Nick Smith, September 26, 2004

As a farmer and 12-year member of both the Michigan Legislature and United States Congress, I have spent much of my life advocating for agriculture. Productivity and open markets will help make sure our farmers can compete in the future. In the 108th Congress, we have worked hard to create new market opportunities through more fair trade agreements. It is a tribute to our agriculture industry that we will export roughly $62 billion in agricultural products in 2004 surpassing the old record set in 1996. With nearly 25% of farm income coming from exports, the success, profitability, and future of American agriculture is directly dependent on foreign as well as domestic sales.

China and India have now become very important markets. Not only do these nations each have more than a billion mouths to feed, strong economic gains allow their consumers to improve their diets. In most cases, that means eating more protein, which plays to the strengths of U.S. agriculture. China is clearly a large consumer of food products and can quickly influence world prices, as they did recently in the U.S. soybean market. Longer term, new trade agreements that give the U.S. more fair and free access to these huge markets will have a big impact on the future of American agriculture.

On the home front, strong and growing livestock and crop production can provide rural communities with greater financial security and jobs. In many rural areas, communities are dependent on a profitable agriculture to support the local economy, which includes schools, hospitals, etc. There have been several years in the past where these communities could not have survived without government farm support programs.

Future farm programs are now challenged on two fronts. Many developing countries complain that U.S. and European subsidies allow farm sales below the cost of production. Brazil has filed a successful WTO claim that U.S. domestic support measures have resulted in excess cotton production and exports that, in turn, have caused low international prices. They also argued that the direct payments in the 2002 Farm Bill do not count as the fully decoupled income support allowed under the WTO. We have appealed the initial WTO decision.

The second challenge to existing farm programs is our record deficits. U.S. farm subsidy payments for the last six years were greater than the first 50 years of farm program payments combined. The Freedom to Farm program that I helped initiate in 1996 worked very well for the first two years until we were hit with natural disasters and low commodity prices. Farmers and rural farm communities came to Washington to plead their case for survival and new emergency subsidies were appropriated. The lack of guaranteed support led to a different approach to farm programs in 2002 Farm Bill. As we start writing the new legislation, there is going to be less money available. Our deficits are at record highs and the need to start balancing the budget with the looming social security and Medicare crises will win the day.

The evidence suggests that markets and the ability to compete rather than farm programs will determine what farmers survive and the kind of agricultural production that continues in the United States. That brings us back to the importance of research, including biotechnology, and trade agreements that do not put American agriculture at a disadvantage.

Congressman Nick Smith, a Republican, represents Michigan's 7th Congressional District, which includes Battle Creek and the counties of Branch, Eaton, Hillsdale, Jackson, Lenawee, Calhoun, and Washtenaw in south-central Michigan.