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June 2011 Archive for The Truth about Trade

RSS By: Dean Kleckner, AgWeb.com

Dean is Chairman Emeritus of 'Truth About Trade & Technology, a nonprofit advocacy group led by a volunteer board of American farmers.

Farmers Want to Feed the World - Let Them Do It!

Jun 30, 2011

By Dean Kleckner- www.truthabouttrade.org

Ronald Reagan used to say that the nine most terrifying words in the English language are: “I’m from the government and I’m here to help.”
 
If he were around today, he’d probably add that the new ten most terrifying words are: “I’m from the world government and I’m here to help.”
 
That’s why a lot of the world’s farmers breathed a big sigh of relief when the agriculture ministers from the G20 nations failed (including Secretary Tom Vilsack) to agree on much of anything at their food-security summit last week.
 
We don’t need diplomats and bureaucrats telling us what to grow or how to grow it.
 
To be sure, their meeting in Paris had a noble purpose: The ministers wanted to address the rising threat of the demand for food outstripping the supply. “The point of departure was to avoid the 21st century being the century of hunger,” said French agriculture minister Bruno Le Maire, the meeting chairman.
 
The warning signs are clear enough. The planet’s population is expected to swell to 10 billion people by 2050. An expanding group of middle-class earners in developing countries such as China and India are adding more meat to their diets. Meanwhile, growth in farm yields has apparently slowed.
 
The challenge is to produce about 70 percent more food over the next few decades--and to do it without vastly increasing the amount of farmland available to crops. It’s quite a challenge: In February, the food-price index of the United Nations Food and Agriculture Organization set a new record. Prices have slumped a bit since, but they remain high and this latest spike may not have been a freak event. It could represent the shape of things to come.
 
So it’s no wonder the G20 nations want to act.
 
In the end, the agriculture ministers merely agreed to fund research and increase transparency--small steps that may result in minor benefits.
 
Fortunately, they failed to reach a consensus on several more ambitious projects, such as restricting investors and trying to control price swings.
 
France, apparently without success, put commodity speculators in its sights, calling for increased regulation of the derivatives market. This is silly. Speculators are in the market every day. Some would like to see prices rise and others would like to see them sink. We tend to hear complaints about them when prices are going up, but they aren’t the villains in this drama. Focusing on them is a distraction.
 
Price swings are also a bad target. As a farmer, I’ve always been for volatility, especially when prices are low. Right now, with food prices high, consumers should favor price swings--because the next one may very well push food costs down.
 
There’s something to be said for predictability and farmers are always guarding against risk by locking in prices and buying insurance. At the same time, everyone benefits when agriculture has the opportunity to respond to market conditions.
 
I’ve always said that, as a consumer, the solution to high prices is high prices. That’s because farmers will respond to them by trying to grow more of what’s needed. Striving to reduce volatility through government interference will succeed merely in confusing market signals--and delaying necessary responses to food crises as they emerge.
 
Government officials like to think that they can manage global agriculture, but really they can’t. It’s sheer hubris for them to believe that they can control something so vast and complicated--and much better for them to get out of the way and let farmers do what they do best.
 
Going forward, as the G20 agriculture ministers strive to improve food security, they should work to unleash the power of trade and technology. Lowering trade barriers helps connect producers with consumers, even if they don’t live in the same country. Enhancing technology--and, in particular, encouraging reluctant European countries to accept genetic modification--will lead to an abundance that will help feed the planet.
 
In the future, I hope someone will utter these 11 words: “I’m from the government and I’m here to leave you alone.”
 
Dean Kleckner chairs Truth About Trade & Technology. www.truthabouttrade.org

Truth About Trade & Technology's Greatest Hits

Jun 23, 2011

By Mary Boote

You might assume farmers know more about rootworms than bookworms, but that’s not necessarily true. It certainly hasn’t stopped the men and women of Truth about Trade & Technology from publishing “The Food Security Reader.”
 
It’s our new book, whose full title is “The Food Security Reader: The Best of Truth about Trade & Technology.”
 
Readers of this column may know that we’ve been writing these pieces every week for over a decade. It turns out that a few of them hold up pretty well. So we’ve gathered the finest in a new anthology, which is hot off the press.
 
If we were a rock band, this would be our album of “greatest hits.”
 
Our ‘day job’ involves growing the food the world needs – using less of our resources to grow more. When we aren’t planting, harvesting, or worrying about rainfall, we devote ourselves to Truth about Trade & Technology and its mission: giving farmers a voice in public debates about free trade and the importance of access to technology in agriculture.
 
We believe farmers should enjoy the right to sell what they grow to consumers around the world. For every three rows of corn grown in the United States, one is shipped abroad. Our livelihoods--and the American economy--depend on these exports. Trade allows us to get food where it is needed.
 
One of our columns, by Chairman Dean Kleckner, is headlined “Ba-ba-ba-ba-ba-Bahrain.” (Yes…you can hum it to the tune of “Barbara Ann” by the Beach Boys.) It’s about the economic and security reasons for a free-trade agreement with a Middle Eastern nation. “Bahrain may be a tiny country, but by helping us create jobs at home and spread freedom around the planet, it’s also an important part of a grand strategy,” wrote Kleckner.
 
As you can see, we tackle the issues of the day and try to do it in a way that’s both entertaining and informative.
 
When we aren’t discussing the politics of trade, it’s the politics of what we eat. We believe farmers everywhere, in developed and developing countries, should have access to the most effective tools they need for growing crops and producing food. That means governments should base their regulations on science-based methods - not fear.
 
In 2009, the popular U.S. TV show “CSI: Miami” attacked corn farmers and biotechnology out of sheer scientific ignorance. Iowa farmer and TATT Board member Tim Burrack fired back in a rapid-response column: “The result was worse than bad television. It was malicious propaganda based on distortions and lies about the common practices of modern agriculture. Call it ‘un-reality TV,’” he wrote. “There’s only one way to say it: ‘CSI: Miami’ puts the ‘BS’ in CBS.”
 
“The Food Security Reader” covers a lot of ground in 440 pages. Our 23 contributors discuss mad-cow disease, biofuels, and even the FarmVille fad on Facebook. The range of topics is impressive.
 
Some of the best columns come from our network of global farmers. Rajesh Kumar of India pleads for access to biotechnology: “Farmers have the ability to take a big step forward with biotechnology--but only if the government in New Delhi will allow us to do so. If it doesn’t let us grow biotech eggplants, it may not permit us to grow any of the biotech crops that my country needs.”
 
Sadly, Kumar and a billion of his countrymen are still waiting for this opportunity, about a year and a half since this column appeared.
 
“The Food Security Reader” is dedicated to the late Norman Borlaug, the father of the Green Revolution and an inspiration to everyone who farms. For his pioneering efforts to improve food production, Borlaug won the Nobel Peace Prize.
 
We don’t expect “The Food Security Reader” to win the Nobel Prize in Literature, but we do hope that it will help Truth about Trade & Technology follow in Borlaug’s footsteps as we confront the 21st century’s great challenge of feeding the world. Dr. Borlaug believed in a farmer’s ability to accomplish great things when given the right tools.   It’s our hope that the farmer’s voices encapsulated in this book will support his vision and explain why trade and technology are necessary if we have any hope of achieving food security and environmental sustainability on our crowded and hungry planet.
 
Copies are available right now at Amazon or on the TATT website. Be the first in your town to own one! And while you’re at it, why not consider purchasing a copy for a friend and your local library.
 
Mary Boote, an Iowa farm girl, serves Truth About Trade & Technology as Executive Director. www.truthabouttrade.org

Put Free Trade on the Political Stage

Jun 16, 2011

 

 
Free trade is having a bad year in the United States. It’s not something we expected. In fact, most of us had ‘high hopes’ when we listened to President Obama and USTR Ambassador Kirk assure us that trade was at the top of the economic agenda in 2011. 
 
I’m disappointed and I’m not alone. We should be growing jobs and the economy by passing free trade agreements already negotiated with Colombia, South Korea and Panama. Instead, the political blame-game has more players than ever and freer trade is not just paralyzed….we’re going backwards.
 
This bad year may be the right time to use the political ‘stage’ and make the good case for freer trade - again.  The primary season offers all candidates the opportunity to state their case for trade and the American economy. What we need is an authoritative voice to get the conversation started.
 
“In America, any boy may become president,” said Adlai Stevenson. “I suppose it’s just one of the risks he takes.”
 
Here in Iowa, a bunch of boys--and a girl or two--are running for the Republican presidential nomination. Among the GOP contenders, along with the President, who will be front and center on the political stage, will be Jon Huntsman, the former Governor of Utah. 
 
Huntsman may be one of the candidates who is best equipped to share his experiences and talk about freer trade as an issue that is vital to the U.S. and global economic recovery.
 
For a number of years, promoting free trade was his full-time occupation. In the first Bush administration, he was a trade official in the Department of Commerce. Later, he became Ambassador to Singapore. In the second Bush administration, he was a Deputy U.S. Trade Representative and involved in the launch of the Doha round of world trade talks.
 
So this is a guy who knows a few things about global economics and trade diplomacy.
 
That’s nothing to take for granted in a presidential race. Consider the case of Barack Obama. When he was running for the White House, he was very anti-trade and talked about quitting the North American Free Trade Agreement.
 
Since becoming president, however, Obama has talked positively about trade.  A key part of his economic strategy involves doubling exports by 2015. In his last two State of the Union addresses, Obama has called for congressional approval of free-trade agreements with Colombia, Panama, and South Korea. Recently (and regrettably) he has allowed these promising deals to become bogged down in the budget dispute with Congress, perhaps at least in part because he hasn’t fully abandoned the views he articulated as a candidate.
 
As the 2012 campaign lurches forward, Huntsman is in a unique position to elevate the debate about free trade. His background will allow him to discuss the issue with authority and describe how it leads to good jobs for workers and lower prices for consumers. American farmers have a special stake in this conversation because so much of what we produce must be sold in foreign markets.
 
We need all the candidates, including Huntsman, to challenge the president directly on those three pending trade agreements--and even compel Obama to push them forward. Real action on the free trade agreements will provide a much needed stimulus for the U.S. economy.
 
Fortunately, Huntsman is not the only Republican candidate who is talking up trade. On June 7, Tim Pawlenty, the former governor of Minnesota, delivered a major address on economics. He called for passage of the trade agreements with Colombia, Panama, and South Korea. He also went on the offense against the White House: “President Obama set a goal of doubling exports. Yet his policies have prevented this. Mine will achieve it.”
 
On April 12, candidate Mitt Romney called for a global trading body that would be of a ‘higher standard’ than the World Trade Organization, discussing the need to protect intellectual property and stating “...if you want to have real trade with America and our friends around the world, you need to abide by a higher standard.”
 
The other Republican candidates will need to explain their own trade views. Some may join Pawlenty with specific calls for action. Others may dodge the issue or even embrace the toxic politics of protectionism.
 
What we’ll have, however, is a richer and healthier campaign in which voters gain an opportunity to know what these would-be presidents really believe.
 
I don’t yet know who I’ll support in the 2012 presidential election, but I know that he (or she) will have a freer trade philosophy.
 
Dean Kleckner chairs Truth About Trade & Technology -www.truthabouttrade.org
 

Oxfam's Approach To Food Security Is Broken

Jun 09, 2011

By Reg Clause - Jefferson, Iowa

 
Farmers around the world are feeding more people than ever before in human history. So what does Oxfam, the celebrated advocacy group, have to say about this remarkable achievement?
 
Six astonishing words: “The global food system is broken.”
 
This radical claim, asserted in Oxfam’s latest report, takes for granted the impressive fact that farmers make it possible for billions of people to eat nutritious food every day. Over the last six decades, farmers have tripled the yield of the world’s most important staple crops--rice, wheat, and corn--without plowing a single net extra acre. US farmers, for example, have doubled corn production since 1980 but are using 4% LESS fertilizer inputs to get it done! Applied technology is the reason.
 
Can’t we at least get a pat on the back?
 
Oxfam is correct to worry about the world’s hungry people. It’s hardly alone in having this concern. One hungry child is too many--and more challenges lay ahead as the planet’s population swells to an estimated 10 billion by the middle of the 21st century. But condemning the genuine accomplishments of the recent past is a poor way to start a constructive conversation about the hard tests of the near future.
 
Apparently that’s how Oxfam rolls. Its 73-page report, titled “Growing a Better Future,” provides a long list of complaints about greed, global warming, and so on. When author Robert Bailey gets away from his sky-is-falling rhetoric and tries to strike a positive note, which isn’t often, he succumbs to hopey-dopey sentiments about the need for “an age of cooperation rather than competition.”
 
Despite these annoyances, Oxfam does point to a legitimate problem: the rising cost of food. More people are spending more money to feed themselves. The world’s poor are struggling to keep up. The poorest simply can’t.
 
So what is to be done? Oxfam calls for “a new global governance,” by which it means more regulation of “trade, food aid, financial markets, and climate finance.” Matt Ridley, the author and columnist, calls this “effectively the nationalization of the world food system.”
 
Only aid-group busybodies who attend United Nations conferences for a living would entertain such an idea. How conveniently they forget that mass famine tends to strike countries with too much governance, such as North Korea and Zimbabwe.
 
A better solution is to unleash the world’s untapped agricultural potential, especially in developing countries. Rather than asking governments to keep food prices down through market interference, we should strive to expand the supply of food so that farmers can keep up with demand. High prices drive higher supplies and there are no economists who disagree with that. Government interference will constrain supply growth, as it always has.
 
One approach is to encourage agricultural biotechnology, especially for farmers in Africa and the developing world. Unfortunately, Oxfam appears to prefer the European approach of stifling genetically modified crops, even though they represent one of the most promising methods for reducing malnutrition, fighting drought, and increasing yield.
 
Rather than acknowledging that biotechnology already has boosted the food supply--and promises more advances soon--Oxfam dismisses GM crops as “crude” and “polarized” gimmicks, calling them nothing more than “techno-fixes.” Its refusal to say anything else, in what is supposed to be a comprehensive study, highlights a fundamental lack of seriousness.
 
So does Oxfam’s unfamiliarity with the basic notion of prices. When prices are high, consumers may grumble. Producers, however, sense an opportunity--and so they respond. In agriculture, this can mean anything from planting more acres of high-priced crops to investing in new seed technologies. The goal is to meet the demands of the marketplace, which is something farmers spend their lives trying to do.
 
Oxfam seems willfully ignorant of this approach, as British blogger Tim Worstall discovered when he drilled down into the data that lies beneath Oxfam’s report. Here’s what the group admits about the calculations that support its frightening prognostications: “It should be emphasized that the model does not capture potential increases in agricultural productivity that are likely to result from increased research and development incentivized by the price increases for agricultural output.”
 
In other words, when Oxfam claims that current trends won’t allow the world to keep up with the global demand for food, it assumes that people in agriculture aren’t going to change any of their habits.
 
If something’s broken, it’s not “the global food system” but rather Oxfam’s approach to food security. Now is the time for open-minded seriousness toward solving known challenges. Oxfam should not marginalize its voice with less objective reports.
 
Reg Clause raises cattle, corn and soybeans on a fourth generation family farm in central Iowa. He is a Truth About Trade and Technology board member (www.truthabouttrrade.org).

Conventional Trade Wisdom

Jun 02, 2011

By John Reifsteck – Champaign, Illinois (www.truthabouttrade.org)

 
There must be a university that offers doctoral degrees in the obvious, judging from a few recent research papers. One showed that talking on the phone leads to poor driving. Another demonstrated that bullies pick on unpopular kids. A third revealed that performance-enhancing drugs enhance athletic performance.
 
Yet sometimes the conventional wisdom is worth proving because the stakes are so high. A good example is a new study from the Department of Agriculture. It asks an important question in its title: “Are Competitors’ Free Trade Agreements Putting U.S. Agricultural Exporters at a Disadvantage?”
 
The answer, of course, is yes. The real shocker is that our political leaders don’t seem concerned enough to do anything about it.
 
Free-trade agreements are an effective way for economic partners to exchange goods and services across borders, as they lower trade barriers by mutual consent. Just about every country on the planet is party to at least one FTA. Last December, according to the World Trade Organization, 290 FTAs were in force. Most had been negotiated since 2000 and more are on the way.
 
President Obama made the case for FTAs earlier this year, in his State of the Union address: “The more we export, the more jobs we create here at home.”
 
Once upon a time, the United States worked hard to boost exports by striking trade deals. Between 2003 and 2007, it finished FTAs with 16 countries, including individual pacts with Australia, Bahrain, Chile, Morocco, Oman, Peru, and Singapore as well as the regional Central American Free Trade Agreement with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
 
The benefits are crystal-clear. On May 19, a company in Chile agreed to buy five new airplanes from Boeing for almost $822 million, in a transaction that will help keep plenty of American workers busy. This is a direct result of the U.S.-Chile FTA, approved in 2004. One of its provisions eliminated Chilean tariffs on the purchase of commercial aircraft.
 
Despite this stunning success, the United States has practically quit the business of trade diplomacy. It has concluded agreements with Colombia, Panama, and South Korea but they’ve languished for years, waiting for the congressional approval that never seems to come.
 
The delay has punished American farmers, according to the USDA report.
 
That’s because the rest of the world isn’t waiting for the United States to jump back into the trade game. Other countries continue to negotiate FTAs. Every deal that doesn’t include the United States has the potential to put our producers at a competitive disadvantage.
 
Consider the case of Colombia. It’s the most important South American market for U.S. farm exports. Each year, Colombians buy almost $1 billion in wheat, corn, soybeans, and other American-grown products.
 
Recently, Colombia signed an FTA with the Mercosur trading bloc, whose members include Argentina, Brazil, Paraguay, and Uruguay. These countries gained an immediate advantage over U.S. agricultural goods--a margin of 15 percent for wheat and 7 to 8 percent for corn.
 
“These preferences appear to have appreciably reduced U.S. shares in these [Colombian] commodity markets in 2009 and 2010,” says the USDA report. The cost to American farmers’ totals hundreds of millions of dollars--and it’s a price we’ll keep on paying until Washington resolves to correct it.
 
The news could go from bad to worse because Canada and Colombia are on the verge of their own FTA. It would make Canadian farm products sold in Colombia less expensive than U.S. farm products. It doesn’t take a Ph.D. in the obvious to know the result: Canadian exports will surge and American exports will slump.
 
The solution is staggeringly simple. Congress must approve the free-trade agreement with Colombia that we negotiated years ago. That way, American farmers will compete on a level playing field with our competitors in Canada and South America. A similar logic works for the FTAs with Panama and South Korea.
 
Yet our leaders in Washington refuse to cooperate with this reality or with each other. The latest hold-up is a dispute over Trade Adjustment Assistance, a $2-billion program of questionable effectiveness that attempts to help workers displaced by foreign trade.
 
Unless the politicians solve these squabbles, voters may decide they need new leadership. It’s obvious.
 
John Reifsteck is a corn and soybean producer in western Champaign County Illinois. He serves as a Board Member of Truth About Trade & Technology.  www.truthabouttrade.org
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