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Corn+Soybean Digest

BIG Bush's Year

In his first year in office, President Bush gave American farmers much of what they wanted. The farm sector scored big wins on estate tax, international trade and environmental regulation.

The Bush administration also brought a new framework to the farm policy debate, creating principles to guide future farm policy decisions. This contrasts with the typical process of passing a by-the-seat-of-the-pants relief package each year dealing with the latest emergency to hit the farm sector.

Basically, the Bush administration asked, “What does the American farm sector need to be prosperous?” says David Orden, professor of agricultural and applied economics at Virginia Tech, and lead author of the book Policy Reform in American Agriculture.

The Bush-lead principles were released in September as a 120-page document entitled Food and Agricultural Policy: Taking Stock for the New Century. Among other things, the principles call for more open foreign markets, an upgraded ag infrastructure and new safety net features that won't encourage farmers to overproduce and impact commodity prices.

The guidelines also call for sensible limits on farm spending. “They're not just opening the feed bucket and saying, ‘we'll spend money just to spend money,’ ” Orden says.

While this philosophy could impact farm programs for years to come, Bush delivered some concrete victories for the farm sector his first year in office.

One of the biggest came in foreign trade, when Bush-administration efforts paved the way for expanded global trade talks by the World Trade Organization (WTO). The administration pushed hard to jump-start the talks, even though it was heavily involved in military action in Afghanistan in the wake of the tragedies on Sept. 11.

The American Farm Bureau Federation hailed the talks as a key step in boosting the global prospects for U.S. farmers. “We can begin to tackle the barriers to trade that block our entry into foreign markets and create unfair advantages for our competitors,” notes Federation President Bob Stallman in a prepared statement.

Nonetheless, there remains a fly in the ointment that could sour hopes for increased ag trade. Congress failed to give Bush authority to negotiate tamper-proof trade agreements. Unless he's given such authority, Congress could alter his already-negotiated trade deals, and foreign governments are unlikely to conclude major agreements with the U.S. under those conditions.

“Other countries won't bargain if they think Congress will change the deal after the fact,” says Orden.

The trade talks are considered vital not only to U.S. agriculture, but also to a revival of the worldwide economy, now in a slump. “The world needs a little nudge to get the world economy going,” says Luther Tweeten, retired ag economist at Ohio State University. “Nothing, in my judgment, would help more than a trade agreement.”

And a revival of the economies of our foreign trading partners ultimately helps decide how much they spend on American farm products and other U.S. goods. “Everybody sinks or swims together,” Tweeten adds.

Farmers also scored a long-sought victory in the Bush tax plan, which phases out estate tax and cuts taxes across the board. The estate tax phase-out is especially helpful to large family farms, which were hit hardest by the tax. “It will allow the transfer of the farm from one generation to the next without a tax burden,” says Barry Flinchbaugh, Kansas State University ag economist.

The Bush administration's opposition to the Kyoto Treaty, focusing on climate change issues, was another positive impact on ag in 2001. That effort kept the U.S. from joining the accord, which specified that the U.S. must cut emissions of so-called greenhouse gases 7% below 1990 levels. If implemented, the requirement could have led to new ag regulations on the use of fossil fuels and fertilizers, required changes in cultivation practices and restricted production of some crops and livestock.

The production of ethanol likely will get a boost from the administration's refusal to exempt California from a mandate to reformulate gasoline to minimize environmental impacts, too.

But the future may not be quite as bright for other pro-farm programs. Costs stemming from the Sept. 11 attack and the ongoing war on terrorism may soak up funds that might otherwise have flowed to agriculture. These costs include $15 billion in aid and loan guarantees to the airline industry, the cost of military action in Afghanistan and aid to rebuild New York City and Washington, D.C.

Funds also will be needed for efforts to prevent biological terrorism, or agroterrorism, aimed at the farm sector. Virginia Tech's Orden says the Bush administration was moving on the bioterrorism issue even before Sept. 11. But because of the attacks, “I think there will be more money spent and more done in that area. You've got to appropriate money for additional inspectors, additional lab work and other costs. But it could divert money from other agricultural programs,” he notes.

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