September 18, 2006
Mike Beltz, Hillsboro, N.D., testifying on behalf of the U.S. Dry Bean Council before the U.S. Senate Agriculture Committee, which held a field hearing recently in Great Falls, Mont. to gather input in drafting the new farm bill. Photo: Tim McGreevy
The U.S. dry bean industry strongly favors retention of fruit and vegetable (FAV) planting restrictions for non-program crops such as dry beans on program crop acres. And because of the unique situation of growing dry beans, any change in the present status quo would require establishing offsetting direct economic compensation to historical dry bean producers.
Thats the key message Mike Beltz gave on behalf of the U.S. Dry Bean Council, in testimony before the U.S. Senate Agriculture Committee, which held a field hearing recently in Great Falls, Mont., to gather input in drafting the new farm bill.
Beltz, from Hillsboro, N.D., is vice chair of the USDBC agricultural issues/government affairs committee, chair of the North Dakota Dry Bean Council, and serves on several committees of the Northarvest Bean Growers Association.
While the FAV planting restriction has been beneficial to all non-program and specialty crops, it is most important to dry bean growers, said Beltz, since dry beans are typically grown in rotations with, or in areas where, major program crops are grown.
Beltz said that while dry beans represent nearly 20% of non-program or specialty crop acreage, dry bean acreage is only a fraction of the acreage of major program crops, about 2% of soybean acreage, for example.
So even a small percentage shift in program crop acreage to a non-program crop with an existing delicate supply/demand balance, such as dry beans, will lead to overproduction and price erosion, Beltz testified.
He further pointed out that unlike other non-program crops or specialty crops, there are very few, if any, economic barriers to entry in converting program crop acres to dry bean production.
Other non-program or specialty crops, most of which are perishable, typically require high levels of investment in equipment to plant, maintain, harvest, and store the crop, along with technical expertise, marketing channels, and specialized labor needs. Such economic barriers to entry do not exist with dry bean production. Beltz explained to the Senate panel that any existing farmer with equipment to plant and harvest grains, such as soybeans and corn, can use the same equipment to plant, tend and harvest dry beans.
Eliminating the planting restriction would disadvantage the historical dry bean grower by subsidizing a likely new significant level of dry bean production on program acres, a result which would be neither fair nor equitable, Beltz testified.
Stripping the farm bill of the fruit and vegetable provision would permit unfair competition from subsidized program crop acreage against unsubsidized non-program crop acreage, and would likely result in a severe disruption of the present delicate supply/demand balance and the present open and competitive market for dry beans.
As such, dry bean growers across the U.S. oppose any legislative, administrative, or any other action that would eliminate the present restrictions on planting non-program crops, such as dry beans, on program crop contract acres for producers who receive program crop subsidy payments on such contract acres, Beltz testified.
The issue of WTO compliance
The FAV provision is a carryover of the 2002 Farm Bill from the 1995 Freedom to Farm Act. The planting flexibility provision permits any commodity to be grown on contract acreage, except fruits and vegetables, including dry edible beans and potatoes. Some exceptions are made for fruits and vegetables, with an acre-for-acre loss of payment.
Some believe the FAV provision in the current farm bill may be challenged as trade distorting in the World Trade Organization, since it restricts the planting of certain crops on direct payment acreage, thus influencing production decisions.
A WTO panel concluded that, because of planting restrictions, U.S. direct payments were not consistent with green-box support (subsidies permitted by the WTO because the effects on trade are minimal). Still, there are no immediate compliance issues associated with the ruling, the USDA Economic Research Service pointed out, in an April, 2006 report.
Beltz said in his testimony that there is no determinative ruling about planting restrictions within the WTO. How rules applying to the farm bill concur within the context of the WTO is further muddled by the collapse of the Doho Round of negotiations, scuttled primarily by disagreements which couldnt be resolved concerning agriculture.
In the event that the U.S. FAV would be challenged within the WTO, equity will demand that offsetting actions must be taken to minimize the harm to growers of other commodities, such as dry beans, that will be impacted, Beltz said, such as offsetting direct economic compensation to dry bean producers with a proven history of production.
Beltz pointed out in his testimony that dry beans is one of the few ag commodities to appear twice on the USDAs new Food Pyramid, and is a food that is increasingly being recognized for its nutritional qualities. This heightens the need for enhancing existing, and establishing effective new, federal programs that are annually funded devoted to dry bean research, nutrition information, consumer education, promotion, conservation practices, risk management, and other dry bean related activities.
Adequate funding is also needed for block grants set out in the Specialty Crop Competitiveness Act of 2004. These grants can help conduct valuable dry bean research, promotion, nutrition, and information activities tailored to state and local needs. The program has only been funded at minimal levels ($7 million), while the program was envisioned to have annual funding of about $50 million.
Since dry bean growers and the industry are heavily dependent on exports, which account for as much or more than one-third of annual domestic production, the USDBC strongly supports continuation of the Market Access Program and the Foreign Market Development Program as administered by USDA, at full funding levels as provided in the 2002 Farm Bill, Beltz testified.
The USDBC also favors continuation of in-kind U.S. commodity donations and full funding levels for highly successful overseas food aid programs- specifically PL 480 Title II, Food for Progress, and the Global Food for Education Initiative.
Since worldwide demand far outstrips present donations, USDBC opposes any proposals that would reduce or transfer the present base level of funding for these programs, Beltz said.
Although the future of the present negotiations of the WTO is in limbo, USDBC believes that food aid is humanitarian assistance, and should not be used as a negotiating tool in the WTO or other trade negotiations, Beltz testified. As such, the USDBC strongly supports the efforts of the U.S. Trade Representative to exclude food aid from such negotiations; to reject the cash only approach of the European Community to food aid; to maintain the world leading U.S. in-kind commodity donation food aid programs as they have been successfully developed and delivered for years; and to continue the dual objective of U.S. food aid programs to provide in-kind commodities for humanitarian relief for emergencies, and for continuing development relief efforts.