Can We Trade Our Way Out of A Farm Crisis?  Perdue Says Yes

Source: By Jessie Stolark, EESI • Posted: Monday, May 22, 2017

On May 17, Secretary of Agriculture Sonny Perdue testified before the House Agriculture Committee marathon three-hour hearing on the State of the Rural Economy.  His testimony started out with an explanation of his motto “do right and feed everyone,” which encompasses environmental stewardship, trade, and nutrition.  Perdue’s testimony made clear that he is a big advocate of trade, and believes it could help ease the supply glut of U.S. commodity crops and lift rural economies in the process.

“We’ve got to sell our way out of this supply/demand crisis, and that’s what we hope to do,” Perdue stated, referring to the current low-price and high production scenario besetting U.S. commodities.  However, while trade is playing an increasingly important role in the U.S. agricultural sector, many remain doubtful that trade alone can wash away the woes of rural America.

As the former governor of Georgia, Perdue is well versed in trade.  According to the U.S. Census Bureau, while Georgia is only responsible for 2.5 percent of U.S. exports, nearly half of the Port of Savannah’s exports are agricultural commodities, according to the state’s economic development authority.  During his confirmation, Perdue promised to be the salesman-in-chief, and regarding the state of the rural economy and low farm income, stated that ‘“I think trade is really the answer.”

Last week, Perdue announced that USDA would undergo a massive reorganization that would create a new Undersecretary for Trade and Foreign Affairs, as well as shift the Undersecretary of Rural Development to a ‘Special Advisor’ position that reports directly to Perdue.  The move will “ensure that American producers are well equipped to sell their products and feed the world,” according to Perdue. The creation of the Undersecretary for Trade was first called for in the 2014 Farm Bill and has been championed by the Farm Bureau and commodity groups.

Increasing global demand for meat and protein rich foods also has driven higher the production of feed crops, like corn and soy to meet global demand for these products.  However, increasing demand has now led to a supply glut of corn, soy, meat, milk and other commodities in the United States. Other major producing countries such as China and Canada are also dealing with similar over-supply issues. At the same time, globally, 70 million people will need emergency food assistance this year, mostly in developing countries. Currently, agricultural production in the Northern Hemisphere is caught in a cycle of commodity over-production. Therefore, it’s doubtful that trade is the only, or even primary, solution to the dire economic situation faced by rural America.

According to the National Association of Counties (NACO), while most urban economies have returned to pre-recession employment levels, nearly half of small county economies have not.  EESI has expressed concern that removing the Undersecretary of Rural Development does a disservice to the huge array of services and individuals that Rural Development serves.  (EESI signed a letter by the Campaign for a Renewed Rural Development that opposes the move). According to the Campaign for a Renewed Rural Development, there is no legal requirement to hew to the current structure of seven Undersecretaries.

With a loan portfolio of $220 billion and staff of 5,000, RD oversees grants, loans and technical assistance for everything ranging from wastewater to renewable energy, housing, telecommunications, and electricity. Additionally, Rural Development administers the Rural Business Cooperative Service programs, which include the Rural Energy for America Program (REAP), the Bioenergy Program for Advanced Biofuels, and the Biorefinery Assistance Program.  President Trump’s ‘skinny budget,’ released March 13, called for the elimination of the Rural Business Cooperative Service, the Rural Water Wastewater Program, and other important Rural Development programs.  The full White House budget is expected to be released May 23.

Several lawmakers expressed concern that they weren’t yet aware of the full ramifications of the move. At Wednesday’s hearing, Perdue seemed unconcerned with titles and job descriptions, stating to Representative Bustos’s (D-IL) question about the role of the Special Assistant, “We’re going to have an assistant secretary directly reporting to me that will be the go-to person …  If it makes you feel better to call that person undersecretary, then enjoy that.”  Later Perdue misspoke when he indicated the position would require Congressional appointment.

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