September 4, 2003

For Immediate Release:

Contact: Ben Lilliston, 301-270-4787

Minneapolis - A new report by agricultural economists with the University of Tennessee Agricultural Policy Analysis Center (APAC) suggests that U.S. government farm policy is contributing to the growing crisis in the worldwide agricultural sector.

Dr. Daryll Ray, director of the UT Agricultural Policy Analysis Center, co-authored the paper with UT colleagues Dr. Daniel De La Torre Ugarte and Dr. Kelly Tiller. The paper "Rethinking U.S. Agricultural Policy" will be presented at the World Trade Organization’s Ministerial meeting in Cancun on September 11.

The study details how U.S. farm policy has abandoned market stabilization tools in favor of production and trade liberalization with disastrous results. Because crop agriculture does not quickly self-correct like other industries, the economists maintain that eliminating supply management tools in recent U.S. farm legislation has led to record-low farm prices and record-high government payments of nearly $20 billion per year to American crop farmers. This cheap-grain policy has benefited multinational agribusiness firms, large livestock operators, and importers—not crop farmers, who now sell grain below their cost of production.

Commenting on the report, IATP's Ben Lilliston stated:

"The World Trade Organization will meet next week in Cancun to continue negotiations for new agriculture trade rules. Much of the discussion between countries has involved setting new limits for domestic subsidies. This debate is a distraction if the goal is to lift prices and end agricultural dumping.

Note that several steps to directly address worldwide commodity prices are not on the table in Cancun: 1) While there are existing WTO rules that make agricultural dumping illegal - those rules are costly, time-consuming and difficult to enforce. These rules need to be strengthened. 2) To address price, we must address supply - not only domestically, but internationally; and 3) the WTO completely ignores the increasing oligopoly power of transnational agribusiness firms which are distorting the global marketplace to such an extent that it is difficult for prices to rise even in cases of tight supply.

What this new study does so well is show how damaging our domestic farm policy is to the global food system. At this time, we have to ask ourselves this simple question: Are we going to set farm policy - here in the U.S. and in the international trading system - that is designed in the interests of farmers or in the interests agribusiness?"

The full study can be found on IATP's Trade Observatory at: http://www.tradeobservatory.org/library/uploadedfiles/Rethinking_US_Agricultural_Policy_Changing_Cou.pdf

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