Wed, Feb

Farmers Keep an Eye on WTO's Agricultural Trade Negotiations

When yields for soybeans and corn are higher than normal, as they are this fall, farming in northwest Ohio and southeast Michigan can be profitable despite prices that are lower than last year's.

TOLEDO, OH − When yields for soybeans and corn are higher than normal, as they are this fall, farming in northwest Ohio and southeast Michigan can be profitable despite prices that are lower than last year's.

But when prices are low, as they were a few years ago, Uncle Sam increases agricultural subsidies and gives soybean and corn farmers hundreds of millions of dollars largely tied to the acreage they farm.

Those and other agricultural subsidies may start falling by the wayside after next year, when the World Trade Organization resumes formal negotiations in December 2005, in Hong Kong.

This summer, WTO ministers agreed on a framework for worldwide agricultural trade that included having the United States decrease some subsidies for corn, soybeans, wheat, and other crops by 20 percent -- starting at a date to be negotiated -- and curtail export credits, both of which could lead to an elimination of such programs.

Some local farmers welcome a gradual elimination in government assistance as long as it goes hand in hand with countries such as India lowering and eventually removing tariffs on U.S. crops and otherwise eliminating restrictions on grain imported into such promising markets.

"It's going to be a change in mindset, if and when it happens," said Terry McClure a fifth-generation farmer in Paulding County who plants 3,600 acres to corn, soybeans, and wheat with his father and son.

"Farmers are going to have to manage their risk a little bit more," he said. "As with any business, we're going to have to become better marketers."

Mr. McClure has received subsidies, although his portion is a fraction of the $3.4 million that went to Ohio's top recipient from 1995 to 2002, according to a database of U.S. Department of Agriculture statistics kept by the Environmental Working Group.

The top Ohio recipient is from Middletown.

The top Michigan recipient, from Dowagiac, got $3.3 million during the period.

Farmers in northwest Ohio and southeast Michigan received nearly $1.2 billion in all agricultural subsidies for those years, the group's figures show.

Overall, Ohio farmers received $3 billion and Michigan farmers $2 billion of the $114 billion all U.S. farmers received during the period.

Lenawee County leads the 19-county northwest Ohio and southeast Michigan area with $104.3 million in subsidies from 1995 to 2002, the group's figures show.

Next was Wood County, with $95.7 million.

Corn subsidies account for about half of those subsidies in both counties.

Various U.S. farm groups have applauded the WTO's progress with global agricultural trade reforms, including doing away with at least some of the $300 billion in government assistance farmers in the world's richest countries receive annually.

But much work remains, experts say.

Discussions should focus not only on U.S. subsidies but also on the use of export subsidies by countries in the European Union and the tariffs and restrictions some countries impose on U.S. imports, said Constance Jackson, vice president of agricultural ecology for the Ohio Farm Bureau Federation.

"Our goal is to make sure the farmer has the tools they need to compete in the international marketplace," she said.

Farmers in northwest Ohio and southeast Michigan could benefit from the WTO's final agreement if other countries reduce their tariffs and export subsidies, said trade economist Ian Sheldon, a professor at Ohio State University's Department of Agricultural, Environmental, and Development Economics.

"Right now, things are up for grabs, I think," he said.

Even without a global decree, area soybean farmers should get a boost from highly populated China's increasing consumption of meat in the next few years, Mr. Sheldon said.

Soybeans and soy meal are part of what will feed animals either raised in China or exported from the United States to there, and the Asian country is loosening its trade restrictions, he said.

"There's no way they can feed all the animals they need," Mr. Sheldon said.

American farmers export a third of their crops but face average tariffs of 62 percent, said Ms. Jackson, of the farm bureau.

The United States levies an average 12 percent tariff on worldwide imports. In India, for example, tariffs on some U.S. agricultural products are 300 percent, she added.

High tariffs, however, will be hard to subdue, one expert said. And progress will be slowed by the view of U.S. officials and farmers that they have done enough to lower subsidies to open up access to developing countries, said Phil Abott, professor of agricultural economics at Purdue University.

"I think a lot of people in the rest of the world don't share that," he said. "People are not just going to give away things."

Dairy products, along with cotton, rice, and sugar, have proven to be more sensitive in global talks than grain crops typically grown in northwest Ohio and southeast Michigan, Mr. Abott said.

But just as cotton-producing countries challenged U.S. subsidies for the crop and got an agreement for cuts, Brazil could mount an argument that U.S. soybean farmers received too much subsidy in 1995, he said.

It will be interesting to see whether U.S. subsidy cuts will be across the board or end up aimed at cotton, rice, and sugar instead of products grown locally, said Mr. Sheldon of Ohio State.

Changes in both subsidies and tariffs will need to be made slowly, said Mr. McClure, who farms near Grover Hill and is a past president of the Ohio Farm Bureau.

Farmers don't want to take subsidies, he said. Being able to export to other countries would create more demand and higher prices, eliminating the need for subsidies, he added.

"We get shut out of a lot of countries," Mr. McClure said.

Source: Knight Ridder/Tribune Business News