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Free trade having harmful impacts on U.S. corn growers, ACGA president to tell Progressive Caucus

(Thursday, June 12, 2003 -- CropChoice news) -- The following is the text of American Corn Growers Association President Keith Dittrich's testimony on the impacts of free trade on U.S. corn producers. He will speak to the Progressive Caucus today.

Good morning Congressman Kucinich and members of the Progressive Caucus. I am Keith J. Dittrich, a corn and soybean farmer from Tilden, Nebraska and also president of the American Corn Growers Association. I would like to thank Congressman Kucinich and members of the Caucus for holding this hearing regarding the impacts of free trade on the livelihoods of farmers here in the United States.

The American Corn Growers Association, which represents 14,000 corn producers, was formed in 1987 after much dissatisfaction with organizations that represented corn producers during the landmark 1985 farm bill debate. Trade was a key focus of this debate and much of the emphasis of the 1985 farm bill legislation was focused on adjusting farm policy to allow farmers to be "more competitive in the global marketplace. The prevailing theory was that if we would reduce price support mechanisms for basic commodities, (which in turn would reduce market prices) farmers would benefit from increased commodity exports and burdensome grain stocks would be therefore be reduced.

To the supporters of this concept, principally the multinational grain processing and exporting companies along with the organizations which they have influence with, the bill was not an entire success. They had hoped for a complete "decoupling" of farm programs from production. This would allow for all out production on the farm, providing them with large quantities of commodities, and prices kept a fire sale levels, due to elimination of all price support mechanisms.

It was understood then by ACGA that there would be an attempt to circumvent Congressional intent through the General Agreement on Tariffs and Trade, and the to be organized World Trade Organization, to achieve further reductions in farm policy price impacting mechanisms in the international arena. This would be achieved by in effect, making domestic farm programs that affected price or managed supply "illegal" by WTO rules. Our first Director of Congressional Affairs, Mr. John Ford, who previously had served as an Undersecretary of Agriculture serving as the chief liaison between Congress and the Reagan Administration, later testified to this numerous times as he warned of the true intent of such trade agreements.

Therefore, after the 1985 farm legislation was passed, it became apparent the focus of farm and trade policy experts became the upcoming GATT negotiations, with a new round of discussions to be held. The focus of the GATT was reducing farm subsidies worldwide, with attempts to liberalize trade to the benefit of farmers here and abroad.

Early in the process, ACGA had assessed the potential for dramatic changes to agriculture if reductions in domestic farm programs were to be made here in the United States under the auspices of trade liberalization. First of all we knew that exports of basic commodities were relatively inelastic and secondly that reductions in price support mechanisms along with the elimination of other price impacting mechanisms such as grain reserves and acreage idling programs, would have devastating effects on family farmers here and abroad. I would like the record to show that we sounded the alarms far and wide of what would happen if such a course were followed, but to no avail.

To this day the United States has continued down the path of liberalized trade and radically adjusted farm programs that have devastated Rural America. In my home community radical changes have taken place, as family farm operations have either had to expand to survive or look to off farm jobs to make ends meet. Currently, our rural communities in Nebraska are facing severe education budget shortfalls that threaten to close many schools down. The infrastructure has either degraded or stagnated since these trade agreements have passed. Most interestingly, our local community has also seen a large influx of workers of other nationalities to work in meat packing plants who have come because of the lack of jobs and opportunity in their home countries. Some of them are farmers who have been displaced by the same trade agreements that was supposed to improve their lives. This influx has caused severe societal problems for our communities as several different cultures are forced to merge in a very short time.

The recently passed farm bill legislation, being slightly improved over the past bill, still does not attempt to improve commodity prices through reinstatement of historically proven price impacting mechanisms, since many of these are considered "illegal" in the eyes of the World Trade Organization. Therefore, it could be said that the proponents of a decoupled approach to farm programs have been very successful over the last 18 years in achieving their goals by in effect circumventing Congress with trade agreements that must be passed on an up or down vote.

At the same time, the stated goals of several trade agreements, including GATT and NAFTA along with the past four farm bills, of expanding trade and improving the incomes of farmers has been dismal at the best. For instance, exports of corn have stayed nearly static over the 18-year period while average market prices have been cut to only 40% of levels in the early 1980ís adjusted for inflation. Again, the effects of such a dramatic reduction in farm gate prices has driven thousands of farmers off the land and caused rural communities to collapse in some areas, with all suffering from a lack of economic activity due to a depressed farm economy.

Since the effects of trade liberalization were so damaging to U.S. producers, conversely it would be thought that there would have been winners, such as farmers from other nations who were allowed better access to markets through trade liberalization. Again, in reality though, farmers around the world have suffered along with US farmers as commodity prices fell globally. Many have suffered even more seriously than US producers due to the lack of any income assistance, which we did have. Even consumers were left out of the benefits of reduced commodity prices as data shows that retail consumer food prices increased at the general rate of inflation up nearly 250% over a twenty five year period, while commodity prices remained flat or lower. It should also be noted that the changes that occurred beginning in 1985 transferred the cost of commodities from the buyer of the products to the taxpayers. In 1985 the cost of the farm bill jumped from a mere few billion a year, to over 26 billion dollars and has recently exceeded 30 billion dollars.

In reality, the only winners in this era were the multinational food and grain processing and exporting companies. These same companies have also been able to dramatically shift our livestock production to vertically integrated systems, controlled by them. To this point in time have achieved their goals of insuring a plentiful supply of low cost commodities to process, transport and sell around the world at the expense of farmers, laborers, taxpayers and consumers as well. I thank you for this opportunity and would be happy to entertain any questions you may have.