Mike Johanns Policy Speach

[pandiana]

Release No. 0126.05
Contact:
USDA Press Office (202) 423-4623

The following is an excerpt from the above document.


TRANSCRIPT OF REMARKS BY AGRICULTURE SECRETARY MIKE JOHANNS AT THE 13TH ANNUAL FOOD AND AGRICULTURE POLICY CONFERENCE - WASHINGTON, DC - APRIL 13, 2005

"Now, speaking of BSE, let me go to that, and I'll give you an update on a topic that has occupied a significant amount of my time. I joked with my staff recently; I said, 'I wasn't paying attention when the President talked to me, and I think I was named the Secretary of BSE.' It felt like that the first few weeks--we were spending so much time on the issue.

"But I have good news today. Three weeks ago Egypt announced the immediate resumption of imports to the U.S.--beef and beef products from animals less than 30 months. And just within the last few days Taiwan announced that it was resuming imports of U.S. beef and, again, good news in that area.

"Two weeks ago Canada and Mexico joined the United States to announce the establishment of a strategy to work on harmonization to manage BSE risk in all three nations, setting the stage, I believe, for a continued cooperative working relationship between those countries.

"We are not going to rest on our laurels. Those are good steps in the right direction, and we're doing everything we can to resume export of beef into other nations. In 2003 the total export value of U.S. beef and ruminant products was $7.5 billion. It was a major export item. After December 23, 2003, 64 percent of that market closed. I mean it just literally shut down. I said in a conversation recently that when it comes to trade you can have the best agreement, you can have the best negotiators, you can sign on the dotted line, and yet you run into this and it's all for naught because the borders shut down very, very quickly.

"So we are doing everything we can to regain that market, and I can tell you that 64 percent of the market closed. Today we've recovered well over a third of that, with 41 percent or $3.1 billion still remaining closed.

"There are still obstacles that we are working on to regain the rest of that market. Japan represents nearly half of the market that remains closed. You pick up your ag publications, you read a lot about our efforts, our work with Japan. That's why. That's why you're reading it. They're a major trading partner. They've been a consistent, solid, trading partner and good friends. And so we're working very hard to answer their questions and get that market open. Plus they're a leader in Asia, so we just have a sense that their leadership makes a difference in that part of the world.

"What remains for us is a strong effort on behalf of our American team. I will share with you, I think what you know already. Soon after coming to office, in fact I hadn't been on the job a week, I invited the ambassador from Japan to come to the USDA. We sat down and visited. We have had a series of policy meetings, technical exchanges, over the last 12 to 18 months. And we have been led by a gentleman that understands what it's all about, and that's our President. President Bush has, as you know, personally discussed this topic with the Prime Minister, which we appreciate.

"Secretary Rice was in Japan just last month, and one of the things that she brought up in her discussions with Japan was the need to resume beef trade. I could not be more appreciative to both the Secretary and the President.

"One reason I'm so dedicated to reopening foreign markets to American beef and beef products is I know it's safe. We have done all of the right things in this area. Science is very clearly on our side. We banned the specified risk materials. The ban on downer cattle, the increased surveillance.

"I will share with you what I told at the Senate Ag Appropriations Subcommittee just this week. We tested now, in about the last year, 314,000 animals. And in fact we've done that, and we have not found another case of BSE. Americans rightly feel safe about eating our beef products. My job is to help move that forward and to even increase the confidence that our consumers have in this product.

"Human health and animal health will always be our top priority. But in order to make sure that we are protecting human health and animal health, our decisions need to be based upon sound science. It is absolutely critical. It cannot be moved by the politics of the day in any country. In any country.

"So it is very, very important that we stick to that message, that we live by that message, we vote by that message, we do everything we can to pay attention to the fact that we must be governed by sound science.

"And in this case we felt very strongly that the science is clearly on our side of the argument.

"We are also working to reopen the Canadian border. I believe that restoring trade with Canada is in the best interest of American consumers, but it is also in the very best interest of this great industry, the beef industry in our nation.

"I am disappointed by the events recently, but we're going to continue to work at our goal of resuming normal trade relations in beef. The Senate voted to disapprove the rule that would have reopened the border. That's only a piece of the process, but it was disappointing. The court injunction was entered, and we're doing everything we can to work through that. In fact, that is now on appeal to the Ninth Circuit Court of Appeals. We are appealing that injunction.

"If there were one message I would deliver about all of this--I said this to the cattle people in San Antonio. I said, you know, trade is not only a two-way street, it's a superhighway. We cannot treat one country one way, treat another country a different way, and expect that that will be ignored. It just doesn't work that way. It's too small a world these days.

"We cannot insist on one hand that our friends in Japan do one thing with us and yet follow a different course of action with another country. In Canada one of the things that we have found as we have studied is: they're very proud of their industry, and they believe very strongly that they're doing all of the right things. Our teams would indicate that they are. Our teams--we had a team travel north after the BSE discovery a couple of months ago and confirmed that Canada is in compliance with the feed ban. They do have a very robust program.

"Our decision to open the border conforms with international standards. The minimal risk rule was put in place with those standards in mind. And here's the bottom line. Keeping the Canadian border closed increases chances of Canada becoming a real live international competitor. They are increasing their processing; they make no bones about it. Their preference would be first and foremost to establish normal trade with the United States, but they're also beginning to recognize that they have to act also.

"And we see the processing increased. They talk about the processing increase. Let me offer a thought, though, and this did not come from me. This is a quote that came from Andy Mitchell who is the minister of Agriculture in Canada. He says and I quote: 'The uncertainty created by the closure of many borders including that of the United States to Canadian live cattle makes it imperative that we accelerate our efforts to regain and to expand our markets. The industry and governments will work together to launch an aggressive marketing campaign to increase exports and reduce our reliance on any one single market,' end of quote.

"Very, very clearly these folks are taking this seriously. My worry is that continued delay has a very downside impact on the small producer and processor that I represented so many years, not only in Nebraska but now that I represent, as Secretary of Agriculture. It is not a good situation.

"So the message is very clear, and believe me we won't let up until we normalize trade relations in this area.

"Let me wrap up with just a concluding thought. The President and I want to do everything we can for American farmers and ranchers and our rural communities in terms of their continued economic prosperity. The best way to do that is to continue to work with the industry and work with our partners in the industry. We have common goals, and we can reach them together.

"I appreciate your patience in listening to me. Thank you for your attention."

[grassfarmer]

Very impressive - except it sounds like BS to me, talk about one thing and do another. Are they really buying Mitchell's story of our aggresively expanded slaughter capacity? They must be very easily fooled. What a shame this part of the story wasn't true....

[rkaiser]

Again with the "harmonization" talk. Enough to keep Laycraft bringing coffee the the boys at any American gathering, while we see 75 cent fats and a movement up to 89 cents American on the other side of the border.

The part that irks me is that this group on the thread will be called whiners by some, even though we do offer solutions. Solutions like Producer owned packing plants, and even money to build them through a producer levy of sorts.

Cheques for TISP should be in the mail this week. I guess Cargil and Tyson may have been left out a bit and needed to get it by offering less for fats this week. No other reason is there?

[farmers_son]

I read the entire speech on the USDA website. First on harmonization, clearly the 3 NAFTA partners are dedicated to a harmonized approach to BSE risk. There should be no absolutely no confusion on the part of Canadian producers about whether or not Canada will continue to be harmonized with the U.S. and Mexico on BSE risk issues such as surveillance testing. Whether individual producers approve or have their own views on what might be better, clearly government has decided.

My take on the overall tone of Johanns’ speech is that U.S. agriculture policy is focused on trade and that the message to U.S. producers is that trade is a two way street. Canadian producers would do well to realize the same thing as there are those in the industry that suggest we can sell our agricultural production globally without making room in our markets for goods from those countries.

Reading the entire speech, obviously CAFTA is a major issue, one that Canadians producers have largely ignored as they focused on the immediate short term at the expense of the larger picture. Check out http://www.cafta.org/What's_New.html

Although on this side of the border we might question the speed of packing plant expansion, clearly it is of interest to the U.S. and is the thing Johanns focused on as the threat to the U.S. He did not mention increased BSE testing as a threat. To quote “And here's the bottom line. Keeping the Canadian border closed increases chances of Canada becoming a real live international competitor. They are increasing their processing; they make no bones about it. Their preference would be first and foremost to establish normal trade with the United States, but they're also beginning to recognize that they have to act also.”

Sometimes actions speak louder than words. If producers remember, the USDA hurriedly announced the proposed rule on BSE just 24 hours before Canada announced their second domestic case of BSE. I felt that was very significant, the USDA could have just waited and the whole optics of our second BSE case would have changed for the worse. And while I am sure the U.S. wishes to see at least more normal trade resume with Canada obviously live trade with Canada is tied to trade resuming with Japan. The question is which will come first, the chicken or the egg.

[rkaiser]

The thing I can't handle about the talk of harmonization is that it has taken all the backbone out of Canadain negotiations. How long can we continue to listen to talk of harmonization while Canadian producers see the raping of their industry.

To have harmony, you need to have a script, a plan, or a music sheet from which to play. Why does Canada need to be left off as co-author, co-writer, or co-producer. Why can't Canada put in it's two bits and call for testing to expand export markets? Why can't Canadian industry stand up for their right to Fair Trade through NAFTA, or the WTO or any other avenue?

I'll tell you why; because America rights the songs, the music, and the Lyrics, and will again with this new Hatmonization approach.

If the song, Lyrics, and Music were wrote together, and the rules followed together, I am all for a North American, or hell even a Global harmony.

[rkaiser]

Shoot - what the hell is a Hatmonization approch you ask?

It's all your whitey!!!

[farmers_son]

The problem Canadian producers are experiencing are not a result of harmonization. Far from it. Harmonization of BSE risk strategies with our two largest export markets, the U.S. and Mexico most likely accounts for the fact that we are exporting any beef at all.

Given the prices we are being paid for live cattle it is hard to remember that our beef is being exported at record high prices. I see the shipment of live cattle over international borders will always be problematic. Therein lies the problem. The problem is not, as I often hear, our dependency upon one market. Our problem is our dependency upon shipping live cattle to that market to provide competition for live fat cattle within Canada. Until that problem is remedied, Canadian producers will continue to struggle financially.

Although not included in the excerpt pasted here, Johanns mentioned the economic situation of agriculture in the U.S. To quote "We have recent records in farm income, recent records in farmers equity, ag exports have been setting records, and production of many commodities, incidentally, has been setting records.” Contrast that with the situation in Canada and we see that the problems in Canadian agriculture will not be all solved by opening the border to live cattle. Canadian agriculture in general is struggling to survive on the farm gate receipts we are receiving.

We have some fundamental problems within Canadian agriculture with lack of competition, not lack of markets. The efforts presently being made to return to the status quo will surely only result in that, more of the same. The obvious solution to me is to integrate up the value chain to capture some of the profits Johanns is talking about.

[pandiana]

farmers_son says: "The problem is not, as I often hear, our dependency upon one market. Our problem is our dependency upon shipping live cattle to that market to provide competition for live fat cattle within Canada. Until that problem is remedied, Canadian producers will continue to struggle financially."
"We have some fundamental problems within Canadian agriculture with lack of competition, not lack of markets"

I am not sure I follow your argument that we can separate competition and markets. It seems to me intuitively that competition naturally follows more markets. Adding live cattle exports to the mix is in reality just creating one more market resulting in more competions directed towards the multi-nationals...which is a good thing except that the same companies will once again choose what to pay for them dependent on their competition.

Boxing beef in Canada and shipping to any market available to us is fundamental of maximize competition.

We must also keep in mind, using rkaiser's analogy, that in the scheme of trade things Canada is playing the piccolo competing with a US hard rock band. Can we ever assume that we can expect harmony or will we ever be treated equally?

I agree with you totally, that the underlying problem of net farm cash receipts for the primary producers being eroded is in the end a more serious problem. And I also agree, that the only solution I see is taking (financial or physical?)control of a vertically integrated marketplace. However, as we can see, this approach is fraught with equally daunting risks. What are the implications of competition with muli-nationals? What change in life style; the farmily farm, the environment,etc.?

Unless we have some strong leadership to gain the confidence of farmers, few are willing accept any level of risk at this time.

I think we are waiting for a white knight.

[farmers_son]

Live cattle trade was in effect the alternative market that provided competition to the domestic packers. And it worked pretty good as long as the border remained open. However live cattle trade will always be subject to border closures as each country seeks to protect the health of their herds. In the event of a disease outbreak, the best place to stop the spread will always be international borders. As a nation we need to decide if we wish to remain dependent upon live cattle trade with the U.S. to provide competition within our marketplace our do we wish to create a made in Canada solution.

In a lot of ways we brought this BSE crisis upon ourselves by becoming way too dependent upon the U.S., not as a market for our beef but as a market for our live cattle. Now we are paying for our lack of foresight, to the tune of $7 billion and rising by two modern large packing plants every month. I will restate my point again, the problem is not that we were too dependent upon the U.S. market, we were too dependent upon the U.S. market for our live cattle.


If by being treated equally, you mean will there ever be a level playing field with the U.S? Funny thing is, when you read Johanns’ speech, that is exactly what the U.S. producers are asking. I think a lot of blame is sometimes put on unfair practices of other governments for the ills of agriculture when the larger problem is an unfair and non functioning marketplace.