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« Back to American Agriculture main page    Transcript for: American Agriculturetranscript.714.html ANNOUNCER: Brought to you in part by ADM, feeding the world is thebiggest challenge of the new century. ADM is promoting soilconservation, so history doesn't repeat itself. ADM, supermarket tothe world. Additional funding is provided by the John M. OlinFoundation, the Lilly Endowment, and the Lynde and Harry BradleyFoundation. (Musical break.) MR. WATTENBERG: Hello, I'm Ben Wattenberg in Indiana. Here inthe heartland agriculture is big business and with the freedom tofarm legislation enacted by Congress back in 1996 the world's oldestbusiness seemed on the way to becoming a modern business, turningaway from government subsidies, and embracing open markets and freetrade. But, at the first sign of trouble friends of the farmersflinched. With bipartisan support in 1998, Congress appropriated sixbillion new dollars for farmers. Business and industries around theworld are going through major restructuring. Will agriculture do thesame? It's a key industry of huge importance everywhere. Think Tankrecently made a swing through the Indiana heartland to examine thestate of agriculture in America. While in Indiana we paid a visit tothe burgeoning city of Indianapolis, the nation's 12th largest, andthe home of the distinguished public policy research organization,the Hudson Institute. There we visited with two scholars ofagriculture, Mike Boehlje of Purdue University, and Dennis Avery ofthe Hudson Institute. Later in the program, we pay a visit to theU.S. Department of Agriculture Secretary Dan Glickman. SECRETARY GLICKMAN (From video): There always has been a feelingthat production of food has a special place and almost every societyhas believed this. So it's not exactly like national defense, but itdoes relate a lot to a country's security. MR. WATTENBERG: The topic before the house, is agriculture incrisis, this week on Think Tank. (Musical break.) MR. WATTENBERG: In the wake of the Great Depression, the federalgovernment set up a system of assistance and regulations designed thehelp America's ailing farmers. MR. BOEHLJE: If you go back into kind of this history of wherethose subsidies developed and when they developed, which goes backinto the '30s-40s period, we did have, I think, disparity between theincome in the agricultural sector and in the non-agricultural sector. There were differences. And farmers were not having the same levelof incomes, they were not having the same level of standard of livingas we had in the nonagricultural sector. MR. WATTENBERG: A system designed to combat depression eraconditions remained in place for half a century. But, times havechanged. (Musical break.) MR. WATTENBERG: Stunning technological advances have turnedAmerican agriculture into a high tech and highly efficient industry. So a few years ago, sensing the time was right for change, Congresspassed the Freedom to Farm Act. The legislation was designed tophase out much of the federal farm support system, and to deregulatethe American farm industry. But, just how far have we come down theroad to freeing the agriculture sector from government's visiblehand? MR. BOEHLJE: But, we're caught halfway through a reform, theworld is going to need three times as much farm output by the year2040. We need to get that by increasing the yields on the good landwe're already farming, because otherwise we destroy the tropicalforests. And a great proportion of the world's best farmland is herein this country, and the food gap is in Asia. The obvious long-termanswer and no one would really argue with this, the long-term answeris to help supply the food gap in Asia from the U.S. That's why theCongress agreed on Freedom to Farm. The second step of the reform isto open up the trade barriers that still are pervasive inagriculture. MR. WATTENBERG: In 1998 when demand from Asia collapsed, farmincome collapsed. In Washington, with agricultural reform barely offthe ground, Congress and the Clinton administration ponied up $6billion in additional aid for farmers. MR. AVERY: I think when we had very good prices, and subsidiesseemed to be less important, which is when this 1996 legislation waspassed, that sounded good at the time. But, we immediately foundwithin a couple of years financial pressures and other problemsassociated with lower prices, and I think the Congress basicallytipped its hand in terms of what it really believed. What it reallybelieved is that for political purposes we will put in place amechanism to provide support for farmers, in part because there was,what, somewhere around 11 of 12 seats in the House that were reallycritical and many of them in farm country. And so this is one way tobe able to possibly change the balance of power in that Congress. Ithink it is going to be interesting to see if this problem of lowerprices continues next year, whether it will see the same kind ofresponse on the part of the government. MR. BOEHLJE: The danger is, if we stop half way through thereform and go backward, then we're setting up our farm policy againfor the prevailed over the last 100 years, when very few people hadenough money to afford meat, milk, eggs, good diets, we won't be setup for supplying the world's food needs in the 21st Century, when ifwe have 8 billion people as a maximum population, 7 or 7-1/2 billionof them will be able to bid for the meat, milk and eggs, and we'llput enormous stress on the natural resources. We may find ourselvesclearing millions of acres of tropical forest to grow cattle pastureand chicken feed. MR. WATTENBERG: Today there seem to be two visions for America'sfarm future. The first favors a go slow approach to farm policyreform, and is skeptical of the merits of full-blown free trade. Thesecond favors freer markets, and expanded trade for farm goods. These free trade proponents urge Congress to approve fast track tradelegislation. They want pressure applied to other countries to lowertrade barriers at the World Trade Organization, they push for greaterderegulation of the agriculture industry here in America. And theyhave been quite critical of apparent political backsliding. MR. BOEHLJE: At the moment there is a surplus in the federalbudget, and the Congress would like to go back to buying the farmvote, cheap. And they gave them a $6 billion, one time gift insteadof giving them free trade in farm products, which would probablyallow them to earn another $50 or $60 billion a year, within adecade. But, at this moment the AFL-CIO is standing firmly in thedoor, and saying no moves toward free trade, even though free tradein farm products would not only create a lot of additional jobs infarming, but would probably create an additional 100,000 to 200,000jobs for blue collar, non-farm workers supporting that agriculture. MR. WATTENBERG: Is American farming today ready for full blownfree markets? Think Tank returned to Washington to visit with theClinton administration's Secretary of Agriculture Dan Glickman at hisoffice at USDA headquarters. (Musical break.) MR. WATTENBERG: Mr. Secretary, thank you so much for joining usat Think Tank. I wondered if we could begin with you offering ourviewers who are not experts on agriculture, what is going on in theworld of farming in America, around the world? Where are we in thisremarkable industry? SEC. GLICKMAN: Well, agriculture is by and large the greatsuccess story of the modern era, in terms of the productivity, thefact is that with about 1-1/2 to 2 percent of the population, weproduce all the food we need, plus about 50 percent more. MR. WATTENBERG: In the U.S.? SEC. GLICKMAN: In the U.S., so this country, through greatachievements in productivity, has been able to produce a moderncornucopia miracle, where we have no shortages of anything, and we doit with far fewer people than we used to do it, through a wholeseries of productivity initiatives. MR. WATTENBERG: Do you have some numbers on that? I mean, I'veseen some about the number of farmers required to grow -- number ofacres required to grow a ton of wheat, that kind of thing. SEC. GLICKMAN: I don't have those numbers, but we have about 1.7million farms in this country. About 2 percent of the people live onfarms, compared to 50 percent of the people in 1900. And we sellabout 50 percent more overseas than we actually need to producedomestically. So it is a modern miracle. And the American peoplepay the lowest per capita for food consumption of any country in theworld, by far. We're like half below anybody in Europe on percapita, and a third of what the Japanese pay. So we have anextraordinary bargain in terms of food purchases. MR. WATTENBERG: Now, what is driving that, is it technology,biotechnology, fertilizers, irrigation? SEC. GLICKMAN: It's not biotechnology yet, although that isbeginning to drive it a little bit. It's largely technology. Wehave the most sophisticated research establishment in the world,through both the Department of Agriculture, and our land grantcollege system that was set up about 130 years ago to do ag-research,and we have an extension network that gets that research out. MR. WATTENBERG: Set up by Abraham Lincoln. SEC. GLICKMAN: The program was set up by Abraham Lincoln, and itwas basically set up as an extension agency. So we have thisenormous research and technology machine that has resulted in thisjust monumental increase in productivity. It's both a burden and apositive, as well, because, you know, you produce new crops, betteryields, and you try to reduce costs, but that has, I think, affected-- trends towards consolidation in agriculture, as well. That is,you can produce more with fewer people. MR. WATTENBERG: But you were saying, in effect, that the firstmodern industry in America was agriculture, I mean, with theintensive research? SEC. GLICKMAN: That's correct. I mean, most of the moderninventions and medicine were spurred on by agricultural research. For example, penicillin was commercialized here at the Department ofAgriculture in the 1930s and 1940s. It was found by AlexanderFleming, but if it hadn't been for our efforts at our researchlaboratories we wouldn't have gotten commercial penicillin to thesoldiers in World War II, and we saved, you know, hundreds andhundreds of thousands of lives. (Musical break.) MR. WATTENBERG: You had mentioned before that the development ofthis cornucopian modern agriculture is obviously a blessing, but alsocan be a burden. Where does the burden part come in? SEC. GLICKMAN: The burden is that as you increase yields, and asyou increase production, and as you kind of move towards moreproductive agriculture, you will need fewer and fewer people to dothe same thing, because 1 person can do what 5 might have done 10years ago, or what 50 might have done 50 years ago. So we no longerhave a 40 acres and a mule agriculture anymore. Even family sizedagriculture has grown significantly larger. MR. WATTENBERG: Okay. So I mean the burden part of it is, ittook 50 people to produce a given yield, and now it takes one or two,what are you going to do with the 48 or 49 people? SEC. GLICKMAN: Right. MR. WATTENBERG: But, if you try to slow up that trend, I meanyou've got a -- you're also in charge of food stamps, here. SEC. GLICKMAN: That's correct. MR. WATTENBERG: At USDA, is that right? SEC. GLICKMAN: Yes. MR. WATTENBERG: I mean, in so far as you keep prices high forfarmers, you're raising -- you're making the food stamps worth lessto your other constituents. And there are more people on food stampsthan there are on farmers. SEC. GLICKMAN: Yes, although we have the lowest rate -- MR. WATTENBERG: As well as consumers. SEC. GLICKMAN: Although food stamp participation is downconsiderably in the last few years. MR. WATTENBERG: I know that. SEC. GLICKMAN: The economy is better, there are other reasonswhy. But, almost every government in the world feels thatagriculture is a somewhat equivalent to national security. It's notthe same thing as the defense budget, but that is, a lot of countrieshave gone to war because of a shortage of food. And we've never hadthat in this country, but there has always been a policy view of --policymakers of both parties in America and certainly in Europe andJapan, and other parts of the world, that food production is somewhatdifferent than other sectors of the world economy, and that itrequires special protection, perhaps for social reasons, perhaps forcultural reasons, not so much necessarily granting monopolies. MR. WATTENBERG: It really is -- and on Capitol Hill, where yourhome was before you became secretary, I mean, it is regarded as sortof something very different, isn't it? SEC. GLICKMAN: It is. And I think part of it has to do with theculture of rural America, small towns, you know, that depended uponfood production as their primary industry for so long, and it'sturned rather significantly. In some parts of America, it's veryhard to adapt to this modern information society world, when you have400 people, and you live, let's say, 200 miles from a town of 50,000. MR. WATTENBERG: In the last 20 years, say in the last 25 years,from the mid-'70s to almost the year 2000, the American economy hasbeen deregulated in ways that none of us would have imagined. Imean, I guess it started with airlines, now it's utilities, it'stelecommunications, it's all kinds of transportation. I mean, it'sliterally unbelievable, banking. And in 1996, they passed thisFreedom to Farm Act which was, I think, sold as, well, agricultureisn't -- getting back to what you were saying, isn't so special andso different from every other industry, we're going to deregulate italso, let the market work it wonders. It's going to be harmful tosome people. We're going to do it in a transitioned way. But it'sgot to join the modern world, and that's going to be good forAmerica, good for the farmers, good for everybody. And it soundedgreat. And then, what, a year-and-a-half later, the Asia crisis hit,demand went down, and back came the people interested in the welfareof farmers, either corporate or personal or political, or whatever,both parties immediately went supine, and said, here's the money,sorry, sorry. Now, is that accurate? SEC. GLICKMAN: Well, not totally. First of all, we had a naturaldisaster, and the weather patterns are getting a lot more difficultand volatile as well. MR. WATTENBERG: Which was the natural -- SEC. GLICKMAN: We had weather disasters last year and the yearbefore, and particularly in the Southwest and the Northern Plains. MR. WATTENBERG: But the problem isn't diminished productivity,it's high productivity. I mean -- SEC. GLICKMAN: But, ironically, at a time you had highproductivity, you also had, in the world -- after all, we're in aglobal economy, not just the United States -- we had extremelycatastrophic weather conditions in terms of droughts and floods. MR. WATTENBERG: El Nino. SEC. GLICKMAN: El Nino effect, whatever it was. And so, that'sone of the things, I think, that precipitated Congress to act to comein with more money. There's no question. But it's an irony ofhistory that we passed this bill in '96 that some said would end thesubsidies totally. I never thought we'd totally end the programsbecause I've lived long enough to see that -- MR. WATTENBERG: And you're from a farm state. SEC. GLICKMAN: And I'm from a farm state. MR. WATTENBERG: Where are you from, Wichita? SEC. GLICKMAN: I'm from Kansas. MR. WATTENBERG: From Wichita? SEC. GLICKMAN: The Wichita area. But, you know, the fact is thatwe had three worldwide record years of grain production, '96, '97,'98. We've never had them higher than what we did, wheat, corn, andthose products. And we had a rapid decline in purchasing from Asiaand other parts of the world. And then we had two major markets weused to sell into that just ended. One was Russia. Russia was, thelargest export item to Russia that they bought from the United Stateswas chickens. More than anything else they bought, they boughtchickens. About 40 percent of all their purchases from the U.S. werechickens. And then China used to be a big market in soybeans andgrains, and they've kind of been out of the market as they try to getmore self-sufficient. So, you take those two things together and,whammo, you just have -- and the currency fluctuations that occurredbecause of the strength of our economy. It just was a calamity in alot of agricultural markets. And so, folks in Congress, and here,and the president said, wait a second, that Freedom to Farm is aninteresting idea, but if prices go down 40 and 50 percent, and a lotof these people are very stressed out, actually, because agricultureis the most leveraged part of the United States economy. That is, ifyou take on a per person basis, a farmer has more debt per capitathan any other business person individually in the United States,because it's 100 percent leveraged every year, almost, for the mostpart, the small and medium-sized farmers. These numbers come fromthe Federal Reserve and our own economists. So, anyway, you had anawful lot of folks that couldn't make it, and that's one of thereason why people said, we can't let this go on without making somechanges to it. MR. WATTENBERG: I like these farmers. I, too, run a familybusiness, or have, which is called Freelance Writing. And ifsuddenly a magazine folds, or a news service folds, or newspapersfolds, you know, my writing deteriorates, or whatever, the federalgovernment does not come up and say, oh, my God, this is acatastrophe, Ben. Here's $20,000 to tide you over. I mean, peoplelook at farming and say, why are they special? SEC. GLICKMAN: Well, Ben, I'd like to -- MR. WATTENBERG: We live in a market economy. SEC. GLICKMAN: Well, I'd like to think that maybe they ought todo it for you, Ben. MR. WATTENBERG: No. SEC. GLICKMAN: But let me put it to you like this, we subsidizeand help an awful lot of industries in America, the oil industry, thesteel industry. I mean, either directly or indirectly, througheither trade or import, or else tax codes. So, agriculture isanother industry the government provides assistance for. It justtends to be more direct than a lot of the other industries that wedeal with. And when you consider the American consumers pays about10 or 11 percent of their disposable income on food, which is half ofwhat they pay anywhere else in the world, the consumer certainlyisn't getting hurt by this system we've got. In fact, they'rehelped. MR. WATTENBERG: Well, he may not be getting hurt on an absolutelevel, but he's getting hurt -- I mean, if the real market pricewould be 8 or 9 percent of his budget, and he's paying 10 or 11percent, that's a subsidy, in effect. I mean, you can make thenational security defense. SEC. GLICKMAN: Well, except that we in this country by and largedo not have the consumer pay for the subsidy. We have the taxpayerdo it, you know. Whereas in Europe they raise the price directly tothe consumer. MR. WATTENBERG: The taxpayer and the consumer are often the samepeople. SEC. GLICKMAN: It may be, but it's a more indirect way of dealingwith it, and it has less impact. We've tried to minimize the impacton the consumer in this country. Whereas, in Europe, they charge itall to the consumer. And that's a big difference. MR. WATTENBERG: Okay. Now, are we -- tell me the situation aboutinternational trade in the United States? I mean, I look at some ofthese numbers, it sounds as if we're getting screwed, I mean in termsof the ability to trade agricultural products. SEC. GLICKMAN: We have great difficulty in certain markets. TheEuropean Union is the biggest problem of the United States right now. They are becoming, I believe, more protectionist. They will not buyour beef. We have a WTO case, World Trade Organization case, rightnow on that particular issue. MR. WATTENBERG: They say that's because of the hormones. Butthat's a trick? SEC. GLICKMAN: Well, I think it's not based on science, becauseall the science says it's safe. And then they're making it verydifficult for us to get any products in that are made throughbiotechnology, or improved through biotechnology. MR. WATTENBERG: Also a trick. SEC. GLICKMAN: And we believe that it's not based on science. MR. WATTENBERG: It's what they call a non-trade -- SEC. GLICKMAN: A non-tariff trade barrier. I mean, I grant theyhave a different culture over there, and they call these Frankensteinfoods. And they think -- I don't know what they think they'll do toyou, but the fact of the matter is that as long as we make sure thatgood, objective, sound science prevails in these judgments, thenwe've got to let the chips fall where they may. MR. WATTENBERG: And how high are their tariffs? SEC. GLICKMAN: It's not so much a tariff. MR. WATTENBERG: It's just saying you can't. SEC. GLICKMAN: Yes. By the way, the EU and the U.S., we're thelargest trading partner agriculturally still, even with theseproblems. I mean, we buy and sell a lot of stuff. MR. WATTENBERG: Agricultural tariffs generally around the worldare much higher than others, than manufactured products. SEC. GLICKMAN: They are. And that's, of course, in the nextround of the World Trade Organization, we've got to work extremelyhard, and it's probably the highest priority in the next trade roundto continue to reduce tariffs, and also the indirect tariffs. Like,for example, some countries have state trading enterprises as opposedto the private sector, and they shield the subsidies in anon-transparent way, in those state trading enterprises. And thenthere's these what I call phony science, and bio-sanitary type ofbarriers that come up that make it difficult. For example, theChinese, the Chinese have made it very difficult for us to get ourwheat in there, our citrus in there, our meat in there. And theyhave a lot of sanitary barriers. MR. WATTENBERG: How do we treat their goods coming in? SEC. GLICKMAN: Well, we buy and awful lot of Chinese goods. Notso much agricultural goods. MR. WATTENBERG: But, I mean, are our agricultural tariff barriersas high as other countries? SEC. GLICKMAN: No. No, we have the lowest in the world. Thatis, our markets, by and large, have been open to anybody'sagriculture over the years. And that, of course, troubles farmersvery much, because they see a lot of markets that we can't get into,and then our markets are open to everybody else. MR. WATTENBERG: We talked in Indiana to Dennis Avery, and he gaveus some numbers. He said the world population is about six billionnow, it's going to go to eight or nine billion. And then a lot ofpeople becoming more and more wealthy, that you're going to need twoor three times the amount of food in 30 or 40 years. And he saysthat the American farm is the place -- is the low cost, high qualityprovider of that extra food. Through technology, it wouldn't requireany extra land in America, and it wouldn't require taking downtropical forests and stuff like that. Do you buy that? SEC. GLICKMAN: I generally buy it. I think the big public policyquestion would be, can family-sized operations do this, or are we onthis treadmill towards consolidation where you will have maybe 40 or50,000 people producing all the food in this country. And thatworries me from a social policy perspective. But I think we can growthe food to feed the world in this country. MR. WATTENBERG: Now, suppose you were not the Secretary ofAgriculture of the United States, but I was interviewing theSecretary of Agriculture of the European Union, and I just made thatlittle speech, hey, we can do it all, we have all the extra land,we're low cost producer. What is he going to say? SEC. GLICKMAN: He would say that there's more to agriculture thanjust producing more food. That is, I want to have pretty meadows,and nice barns, and a bucolic picture of agriculture, and that's beenthe way Europe has been for 800 years, that's the way we're going tokeep it. So, we're not as concerned about these issues of feedingthe world. We're concerned about keeping a beautiful socialstructure alive. And keeping people on the land. MR. WATTENBERG: Notwithstanding that, the number of farmers as apercentage of population in Europe, in Japan, and everywhere in theworld is going down. SEC. GLICKMAN: It's coming down, although it's not as fast ashere. MR. WATTENBERG: Not as fast as we are, which why their food isn'tas cheap. SEC. GLICKMAN: That's correct. Because what they do is, theybasically price their food to their farmer at a much higher levelthan we do on a similar basis. MR. WATTENBERG: And are they still sitting on these mountains ofsubsidized extra butter and cheese and whatever. SEC. GLICKMAN: Yes. And that's the problem where we worry aboutthis from a trade situation, because they pay their farmers so muchthat they have so much extra production that the Europeans, the onlyway to move it in the world markets, is to subsidize it. And that'swhere it interferes with our people. Because when they subsidize it,it means our farmers can't sell at world market prices. And that'swhen we then have to come in with competitive ways to get the productsold. And that usually means export subsidies or other forms ofitems that we don't like to use. MR. WATTENBERG: Thank you very much, Mr. Secretary, for joiningus on Think Tank. Appreciate it. ANNOUNCER: We at Think Tank depend on your views to make our showbetter. Please send your questions and comments to New River Media,1150 Seventeenth Street, Northwest, Washington, D.C. 20036, or emailus at thinktank@pbs.org. To learn more about Think Tank, visit PBSOnline at www.pbs.org. And please let us know where you watch ThinkTank. This has been a production of BJW, Incorporated, inassociation with New River Media, which are solely responsible forits content. Brought to you in part by ADM, feeding the world is thebiggest challenge of the new century, ADM is promoting soilconservation so history doesn't repeat itself. ADM, supermarket tothe world. Additional funding is provided by the John M. OlinFoundation, the Lilly Endowment, and the Lynde and Harry BradleyFoundation. (End of program.) Back to top  Think Tank is made possible by generous support from the Smith Richardson Foundation, the Bernard and Irene Schwartz Foundation, the Lynde and Harry Bradley Foundation, the John M. Olin Foundation, the Donner Canadian Foundation, the Dodge Jones Foundation, and Pfizer, Inc. ©Copyright Think Tank. All rights reserved. 
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