Ed Maixner / Farm Progress Washington Bureau
Economists told a conference of agricultural news writers Monday that Congress may find its farm assistance spending curbed by the 1995 World Trade Organization agreements when it tries to write a new farm bill.
Keven Brosch, an economist and agricultural trade consultant in Washington, says the U.S. spent $15-16 billion in each of the last two years on types of direct support to farmers that is considered trade distorting under world trade rules. The U.S. agreed to limit such support to $19.1 billion by next year.
In estimating farm supports, Brosch points out, the WTO measures not only direct payments, but financial gains farmers receive from import controls the U.S. imposes on dairy products, sugar, and peanuts. He says the kind of proposals farm groups are making to Congress for additional price supports and supplemental income payments will easily force the U.S. to the ceiling imposed by its WTO commitments.
Keith Collins, chief economist for USDA, holds a similar view. "Seems to me," Collins says, "you are pushing the [WTO] cap unless you can figure out how to make counter-cyclical payments that are, in fact, green." So-called "green" payments are those, such as conservation incentives, not tied to farm production. So, how does Congress respond, but keep its farmer assistance beneath the $19 billion annual spending ceiling required by World Trade Organization agreements? Brosch points out that the ceiling imposed by the WTO agreements applies only to price and income support payments that are based on current farm production.
So, he says, payments must be divorced from crop produced in the year the payments are made. Therefore, USDA might enroll farmers in a support program based upon overall farm production history - for example, 1996 through 2000. Then, USDA would establish an overall base of gross or net farm receipts. When receipts were projected to decline from that base, USDA would make the payments based on that projection and on overall crop history, relating nothing to the current year's actual production.:
