Agricultural Outlook 2008
Bruce I. Knight, Under Secretary for
Marketing and Regulatory Programs
Texas & Southwestern Cattle Raisers Association
Corpus Christi, TX
March 16, 2008
Thank you, David (Scott). I appreciate the opportunity to stand in for Secretary Schafer this morning. I know he regrets not being able to be here and sends his best wishes for your time together. I hope you all get a chance to meet.
This morning, I want to touch briefly on a broad array of topics. Then I’ll go into more depth on some of them when I address marketing and regulatory issues this afternoon.
Farm Bill
Let’s focus first on the farm bill. We’re in the final phases of farm bill negotiations as the House and Senate conference committee is completing its work.
This is my fifth farm bill, and I can tell you these negotiations have been particularly challenging. But there’s been a lot of progress in the last few weeks.
The 2002 farm bill, scheduled to expire yesterday, has been extended to April 18 to give the conference committee time to finish up. That extension prevented us from reverting to the 1949 farm legislation, which would be seriously out of touch with agriculture in the 21st Century. But this is a temporary solution, because the U.S. agricultural situation and outlook have changed significantly over the past six years.
The 2002 farm bill is outdated as well. We need a farm bill that looks forward, not backward. We need a farm bill that
- Includes real program reforms
- Increases market-orientation
- Removes trade-distorting subsidies
- Improves the safety net for farmers and ranchers
- Doesn’t increase taxes
- Expands working conservation programs, and
- Boosts energy research to produce ethanol from cellulosic feedstocks and biodiesel from waste greases.
President Bush wants to sign a good farm bill. But he sent a message this past week—the bill needs to be completed during the 30-day farm bill extension or Congress needs to pass a one-year extension if they can’t get the job done.
Secretary Schafer and the rest of us at USDA are doing everything we can to work with the conference committee to resolve the final issues. Secretary Schafer is optimistic, and I am optimistic, that we will be able to reach agreement on a strong farm bill—one that’s acceptable to both houses of Congress and that the President will be proud to sign.
Trade
New legislation will help us continue to move U.S. agriculture forward. We have record prices, record farm income and record exports—and relatively low debt.
Several weeks ago, Secretary Schafer announced a new projection for U.S. agricultural exports in Fiscal Year 2008—$101 billion. That’s up $10 billion over the November 2007 forecast—and $19 billion over last year’s mark. It means U.S. producers have been blessed with 5 straight years of record exports. And this year agricultural exports will generate a trade surplus of more than $24 billion.
There’s good news for cattle raisers in these numbers. Beef exports are up by 25 percent over the past year—and are expected to continue to increase. As our exports grow, we’re experiencing not only higher prices but higher volumes.
And with pending trade agreements, volume should increase further. At the marketing committee session this afternoon, I’ll discuss some important agreements we have with Panama, Colombia and South Korea that are awaiting Congressional action.
Normalization of Trade with Mexico
Of course, one of our most important trading partners is Mexico, and we’ve been working to expand markets there. Since we received our “controlled risk” designation on BSE from OIE, the World Animal Health Organization, we’ve been encouraging all the countries we trade with to accept this as scientific evidence that our beef is safe and to open their markets fully to us.
We want them to accept live animals, semen and embryos as well as meat. This has been somewhat more difficult since these products have been viewed as riskier, and import requirements may be more stringent.
We still have some issues we’re working on with Mexico. Right now Mexico has undue restrictions on live animal movements. We’d like to see full alignment with the OIE guidelines, which would permit us to export older animals. We’re also working with Mexico on TB eradication—and I’ll talk more about that this afternoon in the marketing committee.
Hallmark/Westland
I want to touch, just for a few minutes, on a situation that has concerned almost everyone in the beef industry—the mistreatment and mishandling of cows at the Hallmark/Westland Meat Packing Company in Chino, California.
USDA launched a full-scale investigation based on evidence it received. Then in mid-February, following initial findings corroborating the accusations, the Department announced the largest meat recall in U.S. history.
This was a Class II recall. That means the risk to human health is remote. No one is likely to get sick from eating this beef. But the company failed to follow the rules, making a recall necessary.
The message to meatpackers in this case is clear: USDA regulations are important, and we will enforce them. The requirement that cows be up and walking means they must be walking without inhumane treatment to force them to their feet.
There’s also a message here for livestock producers: Don’t wait until the last minute to send an animal to slaughter.
This has been a difficult situation. The shutdown of this operation has been painful, especially since the company may not re-open. Many people will experience losses.
But about one-third of the ground beef involved in the recall went into school lunches and other USDA feeding programs. We have to know the food we purchase to feed children and the elderly was produced following the rules.
We must continue to uphold high standards to protect the integrity of our food supply, which is critical to consumers here and abroad.
Fever Tick
Part of our commitment to high standards for our food supply is our commitment to safeguarding the health of U.S. livestock. I know one of the particular concerns that cattle producers in Texas share is the fever tick. And for more than 100 years, USDA has fought alongside farmers and ranchers to eradicate this pest in the U.S.—and then keep it out.
In fact, the past two days I met yesterday with the riders who patrol along the Rio Grande River to understand this problem. Over the past 18 months, the number of infested premises both inside and outside the quarantined area along the Rio Grande River has increased significantly, and we’ve had to institute temporary quarantines beyond the permanent quarantined area.
We know that USDA and Texas resources are inadequate to meet the emergency situation we now face to control the current outbreaks of the fever ticks and keep them from spreading and infecting more cattle with Texas tick fever. We are currently exploring options to address this emergency and identify additional funding so we can add more tick patrol riders and animal health technicians along with additional equipment and treatments for both cattle and wildlife, which can also harbor the ticks.
We know we need to nip this problem in the bud before we wind up with pesticide-resistant ticks that will be much more difficult to eradicate. We are working hard to ensure everyone understands why we need additional funding now.
Plum Island
Of course, Texas fever is just one of many diseases that we’re seeking to address. Toward that end, we are developing a world-class animal disease bio-containment facility in conjunction with the Department of Homeland Security’s Science and Technology Directorate. It will be called the National Bio and Agro-Defense Facility or NBAF, for short. This facility will house the National Animal Disease Center, which is now located at an aging and inadequate site on Plum Island, off Long Island in New York.
Last summer DHS announced that five research consortiums have advanced to the next phase of the competitive process for selection of the site for the new facility.
Groups in Mississippi, Kansas, North Carolina and Georgia are still in the running along with Texas Research Park in San Antonio.
DHS has begun the necessary Environmental Impact Statement process on the five sites. We expect that process to be completed within the next year or so. Then DHS, with input from USDA and Health and Human Services, will make the final decision on where to build the new facility.
Conclusion
In this brief time, we’ve covered just a few highlights. I’m looking forward to having more time with some of you this afternoon to discuss trade in more detail as well as talk about some other critical subjects, such as animal ID and COOL.
I think we can all agree that this is an exciting time to be part of American agriculture as we get a new farm bill in place. We can expect continued increases in exports and expanding opportunities for farmers and ranchers across the U.S.
And USDA stands ready to help you protect your livestock, reach new markets and reap the benefits of your hard work.