Business Week: JUNE 6, 2005
GOVERNMENT
Betting The Farm On Free Trade
Bob Stallman is at the center of a storm over the future of American
agriculture
Across the midwest, rural radio stations are airing ads that
feature a famous quote from President Dwight D. Eisenhower: "Farming
looks mighty easy when your plow is a pencil and you're a thousand
miles from the cornfield." The ads are sponsored by the National
Farmers Union, a group representing family farms, and it's no
secret that the Washington pencil-pusher being targeted is American
Farm Bureau Federation President Bob Stallman.
Even Stallman, who grew up on a 1,100-acre rice and cattle farm
in Columbus, Tex., ruefully calls himself "a cell-phone farmer."
But it's not his pinstripe suits or corner office overlooking
the U.S. Capitol that get the goat of the NFU. It's the way Stallman
is dividing farm country by leading the 5.6 million-member Farm
Bureau, the nation's most powerful agricultural lobby, in a strong
free-trade direction. Stallman favors low worldwide tariffs and
a cut in government handouts, reasoning that large-scale, mechanized,
and superefficient American farmers can export their way out of
the commodity glut dogging the industry.
That stance puts Stallman at the epicenter of a raging controversy
over the future of American farming. Other voices representing
small farmers and their struggling rural communities -- the NFU
and the National Family Farm Coalition among them -- fear being
crushed between giant U.S. agribusiness and tons of food from
developing countries.
The debate will heat up in the coming months. In June, Congress
will take up the Central American Free Trade Agreement (CAFTA)
between the U.S. and six Caribbean Basin countries -- a deal that
would open the U.S. to increased imports of sugar, among the most
heavily protected crops in America. Meanwhile, the Geneva-based
World Trade Organization is pushing Europe and the U.S. to trim
the hefty subsidies that provide some farmers with a third or
more of their income. Agriculture "is the tiebreaker"
that will bring developing nations to the table for an overall
deal that will include manufactured goods and services, says U.S.
agricultural trade negotiator Allen F. Johnson. The Farm Bureau
supports CAFTA and the WTO initiative in the face of critics who
insist that trade deals will hasten consolidation of U.S. farms
into large-scale corporate agriculture.
Despite skepticism among some farm families and rebellions by
state Farm Bureau offices in North Dakota, Louisiana, and Colorado,
Stallman remains an adamant free marketer. During nearly six years
heading the Bureau, he has beefed up its economic analysis and
insists that its studies demonstrate that America's farming future
lies in exports.
If Stallman has any sentimental attachment to the family farm,
it doesn't show in the number-crunching. "It is important
to maintain a productive and profitable agriculture sector, but
the questions of who should be farmers, and what size farms should
be, and what the countryside should look like -- those are social
issues," Stallman declares. "If you want a social program,
look at what the European Union spends to maintain its countryside
and keep individual families on farms." Washington would
have to pay subsidies four times as high as it does now to halt
the trend toward consolidation, he says.
Such hard-nosed calculations draw considerable support from farm
economists. "He is seeing the whole forest instead of looking
to save every single tree," says Paul A. Drazek, an independent
farm analyst and adviser to the Bush Administration. The nation's
First Rancher also is a fan, and little wonder: As head of the
Texas Farm Bureau, Stallman engineered an endorsement of long-shot
challenger George W. Bush in his successful campaign for governor
in '94.
To Stallman's critics, free-trade deals are the key to ruin,
not prosperity. They point to the dwindling U.S. trade surplus
in farm products, which the U.S. Agriculture Dept. predicts will
turn to a deficit this year. During the 1990s, the North American
Free Trade Agreement, establishment of the 147-nation WTO, and
trade deals with China all failed to kick-start exports. But they
did encourage imports of meat, fruit, vegetables, and wine.
DICTATING PRICES
"We have been hearing forever that we are just one trade
agreement away from prosperity," says Tom Buis, vice-president
for government relations at the 103-year-old, Denver-based NFU.
While he calls Stallman "a very bright agricultural leader,"
Buis insists that the consolidation that Stallman considers inevitable
"is a huge issue to rural America." Giant purchasers
-- such as Tyson Foods (TSN ) and Archer Daniels Midland (ADM
) -- are increasingly able to dictate prices. Also, "Just
having diversified family farms helps sustain a stronger rural
economy," insists Katherine Ozer, executive director of the
National Family Farm Coalition.
In the end, the future of CAFTA and the summer's farm policy
debate may well hinge on the American sugar industry. Although
sugar growers account for less than 1% of the nation's 2.1 million
farmers, they wield political power in Washington far in excess
of their numbers. Republicans from such states as Idaho and Georgia
will hesitate to sacrifice their sugar farmers on the altar of
free trade. Unless the Administration can attract 30 or so Democratic
House members to make up for expected GOP defections, CAFTA dies.
Ironically, the sugar program is the last vestige of the 1930s-era
government supply-management programs once championed by the Farm
Bureau. "Some of my best friends are sugar farmers -- cane
and beet," says Stallman. But, he calculates, "The damage
to sugar is minimal compared to the benefits for all agriculture."
Even more ironic, in the 2000 race for Farm Bureau president,
Stallman beat 14-year incumbent Dean R. Kleckner by promising
to concentrate more on domestic programs than on a free-trade
agenda. Instead, Stallman buttressed the organization's finances,
moved its headquarters from Chicago to Washington, and eventually
shifted the Farm Bureau focus back to trade. While willing to
swap subsidies for lowered import barriers abroad, Stallman insists:
"We won't unilaterally disarm." But in the long, hot
summer ahead, his biggest worry won't be battles abroad, it'll
be friendly fire at home.
By Paul Magnusson in Washington
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