Remarks by Glickman on the 1997 Agricultural Outlook
                                              Release No. 0061.97
Remarks
                                of
                      Secretary Dan Glickman
                    1997 Agricultural Outlook
              Washington, D.C. -- February 24, 1997
INTRODUCTION
Thank you and welcome to the 1997 World Agricultural Outlook Forum.
There's an old Turkish proverb that says,  he who speaks the truth better have
one foot in the stirrup.' I just want to say that I'm quite comfortable up
here with both feet on the ground.
USDA's been holding this forum for almost 75 years now. I doubt any Secretary
of Agriculture's ever forecast the end of the world. But I do know there's
never been a Secretary who could say -- with the same certainty I do today --
that the outlook for American agriculture is very, very good.
I've been talking to economists ... to Members of Congress ... to our
customers both here and overseas ... and to farmers in the field. Each, in
their own way, has told me the same thing:
*      The economists give a cautious, but enthusiastic thumbs up.
*      A Republican-led Congress and a Democratic Administration continue to
       rally -- in a bipartisan way -- around the positive changes taking
       place in agriculture.
*      The American people express a level of confidence in the safety and
       quality of their food that's rare overseas. World demand for U.S. food
       and fiber has never been higher.
*     Veteran farmers -- the most cautious business people in America -- are
      buying more equipment, and making the kinds of investments that show
      confidence. And more and more young rural men and women are passing up
      the city to stay on the family land or start a farm of their own.
There's a bright future ahead for agriculture.
We live in optimistic times. Just look at the stock market -- 4,000 ... 5,000
... 6,000 ... 7,000 -- all in the span of a few years. Agriculture's echoing
this rally by breaking records of our own -- from exports, to farm incomes, to
sheer volume produced.
President Clinton calls this  the age of possibility.' I'm inclined to agree.
We've all got the flush of a year of record-high prices ... the second highest
farm-income levels ever, right behind 1994 ... We would have broken that
record too if grain prices hadn't squeezed cattle so hard ... $5 corn and $7
wheat ... Cash receipts are at an all-time high -- topping $200 billion ...
The value of farmland has gone up 6 or 7% ... Ag exports reached close to $60
billion ... We're starting 1997 on solid ground.
With the year 2000 just around the corner, everyone's talking as if -- when
those 3 zeroes click over -- a magical new world will appear. But we in
agriculture have already made the leap.
For most Americans, agriculture is a constant in life. Food is safe, abundant
and affordable ... almost like on the Star Trek Enterprise where a computer
gives crew members whatever they want to eat, whenever they want it. But if
you look closely at agriculture, you see that it's not standing still. It's
evolving and adapting so quickly that most of us don't even notice.
Just consider how far we've come. America started out as a country of
subsistence farmers.
Today, less than 2% of us farm. Fortunately, technology and farm ingenuity
have sparked a perpetual revolution in productivity. That's something 98% of
Americans have the high luxury of taking for granted.
Farmers worry enough for all of us. They face every day knowing that a drought
might suck their fields bone dry or a flood could replant their crop 2
counties over.
It reminds me of the joke about the stranger who stops to talk to a farmer
who's out on his porch:
      How's your wheat coming?' he asks.
      Didn't plant none,' the farmer replies.
      Really? I thought this was good wheat country.'
      Afraid it wouldn't rain.'
      Well, how's your corn crop?'
      Don't have one.'
      Didn't plant any corn either?'
      Afraid of corn blight.'
      Well, what did you plant.'
      Nothing,' says the farmer.  I decided to play it safe.'
Farming is uncertainty and risk. As we enter a new era in agriculture, there's
even more risk, but there's also tremendous opportunity. The signature shift
is government easing out of the marketplace. Our not-so-invisible hand is
coming off the scales, and we're recognizing that when it comes to the forces
of supply and demand ... perhaps the best role for government is to simply
get out of the way.
Farmers are taking the lead in the day-to-day business of agriculture. They're
fast becoming market-savvy entrepreneurs. With agriculture going high-tech --
changing everything from the way we water our crops to how we inspect our meat
... with food and fiber playing such a central role in the global marketplace
... this is a natural division of labor. As one Iowa corn farmer put it,
it's farming  how our grandparents knew we should.'
And it frees USDA to govern as we should -- by focusing more on the big
questions of agriculture's future: How do we feed a growing world without
destroying the land base? How do we help all farmers -- big and small, in
every field -- better manage risk? How can we expand global opportunities?
It's a different, less interventionist role for government, but it's also a
more important one.
ENVIRONMENTAL CHALLENGE
Can we feed a growing world without destroying the environment? The honest
answer is maybe.  It depends a lot on the choices we make today.
There's a consumer choice: Will the world accept biotechnology? It's in some
ways an odd question since in many cases, the world already has: I don't think
there's a diabetic out there who'd object to insulin. Biotechnology goes all
the way back to the 1800s with Gregor Mendel cross-pollinating his pea garden.
Then, he was an eccentric green thumb. Today, he's the father of genetics.
It's an important question -- will people accept biotechnology? It's our best
shot at feeding a hungry world and leaving a sustainable environment. It gives
us cost-effective ways to produce crops with more nutrition, that require less
water, that can endure harsh weather, that can fend off pests without using
pesticides.  Where it is safe, and it has proven safe, we shouldn't turn our
backs on it.
That's not to say that people shouldn't make their own choices. Throughout
history, people have been suspicious of technological progress ... sometimes
rightly so. But I think we can do a better job of demystifying biotechnology,
and making sure folks know that we are keeping a vigilant eye on these
products. If we say they're safe, it's because our scientists have proven
they're safe.
Another choice will be how we use our natural resources. The dustbowl days of
the dirty  30s served as a somber warning that we can push Mother Nature
beyond her limits -- bankrupting our farmers and leaving a barren earth. We
have to protect the land that feeds us. Our #1 tool to do that is the new
Conservation Reserve Program. It's our farm bill for the future. Where the old
CRP allowed government to manipulate supply and demand, the new one is a true
conservation program.
It will prevent soil erosion, protect wildlife habitat and improve our air and
water quality. It won't take healthy land out of production. It's bound to a
strong set of environmental criteria which USDA staff will use -- out in the
field -- to rank bids against one another. Only the most environmentally
sensitive land will be accepted.
I know there's concern about the amount of acreage eligible for the CRP. I'd
just say: There's a lot of students eligible for Harvard, too. By law, we can
enroll less than 15% of eligible land.
We'll take what gives us the biggest environmental bang for the taxpayer buck,
and leave supply and demand to the markets.
RISK CHALLENGE
Farmers are happy to see government get out of the markets. But they're also
wary of the risks. I'm sure our Wall Street contingent today could empathize.
Especially now at the outset, there's going to be pressure on government to
step back into markets. For example, because of recent wide price swings in
dairy, some in the industry wanted me to change the floor prices. Most didn't,
and I didn't. We took other steps instead. We accelerated purchases for
domestic feeding programs, like we earlier did with beef. We stimulated
exports and asked questions about the National Cheese Exchange. Where are we
today? Dairy prices are up. Milk prices are up. They still have a ways to go,
but the worst is hopefully behind us.
As a general rule, government should not micromanage markets, but we should
spread a safety net. Our farmers perform the most essential work around.
Protecting them from risk is in the national interest. That's why this
Administration promised farmers a safety net for the future. We deliver in our
98 budget:
*     We make revenue insurance available nationwide, so farmers can buy
      protection from weak markets as well as powerful storms.
*     We reform farm credit by ending the one-strike-you're-out policy which
      disenfranchised a whole class of good farmers who went under in the 80s.
*     And we allow commodity loan extensions and managed haying and grazing on
      conservation reserve land when markets get tough.
None of these are budget busters, but they get the job done.
Another simple way government can help is as an information broker. This is,
after all, the Information Age. Knowledge is power, and farmers are hungry for
it. They have to be shrewd in business, like never before.
50 years ago, farmers were fairly autonomous. They used their own labor, made
their own fertilizer, ate their own crops. What they sold, they sold largely
on the cash market. Today, like everyone else, they have consultants ...
people tell them when to apply pesticide ... people scout their fields for
insects ... farm managers ... marketing analysts ... bankers.
Farms with a production or marketing contract make up 40% of what's produced
in this country.
These contracts can help reduce risk, but there's a lot of them out there.
Farmers need straightforward information. Otherwise, we get situations like
the hedge-to-arrive fiasco where many producers felt they didn't understand
what they'd gotten into. Who could tell? Many of these contracts weren't even
on paper.
Information is also a great equalizer. As I travel around the countryside, the
issue I hear most about is livestock concentration. Sunlight's been our
solution. We dramatically expanded market reporting data to help smaller
producers get a fair shake.
We're also helping family farmers by proposing estate tax relief, so the farm
can pass from generation to generation as an opportunity instead of a
financial headache.
These are modest but meaningful reforms. But they're not all we're doing. This
Administration's most far-reaching risk management effort stretches all the
way around the world. After all, what better way to reduce the risks of the
marketplace than expanding the size of the marketplace?
TRADE CHALLENGE
This Administration has opened up more doors around the world than any in
history. That's why, last year, we hit nearly $60 billion in ag exports. You
may read about airplanes and computers, but the fact is, when people around
the world buy American, more than anything else, they buy American
agriculture. We are once again #1, and we plan on staying that way.
Our export sales will slip a bit this year -- to about $56.5 billion. That's
up $1 billion from our December projections, mainly because of recent heavy
shipments of oilseeds and cotton to China, the EU and Mexico. It's still $3.5
billion below last years record levels, but that's more the result of grain
prices coming back down to earth than anything else. Our sheer volume of
exports is still strong. Bulk commodities will be a crowded field. Those
numbers will slip slightly. But exports of our high-value products will
continue their record climb, and that's a strong signal of what lies
ahead.
There's a world of opportunity out there. Some days I feel like I should be
the Ambassador of Agriculture. I've been to China ... to the Phillipines for
the Asia-Pacific economic summit ... to Europe several times. In the coming
months, I'll go to Latin America and back to the Pacific Rim.  I've just
returned from South Africa with Vice President Gore.
That was an amazing visit. It's good to see freer markets and freer people
making progress together. Our relationship with South Africa is one of 4 that
Vice President Gore has set up with emerging democracies -- along with Russia,
the Ukraine and Egypt.
Egypt's a very promising market. It's our biggest in the Middle East. From
1994 to 1996, they've gone from buying $613 million to $1.5 billion in U.S.
agricultural goods -- mostly grains -- much of that feed grains for their
poultry industry. As a result, their poultry business is booming, incomes are
on the way up, and we've got better customers.
These commissions cut through reams of red tape. I was in a meeting between
Vice President Gore and Victor Chernomyrdin that was breakthrough after
breakthrough after breakthrough. I like Chernomyrdin. He's from the Ukraine
like my family. In fact, he looks a lot like my grandfather. I found that
charming ... until others noted how much he looked like me.
We had similar success in South Africa, and it worked both ways. Their
national flower is the protea. It's huge. It's beautiful, and it looks like it
could eat you. We recently allowed their import into the U.S. The South
Africans very much want to see our doors stay open.
Subtlety isn't too big over there. We got off the plane. We were greeted with
protea. We went for a tour of the countryside. They pointed out the wild
protea. We visited a farm ... that grew protea.
The centerpiece at our reception ... the vases in our hotel rooms ... the
decorations at the press room ... you get the picture.
At least they were beautiful. I, on the other hand, talked about karnal bunt
every time they gave me a flower. But it paid off. I returned home with an
agreement that South Africa will buy $34 million in wheat from the quarantine
areas that has twice tested negative. This is a major break in the logjam of
our perfectly saleable wheat. More will follow.
Of course, not all of our trade negotiations are an exercise in diplomatic
decorum.
Our relationship with the European Union is particularly tenuous. We had
diametrically opposite reactions to last year's tight grain markets. They
clamped down with export controls. We said,  no embargo.' Later, when stocks
eased, they went forward with export subsidies. We held our fire. We still
are, but we can't hold out unilaterally forever.
In our  98 budget, I've asked for full funding of our Export Enhancement
Program -- an increase of $400 million. That's my big stick, and I'm prepared
to use it if that's necessary to protect our producers from unfair
competition.
This Administration won't hesitate to go to the mat for the rights of our
producers. It's important for team USA, but it's equally important to the
integrity of the World Trade Organization. It's still young and
impressionable. We need to shape it around the principles of fairness.
The big test ahead is the EU ban on U.S. beef cattle raised using hormones.
Study after scientific study has shown this beef to be perfectly safe. Under
the Uruguay Round, that means our producers have a right to compete in
European markets. We've been denied access for 8 years.  So we've taken the EU
to the WTO on this, and I expect a decision in the coming months. We have a
solid case, and we're optimistic that those markets will soon be fair game.
Phony science trade barriers are one of the biggest threats to fair trade. As
traditional barriers fall away, every government -- including our own -- is
facing pressure to  be creative.' We can't give in. As one cattleman
colorfully put it,  mixing trade with politics is the easiest way to get your
butt kicked.'
Sound science must be our referee. That's why we lifted the ban on Mexican
avocados. Our scientists had concerns about the spread of pests. We worked
through them and developed a satisfactory system. Now that we've shown our
commitment to resolving disputes with science, we're seeing it reciprocated.
Just last week, Mexico accepted our sweet cherries into their markets. That's
a $7 million decision for our producers. Fairness won't guarantee that we win
every argument. But it ensures a level playing field, and that's all America
needs to succeed.
It reminds me of the old joke about the chickens out scratching in the yard. A
football that's accidentally kicked over the fence plunks down ... the rooster
struts over, inspects it, turns to the hens, and says,  I don't mean to
criticize, but look what they're puttin' out next door!'
America's got the football, and we're running with it. We're setting the world
standard -- on principle, on productivity, on quality, on safety. We're the
most competitive nation in the world.
So we should see the world for what it is -- 96% of our potential customer
base.
That means pushing forward on freer trade -- extending NAFTA into South
America, expanding the WTO and pressing for further reductions in trade
barriers in the 1999 GATT negotiations.  The major farm groups have largely
rallied behind expanding freer trade. They should be commended for doing so.
It's forward thinking, but it doesn't win popularity contests. This, for
me, is one of the fundamental mysteries of our time.
You won't find a stronger case out there for freer markets than U.S.
agriculture. Expanding trade has driven our record growth, and it's the only
way we can sustain it. Domestic demand is relatively flat. It's world demand
that's going through the roof -- especially in Asia and Latin America where
populations and incomes are skyrocketing. Open doors are wide open
opportunities ... as long as agriculture stays in the mix of trade
negotiations.
In a few minutes, you'll hear from a friend. The Japanese call her the  dragon
lady of America.' In my book, that's the best introduction a U.S. Trade
Representative could ask for. Charlene Barshefsky will fight for American
agriculture.
And we need a fighter ... particularly on China. I know she's going to talk
about that. I'll just say that the latest signals on the agricultural front
are not good. For the past 2 years, the Chinese government's been fixated on
self sufficiency and has intensified its role in basic ag commodity markets.
This certainly doesn't help their case for joining the WTO.
Part of the whole point of freer markets is the guarantee that countries who
can't grow enough food can buy enough food. That's why the United States was
so adamant against a grain embargo. We're serious about being that reliable
supplier. If China's successful in boosting its grain production, there might
be a dampening of world demand in the short run. But it's hard to believe --
given their population demands -- that we won't soon see a return to imports.
CONCLUSION
So for a government that's getting out of the day-to-day business of
agriculture, I'm certainly finding myself very busy these days.
A wise man once said there are 3 basic questions in life. Where have we been?
Where are we now? And how the heck did we get here? He sounds like a farmer.
We don't have a whole lot of faith in crystal balls, but it's hard not to have
faith in all the positive changes taking place.
Gandhi once said,  The difference between what we do and what we are capable
of doing would suffice to solve most of the world's problems.' I think we, in
agriculture, are just beginning to comprehend all that we are capable of
achieving.
If we face the challenges and the risks ahead together, then agriculture's
future will surely surpass even its own stunning history.
Thank you.