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Troubling Year Draws To A Close

posted on December 28, 2001

Quietly the world changed a bit more this week. President Bush granted China "permanent normal trade status", ending a quarter century policy of linking Chinese access to U.S. markets to the communist nation's expansion of political and economic freedom.

Also this week a freighter loaded with corn and frozen chicken chugged into a Cuban harbor, the first commercial shipments of food to that Communist nation in nearly 40 years. More shipments of soybeans, rice and wheat are scheduled to arrive in the next couple of months. Admittedly both events are more political than commercial, but they pave the way for commerce.

Even though this past year will be most remembered for the events of a single day, it was acts of commerce in 2001 that will define the future.


Troubling Year Draws To A Close

It took but one horrifying morning to define 2001.

Millions of lives around the globe were suddenly and dramatically changed by the scenes of the destruction. A new kind of war, this one on terrorism, was initiated following the loss of more than 3,000 lives in the heart of New York City's financial district ... and at the symbol of U.S. might in Washington.

President Bush: "Thousands of lives were suddenly ended by evil, despicable acts of terror..."

A new president was forced within eight months of taking office into leading the nation in the war on terrorism. In addition to mobilizing the armed forces for action in Afghanistan, strident new domestic security measures were employed. Among them, the temporary grounding of all domestic air flights, right down to crop dusters working the fields of Rural America. The shutdown of the nation's 35-hundred agricultural aviators fueled speculation and fear about the potential for bioterrorism attacks from the air.

On the ground, meanwhile, commodities exchanges reopened after an historic two-day shutdown, while the physical movement of grain was largely uninterrupted.

Senator Tom Harkin, D-Iowa: " And we are going to put our farmers and ranchers in a terrible, terrible situation next year all because of the vote that was held 15 minutes ago."

On the legislative front in 2001, the push to rewrite farm policy before the end of the year came up short. Farm state lawmakers and agricultural interests, fearing there will be less money available for farm subsidies in the federal budget next year, sought sweeping changes in the existing Freedom To Farm law. But they met stiff opposition from the White House and Senate Republicans who claimed the bills being proposed were too expensive.

Legislation approved in the House and sought by Senate Democrats would have provided some $73 billion in farm subsidies over a five-year period. The bills also would have delivered new counter-cyclical benefits to producers of most commodities ... including, for the first time, fruit and vegetable growers.

The current farm law does not expire until September, but Senate leadership has pledged to tackle the issue again right after the start of the new year..

Among the elements central to that debate will be trade and antitrust legislation. Congress did manage to narrowly approve one of the administration's key trade issues. The so-called "fast-track" trade policy gives the president greater latitude in the negotiation of trade deals and allows Congress only a "yea" or "nay" vote on such deals without amendment. Supporters of fast-track say farm interests stand to benefit from the policy.

Antitrust issues also remain largely unresolved. Many in Congress express concern over agribusiness consolidation, especially in the meatpacking industry. That contraction was symbolized in 2001 by the purchase of beefpacking goliath IBP by poultry processing giant Tyson Foods. The $2.7-billion deal gives Tyson 28% of the beef market, 25% of the chicken market, and 18% of the pork market.

On the legal front, a federal court in Michigan ruled the vote to terminate the pork checkoff was "advisory" ... and the subsequent deal between USDA and the National Pork Producers Council to continue the mandatory assessment was legal.

Opponents of the checkoff maintain the court's ruling on the vote is only one element of the case. They contend the existence of the checkoff is unconstitutional and vow to continue the legal fight to end it.

Environmental regulation remains at the forefront for many involved in agriculture. New rules proposed by the Environmental Protection Agency in 2001 redefined concentrated animal feeding operations, or CAFOs (KAY-FOES). The new standard includes extending liability for manure handling to anyone who owns animals or influences animal production.

Critics object to giving EPA the authority to regulate certain aspects of farming, such as manure application. In the first case bound to have widespread ramifications, the EPA ordered Seaboard Farms of Oklahoma to comply with a law governing hazardous waste from industrial or municipal sources. Pork industry officials claim the case against Seaboard will lead to similar actions against cattle and poultry producers, as well.

In Europe, a two-month outbreak last spring of foot-and-mouth disease devastated foreign livestock markets. Officials estimated the cost of dealing with the highly contagious disease in the U.K. alone at $4.3-billion dollars. To stop the spread of the disease, hundreds of thousands of farm animals were destroyed in England and other parts of Europe.

Declines also were seen in the cotton market, where overproduction spurred historic low prices for the fiber. Indeed, the story's much the same for the nation's other widely grown commodities, like corn, wheat and soybeans.

Just how to address the continuing problem of low commodity prices will be but one of the challenges facing farm policymakers in the year 2002.


Tags: agriculture China Cuba economy news trade