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Is U.S. agriculture losing its competitive edge?

"If the U.S. was once the most efficient, lowest cost producer of agricultural commodities, it can no longer make that claim in a number of production sectors," says David J. Frederickson, president of the National Farmers Union.

"U.S. producers are now witnessing a loss of our competitive position both internationally and domestically. Not only is our comparative production advantage over producers in other countries waning in many commodity sectors, but we are also losing the battle in maintaining a competitive advantage."

To a great extent, he says, this is due to the acceleration of technology transfer globally and a wide range of strongly-supported U.S. public policies concerning labor and environment. "In addition, macroeconomic and monetary policy considerations continue to severely hamper U.S. agricultural exports and encourage imports due to exchange rate differentials."

Agriculturally disarmed

"For a variety of reasons," he says, "the U.S. has unilaterally disarmed itself in the traditional agricultural trade areas of market access, domestic policies, and export subsidies, while ignoring the basic issues that affect our future competitiveness."

The U.S. and it’s trading partners "have failed to harmonize, enforce, or dismantle much regulatory authority over sectors critical to maintaining competitiveness in agriculture." At the same time, as the agriculture service sector has become more globalized, it has also consolidated, "concentrating its global influence and control over multilateral negotiations and markets."

Over the last three decades, Frederickson says, the aggregate farm gate export value for U.S. agricultural products has been flat, while domestic demand has continued to rise.

"Our actual experience directly contradicts trade advocate claims. Also, the individual overseas markets that were expected to provide the greatest stimulation to our exports, such as the former Soviet republics, China, Latin America, and Southeast Asia, have failed to materialize."

The Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and other free trade agreements "have not resulted in improved U.S. agricultural performance," he contends. "In fact, as a result of numerous trade agreements, the U.S. has greatly increased its imports of competing agricultural goods."

Market management

Frederickson says it is "unrealistic" to expect governments — "ours, and particularly those of food-deficit nations — to curtail intervention in agricultural markets or in areas that directly have an impact on production and distribution.

"Food safety and security, along with the importance of agriculture to national economies and social structures, insure that some form of intervention or market management will remain."

But, he says, if U.S. producers are to be competitive in the 21st century, "trade negotiations and agreements must first be viewed as a ‘means’ and not the ‘end,’ as many currently seem to believe." Then, he says, the U.S. may be able to create an agricultural trade environment and spirit of cooperation that "can identify and address the legitimate concerns of consumers for an adequate, affordable, and safe food supply, while providing a more stable and acceptable economic environment for producers."

Attention must be given, Frederickson says, not only to the traditional trade issues of market access, export subsidies, domestic policy, and special and differential treatment, but also to issues such as labor and environmental standards and exchange rate fluctuations.

"The primary goal of trade negotiations should be to enhance the harmonization of national policies and priorities, while fostering greater cooperation in addressing the real problems that concern producers and consumers."

Unless the U.S. finds new ways to address these issues, Frederickson says, "our production agriculture’s ability to engage in economic rivalry, without the presence of monopoly or collusion, will be relegated to the same mythical status as free trade."

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