Farm program spending is worth billions of dollars each year to the rural economy, which makes the planned reductions no small matter in farm country. USDA projects net farm income in 2005 at nearly $72 billion. That's the second highest total on record, but some $10.7 billion less than last year.
Farm income and farm subsidies also are subject to the whims of international trade, which provides no certain prospects. That's because global trade talks hinge largely on resolving differences over farm subsidies and market access. And that's a tall task.
Negotiators head back to Europe next week to search for a breakthrough, something U.S. trade officials say depends on concessions by the Europeans.
Mike Johanns, Secretary of Agriculture: "Now with some 40 days remaining before the WTO ministerial in Hong Kong, the clock is really ticking."
At a midweek congressional hearing, U.S. trade officials said their offer last month to significantly cut farm subsidies demonstrates a willingness to make concessions on the three pillars of world trade. Those pillars include market access, eliminating export subsidies and substantially reducing trade-distorting agricultural subsidies around the world. Agriculture Secretary Mike Johanns says the U.S. expects other WTO members to match that level of ambition. But, he claims the EU's offer last Friday to cut agricultural tariffs is inadequate.
Rob Portman, U.S. Trade Representative: "If we don't pull it together next week, then I think it's very difficult to see how we can pull together the other issues in time for a successful Hong Kong meeting. So the pressure's on."
U.S. Trade Ambassador Rob Portman also was critical of the EU's recent offer. He and Johanns are scheduled to meet in London with trade ministers from the EU, Brazil and India next week. From there, they will travel to Geneva, where their meeting also will include Australia. The group is known as the Five Interested Parties.
Rob Portman, U.S. Trade Representative: "We've got some of the most productive land in the world and the most productive farmers in the world, and we ought to let them compete fairly."
The WTO talks are meant to boost the world's economy by lowering trade barriers. Poorer countries want the U.S. and EU to make substantial cuts in aid to farmers. They claim rich nations' subsidies keep world prices artificially low and undermine developing countries' exports.
Mike Johanns, Secretary of Agriculture: "Our goal is fair trade. We would prefer to achieve this objective through a successful conclusion of the DOHA negotiations. However, our offer to reduce domestic support is tied to progress in market access. To do otherwise would not be fair trade."
As the WTO's deadlock on agriculture continues, there was some good news on the trade front this week. On Wednesday, Japan's Food Safety Commission, or FSC, announced it will welcome American beef back into its market. The FSC signed off on a draft proposal that will lead to a conditional reopening of the beef market to U.S. meat packers. The reopening is scheduled to happen by year's end.