory idling of crop acreage and the
federal purchases of surplus commodities. Although it retained price
supports and added cash payments to growers to tide them over through a
transition, its goal was to have the world market, not the federal
government, telling farmers how much and what to plant.

But as world prices plummeted in the late 1990s, Congress rushed to the
rescue with huge "emergency" bailouts that ran up the federal deficit. The
new legislation, in effect, acknowledges the failure of the previous policy
by setting up a new counter-cyclical program that would provide advance
payments to growers based on estimates of future price trends.

The combined payments to growers of staple crops would consume by far the
largest share of the $73.5 billion in extra money that Congress has made
available for farm programs between now and 2012. Peanut growers alone would
collect about $4 billion more. The corn support price would rise from the
current $1.89 a bushel to $1.98 this year and next, and then drop by two
cents a bushel.

"I recognize it's extremely difficult to put together a meaningful farm bill
in an election year with different regions, different priorities and
different perspectives," said Rep. Ron Kind (Dem.-Wisconsin), who fought for
greater conservation funding in the House bill. "But it's disheartening to
see that 75% of the new money will go into crop programs that benefit less
than 30% of the farmers in our country."

To limit the benefits going to the most affluent farmers or corporations,
Senate Democrats fought to cap payments at $275,000 annually. But that
effort failed when House GOP conferees resisted, even though the House had
passed a nonbinding resolution backing the Senate position.

Under the compromise agreement, top payments were set at $360,000,
down from the current $460,000 ceiling. But loopholes that allow several
entities to receive the payments were retained. Harkin promised to work
to bring more "transparency" to the farm payment system. Industry officials
said the torrent of funds going to the heartland would likely have the effect
of sustaining --- or increasing --- land values, a development that would not
help thousands of farmers who rent their land from others.

"It's going to put more money into the agriculture economy, probably," said
John Campbell, vice president of Ag Processing Inc. of Omaha. "If you're a
banker or own land, that's great. If you're a tenant farmer, it may not be."
Campbell served on a commission last year that studied the farm economy.
Along with providing traditional supports for farmers, the new legislation
would shape conservation, nutrition, research and rural development
programs. Negotiators set aside a proposal to bar meatpackers from owning
livestock.

A major compromise involved midwestern and northeastern dairy farmers, at
odds for years. Midwestern dairy farmers have charged that unduly high
northeastern milk support prices have barred them from that region's market.
The agreement would establish a 3 1/2-year, $1.3 billion national dairy
program. Under a complicated formula, the price of milk would be supported
at $16.94 per 100 pounds.

U.S. livestock and hog producers won a battle when House negotiators
accepted a Senate plan to require that all meat be labeled by country of
origin. It was pushed by livestock operators in the Northern Plains who fear
Canadian and Mexican imports. Fish, fruits and vegetables would also be
covered. The final bill provides major gains for those pressing for
conservation programs for which all farmers are eligible. It authorizes a
record $17.1 billion over 10 years for improving water quality, protecting
wetlands, safeguarding open spaces and setting aside marginal land.

CAMPAIGN FOR FAMILY FARMS:
"WE'VE GOT TO KILL THIS BILL
BEFORE IT KILLS US"

CAMPAIGN FOR FAMILY FARMS: . . Early statements indicate that farm bill
negotiators have rejected key provisions supported by family farmers and
farm groups from all across the nation, including a ban on packer ownership
of livestock and restrictions on large payments being made to factory farms
and meatpackers.

"This is a travesty, a boondoggle, and an outrage," said Minnesota farmer
and Land Stewardship Project member Monica Kahout. "Family farmers have
consistently called for a ban on packer ownership of livestock, but congress
is responding to corporate lobbyists rather than the people with this bill.
This is a farm bill that directly supports corporate livestock factories,
pure and simple."

The Environmental Quality Incentives Program (EQIP), which currently pays
for effective conservation practices on family farms, will also face
significant changes as a result of the farm bill deal. "The Bill would turn
the EQIP into a huge new subsidy for factory livestock producers," said Phil
Wright CFF spokesman and Illinois Stewardship Alliance member. "If the
conferees go with the House version of EQIP, it could mean up to $50,000 a
year for every factory farm in America."

"I don't know if I've ever seen a worse example of corporate special
interests at work than through this so-called farm bill process," said Iowa
farmer and Iowa Citizens for Community Improvement member Larry Ginter.
"This is a Factory Farm Bill that rips off family farmers and taxpayers, and
lines the pockets of the packers and grain traders. Who in America, besides
the lobbyists, politicians and agribusiness corporations, actually supports
this bill?

Rhonda Perry, a Missouri farmer and Missouri Rural Crisis Center member,
agrees. "What we're facing is a farm bill that refuses to ban packer
ownership of livestock, provides millions of dollars in funding to support
corporate livestock factories, and facilitates cheap grain prices that will
continue to fuel the construction of new factory farms. The American public
is sick and tired of paying for bad policies that foot the bill for
corporations. We've got to kill this bill before it kills us."

GRAIN CORPS. CONTINUE TO CONSOLIDATE
AS TRADE TRANSPARENCY SUFFERS SETBACKS

MICHAEL J. STRAUSS, OSTER DOWJONES:
The gradual move toward transparency in the historically secretive
international grain market has suffered some setbacks, and the trend
toward consolidation among large grain traders is shaping up as one of them.

Grain firms have never been eager to share information about transactions
and market-influencing events. But they have been forced to improve
transparency as trade has grown and as futures have drawn in participation
from investors accustomed to more regulated --- and more open --- financial
markets. As the number of firms involved in the business falls, this process
is being reversed.

In the last few years, many global grain trading firms have disappeared,
either going out of business or being absorbed into other companies through
mergers, and the process is continuing --- perhaps even accelerating. A
sustained slump in grain prices has taken its toll on some firms, a few have
fallen victim to losses by rogue traders and still others have been bought
and sold in corporate maneuvers that had little to do with the trading
business itself.

Trading giants like Continental and Andre and second-tier firms that had
gained prominence by their importance in the grain markets, like Tradigrain,
are among those that have been caught in the trend. It's not that business
is shrinking --- the International Grains Council says the amount of grain
traded internationally has grown 6% in the last three years --- it's that
the number of players is falling as margins have become tighter.

This isn't just affecting the grain sector --- industries like airlines and
telecommunications have been undergoing the same thing. But what makes the
grain trade different is that so much of its activity is done by entities
that don't have to say much about what they do, either to the public or to
each other.

These include the trading giants that began years ago as family-run
businesses, like Cargill and Dreyfus. Family firms continue to dominate much
of today's world's grain trade, and some are thriving. Most are still
privately held, so don't fall under disclosure rules that many governments
enforce for firms with publicly traded securities. Cooperatives, which move
large amounts of grain in many countries and are not subject to rigorous
disclosure rules, have also been merging.

The other players in the grain trade that don't have to say much are
state-run or quasi-governmental sellers and buyers. State-controlled sellers
like the Canadian Wheat Board and official importers in countries like Egypt
and Algeria are among the biggest traders.

The fall in the number of entities trading grain is not the only direction
the threat to transparency is coming from. Cargill's recent acquisition of
one of the world's largest starch producers, Cerestar, is indicative of
moves by some agribusiness companies to become more vertically integrated.
Those on the outside of such corporate structures may become less privy to
the kinds of transactions that are done between companies within them.

Grain brokers who are used to arranging deals between firms at different
vertical levels have already expressed concern that their business will be
eroded as more trades get done "in house." This would also mean the erosion
of the brokers' place in the information chain, since it is often through
brokers that word of specific grain needs or availability will reach the
broader markets.

While the grain sector's consolidation may make it more difficult for some
of this information to get out, it is occurring amid a longer-term
counter-trend that might limit its impact.

Some of the world's leading grain-importing countries have been gradually
liberalizing their grain sectors, and this is fostering the emergence of
more private-sector trading firms to co-exist with state-run entities. Also,
the U.S. aims to use the World Trade Organization's upcoming agricultural
trade talks as a venue to broaden this process, by fighting to get state-run
agricultural trading firms that act as monopolies outlawed in favor of
multiple players. As new trading firms enter the grain markets from
scattered points around the world, they may be critical to keeping the
market's information flow intact.

IATP REPORT:
GLOBAL TRADE AGREEMENTS WILL NOT SUCCEED
HELPING FARMERS AND RURAL DEVLOPMENT UNLESS
IT ADDRESSES TRANSNATIONAL'S MARKET POWER

BEN LILLISTON, INSTITUTE FOR AGRICULTURE AND TRADE POLICY:
The current global agriculture trade agreement will not succeed in helping farmers and
broad-based economic development until it addresses market power by
transnational corporations, finds a new report released . . . by the
Institute for Agriculture and Trade Policy. The report, Managing the
Invisible Hand: Markets, Farmers and International Trade, is by the
Institute's Trade Director Sophia Murphy. The report was produced by IATP
for the Canadian Foodgrains Bank.

The report examines the World Trade Organization's (WTO) Agreement on
Agriculture, which is the primary trade agreement governing global
agricultural trade. Between now and March 31, 2003, governments will draft
revisions to the current agriculture trade rules. Government delegates at
the WTO will discuss issues such as export subsidies, market access,
domestic support programs, food security, and special treatment for
developing countries.

The report examines the weaknesses in the Agreement on Agriculture and
argues that the agreement itself, whose structure is reflected in the
negotiations, is fundamentally flawed. The Agreement ignores:

* the inelastic nature of demand in agriculture;
* the relatively inelastic nature of supply in agriculture;
* the political and economic weakness of most farmers;
* the vertical integration of the agricultural system;
* the fact that countries do not trade; farmers do not trade; transnational
agri-business trades.

"Until multilateral trade rules take account of the concentration of market
power in transnational agricultural trade, they cannot manage an open and
fair trading system," Murphy writes in the report. "Agricultural trade rules
need to take into account the rapidity of change in the whole agricultural
sector, from seed production to food processing to retailing. These rules
must allow countries, particularly developing countries, the flexibility to
block dumped agricultural products, protect food security and preserve the
livelihoods of low-income farmers."

The paper proposes several revisions to the WTO Agreement on Agriculture
including:

1. Investigating and publishing the scale and scope of transnational
agri-business activities in member states;
2. Evaluating the sources of market distortion, public and private, and
discussing how best to address them;
3. Creating a WTO working group to discuss competition issues specifically
related to agriculture.

Murphy will present the paper at the "World Trade Organization Symposium:
The Doha Development Agenda and Beyond," being held from April 29-May 1 in
Geneva, Switzerland. IATP is one of half a dozen Non-Governmental
Organizations sponsoring an April 30th workshop in Geneva titled: "Dumping
and the WTO Agreement on Agriculture: The Food Security Implications."

Sophia Murphy is the director of IATP's Trade and Agriculture Program, which
focuses on multilateral institutions and food security. She is a former
Policy Officer at the United Nations in Geneva, Switzerland, and Policy
Officer at the Canadian Council for International Co-operation in Ottawa.
She is a graduate of Oxford University and the London School of Economics.
She has written frequently on food and trade issues and has spoken to many
international panels on these topics --- most recently at the United Nations
Financing for Development meeting in Monterrey, Mexico.

The Institute for Agriculture and Trade Policy promotes resilient family
farms, rural communities and ecosystems around the world through research
and education, science and technology, and advocacy. The full report and
executive summary can be viewed at: http://www.tradeobservatory.org