As a wheat grower who has experienced the perils of disaster, low market prices and uncertain market conditions and who also exports wheat overseas, I was interested in a presentation on the ongoing Doha Round negotiations at the National Association of Wheat Growers (NAWG) and U.S. Wheat meeting this past fall.
Craig Thorn, a consultant from DTB Associates LLP, which focuses on trade issues, talked about the current status of the Doha trade negotiations and the potential gains and losses that wheat growers could expect when the talks conclude.
The Doha Development Round is the trade negotiation round of the World Trade Organization (WTO). Its objective since commencing in November 2001 is to lower trade barriers, which allows countries to increase trade globally.
Thorn talked about conflicts among developing nations, such as China, Brazil and India, that want to protect their markets from imports as well as countries who are pushing for market access opportunities in all market sectors. He explained the issues that led to another collapse of talks in July 2008 when India and China disagreed with other countries regarding their desire to protect themselves from imports.
Thorn also explained how markets could potentially open up for U.S. wheat growers by reducing tariffs in developing nations, eliminating the monopolistic grain system at work in Canada and reducing the export subsidies used in Europe. However, he also explained that with the special exceptions and safeguards that many countries want, the market access gains for U.S. agriculture could be minimal or take years to develop.
As vice chairman of NAWG's Domestic and Trade Policy Committee, I was most interested in the discussion about how an agreement could affect the 2008 farm bill.
The U.S. has a $19.1 billion annual cap on Amber Box spending, established during a previous round of negotiations. The cap covers all trade-distorting programs, including loan deficiency payments, the Average Crop Revenue Election (ACRE) program, the Supplemental Revenue Assistance Payments (SURE) program and others.
While the direct payment is the most nondistorting farm program, it will likely have to be reported in the Amber Box in the future because of the WTO cotton case.
Trade negotiators in the Doha Round agreed to a $7.6 billion future limit in the Amber Box. While prices were up in 2008 and U.S. Amber Box spending was much lower than previous years of the 2002 farm bill, the current drop in prices makes it possible to exceed these new limits in any year of the 2008 farm bill. That would leave it up to the Secretary of Agriculture to cut whichever programs he sees fit in order to meet the cap.
While Thorn suggested that farm bill programs could be tweaked in order to make them fit into non-trade-distorting categories, I have to wonder what the possibility of that is.
Just a tweak. During the 2008 farm bill, the No. 1 priority for wheat growers was maintaining or increasing direct payments. While we were successful in maintaining this program, the effort was met with resistance from the House and Senate agriculture committees, mainstream media and farm groups that do not believe we should be subjected to the rules of the WTO. Knowing how hard it was to draft a farm bill, trying to "tweak" farm programs to make them more WTO-compliant could be a long and ultimately unsuccessful journey.
There is a push in several countries, including the U.S., to come to an agreement. Major Doha Round negotiations are expected to resume sometime this year. We know that if the trade talks fail again, business will continue as usual for a while. But once an agreement is made, markets will have to change and government policy will need to be reviewed. So we, as farmers, need to be educated about the pluses and minuses of any agreement and work to influence the outcome.
I encourage you to learn and read as much as you can about the Doha negotiations and how they may affect your bottom line. Visit NAWG's trade page, www.wheatworld.org/html/info.cfm?ID=29, for more information.
Form an opinion and let your congressional representatives know how you feel. Talk to other farmers and send letters to the editor of your local newspaper. And let us in the state and national wheat grower associations know how you feel, too.
Jeff Newtson is a wheat producer in Helix, Ore., and is the vice chairman of NAWG's Domestic and Trade Policy Committee.