Analysis – by Roberta Rampton
August 31, 2009
WASHINGTON (Reuters) – U.S. farm groups, dependent on world markets for growth, hope the Obama administration will soon turn its focus to finding ways to expand trade as the global recession pummels agricultural exports and farm income.
Farm groups worry they could lose ground in important foreign markets if the administration — consumed by health care reform and climate change legislation — waits too long to move trade near the top of its agenda.
"Trade is our lifeblood," said Rebecca Bratter, policy director with market development group U.S. Wheat Associates.
"We need to somehow let the administration know that trade fits into their current priorities," Bratter said, adding that expanding trade can boost jobs at home, advance diplomacy and security issues, and stimulate overseas development.
The stakes are high. U.S. farm exports were worth $97.5 billion in fiscal 2009, which ends on September 30, down 15 percent from the record $115.3 billion a year earlier.
In 2010, exports could dip to $97 billion, the USDA said on Monday in its first forecast for the year ahead.
Sagging exports have hit farmers’ bottom lines. Last week, USDA forecast net farm income for 2009 would plunge 38 percent from 2008, when demand and prices surged to record heights.
"With economic conditions deteriorating worldwide, demand for exports has tailed off, with few options available to expand marketing elsewhere," the USDA said.
So far, U.S. Trade Representative Ron Kirk has emphasized he plans to crack down on enforcing trade deals. [ID:nN16130244] The farm belt was grateful when the administration jumped to help lift unjustified bans on U.S. pork after the outbreak of a new strain of H1N1 flu virus.
"It came at a time when producers were already financially vulnerable, and the administration was very quick to understand that," said Nick Giordano, a vice president of the National Pork Producers Council.
Analysts also have taken some comfort from the general tenor of the administration’s remarks about the importance of trade, particularly from Kirk, though they said USDA officials have been less engaged on the trade policy file thus far.
Farm groups, like other export-dependent sectors, are still waiting for a long-promised speech on trade from President Barack Obama they hope will make clear his trade goals.
"Until we see something in writing that sort of spells out what this comprehensive trade agenda is going to be, people are left to wonder," said one industry analyst who, like others, was loathe to be seen as critical of the new administration.
Farm groups are keen to see how Obama intends to put his stamp on three pending bilateral deals negotiated by the former Bush administration, and a timeline for when he will take them for approval to an unenthusiastic Congress.
Pending deals with South Korea and Colombia are particularly important for U.S. farm exporters, who worry about losing sales to competitors inking their own agreements.
In Colombia for example, Canada and the European Union are moving ahead on their own free trade deals, which would give them a huge edge over U.S. wheat exporters.
"We’re fighting to keep our market there, because we are going to lose it, and that means $100 million a year out the window," Bratter said. "Time is money, and the clock is ticking on Colombia for us."
As the deals languish, the United States will be unable to start work on potential new agreements in regions such as Asia that could result in better access for exporters.
U.S. farm groups also are eager to see the long-running Doha round of World Trade Organization talks conclude, as long as the deal paves deep enough inroads into markets such as China and India to make up for cuts to U.S. farm subsidies.
The United States will also face continued pressure in the talks to reform its subsidies, which other countries blame for artificially boosting world production and hurting prices.
Kirk travels to Delhi this week to meet with other trade ministers to see how they can get talks rolling again. World leaders have called for a conclusion next year.
It may be difficult for Kirk and the administration to aggressively push forward on a deal because the House and a third of the Senate face elections next year, analysts said.
Given high jobless rates in many states, lawmakers won’t be eager to stick out their necks on trade deals seen by many as sucking jobs out of the U.S. heartland, said Robert Thompson, a farm policy analyst at the University of Illinois.
"I just think the politics would be too difficult for Congress to stomach," said Thompson, who expects a Doha deal would be more feasible in early 2011.
(Editing by Lisa Shumaker)