August 6, 1992 PRESIDENT BUSH ON AGRICULTURE +quot;The quantity and variety of goods that

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August 6, 1992 PRESIDENT BUSH ON AGRICULTURE "The quantity and variety of goods that fill our Nation's grocery stores are unparalleled -- a shining testament to the ingenuity and productivity of the American farmer." President George Bush November 20, 1991 "Today, the trade practices of the European Community hurt American farmers.... I am not going to put our farmers at an unfair disadvantage. Sooner or later, the EC must stop hiding behind its own iron curtain of protectionism. Meanwhile, we will remain leaner, tougher and more competitive." President George Bush January 13, 1992 Summary o President Bush is committed to ensuring that our farmers and ranchers can compete in the world marketplace. The President has worked hard to provide greater flexibility for our farmers, promoting new uses for agricultural products, opening markets for farm exports, and helping to mitigate undue burdens of regulations. o Under the Bush Administration, nominal farm income has reached a record high, and farm debt has fallen by one- third. At the same time, farmers are now receiving more and more of their revenues from markets, instead of the federal government. o In November 1990, President Bush signed into law the market- oriented 1990 Farm Bill. The President vigorously pursued this bill which builds on the successes of the 1985 Reagan legislation. This program will keep American farmers competitive in world markets, assist farmers in their efforts to conserve soil and water and stabilize farm income and the U.S. food supply. Increasing Farm Income o Under President Bush, farm income is at record levels. Government support through farm programs, the reduction in the debt load of farmers, increased international markets due to aggressive market opening and export programs, and President Bush's position on reducing interest rates all contributed to the expansion in farm income. -- After adjusting for inflation, it is estimated that net farm income for the period 1989-92 will be 14 percent above the previous four year period. Agriculture sales and gross cash receipts have increased $16 billion since President Bush took office -- to $167 billion. At the same time, government payments to farmers have fallen as farmers have received more money from private markets. -- In 1984, farm debt was $194 billion; by 1991 it had fallen to $123 billion (forecast). Lower interest rates combined with declining farm debt have significantly improved the financial position of farmers. -- Farmers' equity has grown by $45 billion in the three years from 1988 to 1991. As farmers continue to cut debt and increase assets, about 60 percent of the equity decline which took place in the first half of the 1980s will be regained by the end of 1992. Maintaining Farm Program Support o President Bush's major domestic farm policy challenge during his first term was the 1990 Farm Bill. The President led the effort to maintain support for America's farmers while achieving the Congressionally mandated reduction in agricultural subsidies and government costs. -- To offset the effects of lower government expenditures, the Bush Administration advocated the concept of "planting flexibility," which lowered the restraints on cropping choices. -- Greater flexibility has made U.S. agriculture more competitive in global markets. -- In 1992, farmers used their new freedom to plant over 8 million acres to alternative crops. -- The market-oriented Farm Bill provisions are raising farm productivity and efficiency and helping farmers earn more in the marketplace, thereby reducing their reliance on government payouts. At the same time, vital support continues. Reducing the Burden of Agricultural Regulation o In his State of the Union address in January, President Bush vowed to eliminate unnecessary regulations that impede economic growth and accelerate implementation of those that promote growth. o On March 19, the Bush Administration announced a package of agricultural regulatory changes totaling $1 billion in economic benefits. These initiatives range from ways to reduce compliance costs for nutritional labeling of meat and poultry products to streamlining the application procedures for FmHA farmer loan programs to speeding up a new loan program for beginning farmers. o The President's directive to get the government off the backs of farmers continues to succeed. In recent weeks, rule changes have reduced the number of trips that are necessary to local USDA offices. Other changes include flexibility in enrolling wetlands in the Conservation Reserve Program and making the Export Enhancement Program and Export Credit Guarantee Programs easier for exporters to use. o The President recognizes that unduly burdensome regulations are a brake on economic progress for U.S. farmers. Significant headway is being made to dismantle such rules to put money back into farmer's pockets instead of wasting it on unnecessary compliance costs. Promoting Agricultural Trade o President Bush is committed to breaking down trade barriers and opening new markets around the world. Agricultural exports are up, topping $37 billion in 1991, and are expected to reach $41 billion with an $18 billion surplus in agriculture trade this year alone. o The President has successfully negotiated expanded markets, such as agreements on beef and citrus exports to Japan and similar dropping of barriers in other growing Asian markets. o The President has worked to reduce the unfair agricultural subsidies of our competitors through the GATT negotiation process, and other diplomatic and economic efforts. -- The U.S. oilseeds case against the EC has twice been judged by the GATT in our favor; however, the EC has so far refused to change their unfair policies toward U.S. oilseed producers. While we continue to negotiate with the EC within the framework of the GATT, we are prepared to use all our trade remedies should the EC not bring its policies in line with GATT requirements. o The President has extended agricultural credits guarantees to Russia and other nations of the former Soviet Union to meet their needs in this critical time. The U.S. has made available $4.85 billion in credit guarantees for the purchase of U.S. agricultural goods to the former Soviet republics and up to $165 million in food aid. This will help increase farm income and retain important markets. GATT Uruguay Round: o President Bush has led the world in pushing for global reform to open markets in the Uruguay Round negotiations of the GATT. Foreign markets absorb 20-25 percent of U.S. agricultural sales. A successful agreement could expand farm exports by $4 to $5 billion by the year 2000. This would add $5 billion in farm cash receipts, reduce federal outlays by $2 to $3 billion, add 40,000 to 60,000 new U.S. jobs in the food and agriculture sector, and require only a few changes in U.S. domestic support programs. o Agricultural reforms in the Uruguay Round would mark an historic departure from the costly protectionist measures that have restrained agricultural trade growth, largely outside GATT disciplines. These reforms would have significant benefits for farmers, taxpayers, and consumers in the United States and the rest of the world. They will help to level the playing field for U.S. farm exports and will provide fair import safeguards for U.S. farmers. o President Bush, supported by other GATT members, has demanded that any final GATT agreement include a commitment by all parties, including the EC, to significantly reduce trade barriers and to require their farmers to compete fairly in the world market. -- The Bush Administration has aggressively focused and spent $850 million so far this year on the Export Enhancement Program (EEP). This program is specifically designed to counter the EC's massive export subsidies and maintain pressure to negotiate a settlement. -- This commitment demonstrates that the Bush Administration is determined not to reduce these subsidies unilaterally, and put U.S. farmers at a tremendous disadvantage to subsidized competitors. o The EC's recent reform of its Common Agricultural Policy could promote further progress on the GATT. CAP reform alone, however, does not resolve the problem of the EC's unwillingness to reduce export subsidies. The EC must take further steps to join the rest of the world in reducing subsidies and opening its markets to competitive trade. North American Free-Trade Agreement (NAFTA): o President Bush has been at the forefront of negotiating a fair free-trade agreement with Mexico. With nearly 90 million consumers and an expanding economy, Mexico will provide a vital and expanding market for U.S. agricultural products. NAFTA offers a total market of 360 million people. o U.S. agricultural exports to Mexico have almost tripled since 1986 to a record $3 billion in 1991. The U.S. is currently the largest supplier of agricultural products to Mexico. Under a NAFTA even more can be done since Mexico's remaining trade barriers are still higher than those of the U.S. (Mexican tariffs on U.S. products average about 11 percent while the U.S. tariffs are only about 4 percent.) o President Bush firmly supports the development of a strong NAFTA agreement which will secure further export opportunities for agricultural products to Mexico. A NAFTA will provide adequate transition provisions for U.S. producers. This will include import safeguards and long term phase-in periods for sensitive crops to avoid severe impacts on any commodity or industry. o At the same time, the Administration will ensure that health and safety standards are not relaxed on food imports. The U.S. will maintain the right to exclude any products that do not meet U.S. health or safety requirements and will continue to enforce those requirements. President Bush seeks a commitment to work together with Mexico to enhance environmental, health, and safety standards regarding products and to promote their enforcement. Trade Agreements in Asia: o The largest region for U.S. agricultural export market is Asia, accounting for 44 percent of farm exports in fiscal year 1990-91. In that year, U.S. sales of agricultural products to Japan (our largest single market for farm products) totalled $7.7 billion; sales to Taiwan were $1.7 billion. However, there are still many trade restrictions facing the U.S. agricultural industry. President Bush has actively pursued trade agreements to open Asian markets. -- A 1990 agreement was negotiated with South Korea which will completely open its beef markets to the U.S. by 1997. Currently, South Korea is the third largest market for U.S. beef. -- An agreement with Japan led to a complete lifting of quotas on beef imports on April 1, 1991. The U.S. has increased its beef exports to Japan from $557 million in 1987 to $889 million in 1991. -- A 1990 agreement with Japan on processed wood products will increase exports by $1 billion. Promoting New Uses for Farm Products o The Administration is supporting a growing effort to expand nontraditional markets for farm and forestry products. Markets for fuels, lubricants, biodegradable materials, inks, and pharmaceuticals offer tremendous potential for American agriculture. Expanded markets will increase farm income, create economic opportunity in Rural America, help achieve a cleaner healthier environment, and reduce our reliance on foreign oil. -- Funding for activities in these areas has increased substantially. The President has requested that Congress more than double funding for the Alternative Agricultural Research and Commercialization Center (AARC) in FY 1993 from $4.5 million to $10 million. AARC's mission is to facilitate the movement of new technology and nontraditional products from the laboratory and testing phases into the marketplace. -- USDA's Agriculture Research Service (ARS) is increasing its effort in the area of new uses. Funding requested for FY 1993 is $5 million higher than FY 1992. -- Products and materials made from crops are generally environmentally friendly and safe to handle. Disposable packaging made from starch is biodegradable and nontoxic and thereby providing one solution to the increasing solid waste disposal problems. o The Clean Air Act Amendments of 1990, proposed and signed into law by the President, provides expanded market opportunities for biofuels, both ethanol and biodiesel. Biodiesel is a clean burning substitute for diesel fuel and can be made from oilseeds and animal byproducts. -- USDA is currently working with EPA and DOE to ensure that ethanol will enjoy the market opportunities available to it under the Clean Air Act. -- USDA's Economic Research Service (ERS) estimates that increasing ethanol production to 5 billion gallons will create 100,000 jobs, many of them in rural areas. -- An expanding market for ethanol will also reduce emissions of carbon monoxide and other harmful air pollutants. Growing crops for fuel will also reduce the amount of new carbon released into the atmosphere helping to stabilize levels of carbon in the air. o The President's National Energy Strategy also calls for an expanded market for biofuels to increase our domestic energy production and reduce our dependence on foreign oil. o Funding for activities within USDA to encourage the development of ethanol and biodiesel markets has increased substantially. Funding requested for FY 1993 is almost three times that appropriated in FY 1992. -- ERS has identified new cost-saving technologies that can lower the cost of producing ethanol by as much as 20 to 30 percent and increase market opportunities even more. USDA's Office of Energy, ARS and other agencies are working to develop these new technologies and make them available to the private sector. Agriculture and the Environment o Recognizing that farmers are the first environmentalists and have been working for generations to protect and preserve their lands to maintain productivity, the President has oriented farm policy toward the goal of assisting farmers in their efforts. o The Administration has been working with farmers to provide them with information regarding best management practices and new technology to assist them in reducing inputs and complying with State and local environmental laws. The Administration has sought to ensure that zeal for environmental protection does not transfer into laws so restrictive as to put people out of business. o The President supports the Wetlands Reserve Program (WRP), the Conservation Reserve Program (CRP), and the Water Quality Incentives Program which are all voluntary programs available to producers to assist in the protection of their lands. o The Administration supports greater planting flexibility as a means to divert from monocultural practices and opportunities for exploration and experimentation with new crops to achieve the best management practices for the land. o The President believes that it is possible to protect important wetlands and at the same time have a balanced, sensible approach to protection that takes into account the property rights of farmers.

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