With farm income projected to fall nearly $4 billion this year, the Clinton administration is taking new steps to boost agricultural exports and prop up prices paid to farmers.
Agriculture Secretary Dan Glickman, who unveiled the plan at a Senate hearing Thursday, said that despite free-market reforms in U.S. farm policy, there are times when government must step in."We must not forsake our own responsibility," Glickman told the Senate Agriculture Committee. "Rain or shine, bear or bull, we need to look out for our farmers and ranchers."
Two of the actions are being taken by the department immediately:
- Getting around an annual limit on dairy exports by using amounts from prior years in which the allocations were never actually sold. This would clear the way for sale of some $50 million in dairy products to other countries.
- Using the Export Enhancement Program to subsidize farm products in retaliation for unfair trade practices conducted by other countries. In the first example, the United States would subsidize about 20,000 tons of poultry for sale to the Middle East. This would compete with the European Union, which is blocking imports of American chicken in a dispute over sanitation practices.
Another USDA proposal, which would require a formal public rule-making procedure, would allow the export program to be used to subsidize exporters whose cargos are unexpectedly and unfairly turned away from foreign ports.
In addition, Glickman is asking Congress to pass legislation allowing any money left in the export program at the end of the year to be used to purchase farm products for other food programs, ranging from foreign aid to the U.S. food security reserve. That carryover is often spent on unrelated items.
Senators generally welcomed Glickman's announcement, although many called for more sweeping trade advances such as approval of fast-track authority for the administration to quickly negotiate more international pacts and open markets for farm products.
"We ought to back him on some of these initiatives," said Sen. Pat Roberts, R-Kan.
In a letter Wednesday to Sen. Dick Lugar, R-Ind., who chairs the Senate Agriculture Committee, Glickman said the low prices for farm products are being caused by Asian economic problems that have cut exports and by prospects of more bumper crops this year. Stocks of unsold grains and soybeans are 13 percent higher than last year.
One department estimate is that net farm income this year will fall to $51 billion, down from $55 billion last year.
Wheat prices, Glickman said, are currently at a five-year low and corn prices at levels not seen in four years. There is a glut of pork and beef, which has depressed those prices as well.
Aside from the export moves, Glickman wants Congress to allow USDA to extend federal commodity loans from nine months to 15 months, which would permit farmers to hold onto crops until prices are more favorable.
These loans, which serve as a floor for crop prices, allow a farmer to repay the government by forfeiting the crop instead of paying the loan itself. This allows farmers to use money to pay other debts when prices for crops are low.
The 1996 farm law ended the link between prices and farm subsidies, which are being slowly phased out. The low prices this spring have caused some concern about how to ensure farmers have an adequate safety net.