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Trade, Legislative Issues Top 2004 Rural Agenda

posted on January 2, 2004

With Mad Cow dominating the news in farm country, it's hard to remember that Rural America faces other challenges in the new year. And because the health and well-being of American agriculture is tied to a wide array of economic factors, those challenges will play out on a number of fronts.

From the corridors of power in Washington to international ports of call, Wayne Bruns provides a look at the key issues on the rural agenda in 2004.


Trade, Legislative Issues Top 2004 Rural Agenda

From the occupation in Iraq to the health of the economy, the focus for much of the nation in 2004 clearly will be on the presidential election. But outside the political arena are a variety of pending issues critical to the livelihood of farm state interests.

Among those issues are: a bitterly debated and massive energy bill in Congress ... the funding and implementation of country-of-origin labeling laws ... the rise or fall of currently soaring commodity prices ... and nagging trade issues that promise to vex international partnerships unless they're resolved.

Sen. Dick Durbin, D-Illinois: "Come to Congress. Come to Capitol Hill. Come to Mama."

Stalemated during the closing days of the 2003 Congressional session, the 1,400-page energy bill is on the front burner for the start of the 2004 assembly.

Farm state lawmakers see passage of the bill as critical because it doubles the minimum use of corn-based ethanol and biodiesel by the year 2012. It also provides billions in tax credits and other benefits over the next 10 years for developing renewable energy sources, including ethanol.

But the legislation stalled when opponents objected to a provision that grants immunity from lawsuits to producers of MTBE, an additive blamed for groundwater pollution.

Sen. Pete Domenici, R-New Mexico: "... there is no way to get an ethanol bill of any consequence without addressing the issue of MTBE."

With a vote on the bill expected no later than January 20th, observers say four lawmakers from Illinois, Indiana and Wisconsin must be persuaded to end a filibuster for the legislation to move forward.

Another issue sure to get early attention in Congress is the country-of-origin labeling law, or COOL. Though supported by a reported 165 farm and consumer groups, the law is adamantly opposed by the Bush administration, and some retailers and packers.

Approved as part of the most recent farm bill, the law would mandate labels on red meats, seafood, peanuts, fresh fruits and vegetables. It was set to take effect next September. But in last-minute spending deliberations, lawmakers delayed the labels until 2006.

Rep. Henry Bonilla, R-Texas: "This country-of-origin labeling provision that was put in the Farm Bill last year is controversial and costly."

Observers say the architects of the delay now will begin writing a new voluntary COOL. Supporters of the current law say they'll fight efforts to rewrite it.

Stay tuned.

More positive momentum was gained in 2003 in trading pits and cash markets, where most major farm commodities saw a significant jump in prices.

A series of fundamental factors were responsible for the higher prices, not the least of which was strong demand from the Chinese for U.S. feed grains. Mounting trade tensions between the two nations have placed 2004 grain deals in doubt. But analysts also note that a continued drawdown in U.S. oilseed and feed grain stockpiles should help sustain price impetus.

In livestock, beef prices soared in 2003 thanks in large part to problems north of the border. Canada reported its first and only case of Mad Cow disease in May. That was followed by the closing of the U.S. border to Canadian beef imports. Coupled with rising seasonal demand for beef, U.S. producers enjoyed a banner year at the feedlot.

John Lawrence, Iowa State Univ. Economist: "... the market is at record high prices. Not a complete surprise although perhaps unanticipated that we're at these levels."

On the flip side, hog prices remained stagnant for much of the year. Pork industry analysts cite a variety of reasons for the sluggish market, including the industrialization of the hog industry and inelastic production levels.

Another area that will help determine farm income in 2004 is trade. Few industries in the U.S. are as trade-sensitive as agriculture. And from China to Europe to the streets of Miami, the repeated failure of global trade liberalization efforts has caused tensions to rise among long-time trading partners.

U.S. Trade Representative Robert Zoellick will have his hands full with a number of key issues. Among them:

--Resolving differences with the European Union over everything from cutting farm subsidies to lifting the ban on the import of genetically modified products.

--The promulgation of the Free Trade Area of the Americas, the Bush administration's attempt to establish the largest free trade zone in the world. If successful, it would include 34 nations in the Western Hemisphere.

--And, the reconciliation of trade differences with China, which currently enjoys a $100 billion trade surplus with the U.S. Widely accused of manipulat6ing currencies to gain an unfair trade advantage, the Chinese already have dropped not-so-veiled threats of retaliation over recently imposed U.S. textile quotas.

Along with management issues for the nation's rivers and forest, and Supreme Court rulings on the constitutionality of commodity checkoff programs, 2004 promises to be a busy year for farm state interests.

For Market To Market, I'm Wayne Bruns.


Tags: agriculture Congress government Mad Cow news policy rural trade