Facing an overflow crowd in a side auditorium of Little Rock's Alltel Arena, U.S. Secretary of Agriculture Mike Johanns was received warmly by Arkansas farmers and businessmen. However, despite an ample dose of southern hospitality, Johanns — who repeatedly insisted President Bush was right to cut agriculture spending in the face of record federal deficits — still faced a series of hard, direct questions and comments.

Even the secretary's host, Democrat Sen. Blanche Lincoln, frequently poked at him between attendees' queries at the May 23 meeting. “Farmers are willing to do their part in addressing the financial burden of the nation,” she said. “But I also know they don't deserve to carry a disproportionate part of that burden.”

In his proposed 2006 budget, President Bush has called for $587 million (some 5 percent) worth of cuts in agriculture programs. To achieve this, subsidies would be capped at $250,000 per farmer and the three entity rule done away with.

On CAFTA

Johanns was eager to push the benefits of the Central America Free Trade Agreement (CAFTA). Whenever speaking to farmers and ranchers about trade, Johanns said, he is always asked to provide “a level playing field. Their belief, much like mine, is given a level playing field, America's farmers and ranchers can compete with anyone in the world.”

How level is the current field of play? “Under current agreement, 99 percent of ag products of CAFTA nations enter the United States duty-free. They pay no duty to bring their products to compete with you.”

Soybeans are the second largest source of farm cash receipts in exports, said Johanns. Current duties range from zero to 20 percent. “The WTO would allow those duties to go to 90 percent. Under CAFTA, those countries will provide immediate, duty-free access to U.S. soybeans.

“Arkansas is the number one rice exporter and current duties are as high as 60 percent. The WTO allows those duties to rise to 90 percent. When CAFTA is passed, there will duty-free access for 400,000 metric tons of rice in the first year. The amount will grow in the years following.

“For cotton, Arkansas is the fourth-largest exporter. The WTO would allow tariffs up to 60 percent. Under CAFTA, tariffs would be immediately eliminated for markets worth more than $55 million.”

“CAFTA,” concluded Johanns “is a unique opportunity to truly level the playing field.”

Deficit woes, fair share

Johanns, harkening back to “dark days” of balancing budgets as Nebraska governor, said agriculture would suffer even more if the federal deficit is left to fester.

As governor, “I saw people laid off. I saw people whose overtime was completely eliminated. I saw hours cut… In Nebraska, the constitution requires that we balance the budget. We can't have any debt — the constitution limits debt to $50,000.

“So, I had two alternatives. I could go to people hurting already and tax them more. Or I could cut spending. Neither choice was very popular… People were unhappy about it.”

This isn't the first reconciliation in agriculture, said Johanns. “I wish I could tell you it's the last. But, quite honestly, you and I know better than that. It probably isn't the last.

“By comparison to other reconciliations — the last in the 1990s, I believe — this one isn't nearly as severe. But President Bush has set a goal saying, ‘We can't run deficits at this level. We've got to cut the deficit in half in the next five years.’

“One thing I know: high deficits create higher interest rates. That's not good for agriculture. Somewhere we've got to cut the federal deficit. I've never believed it's the right approach to say, ‘Wait a second. Go to the other guy's program.’

“The reality is, I believe very, very strongly that the president's goal is right… There's a day of reckoning. So, even though (Bush's ag-program cutting) proposals aren't the most popular, I believe they're needed.”

Facing the heat

Unimpressed, Bill Bristow, a Jonesboro, Ark., attorney, took the microphone and lectured Johanns on the “unintended consequences” of the cuts on southern agriculture. “In the 2002 farm bill, we had means testing for the first time. Politically, that sounded like a wonderful thing… The point was certain landowners, because of their income in other areas, wouldn't be able to get money from the farm program. The consequence of that was to force those farmers to go cash rent. That puts all the risk on the farmers and makes more money for the wealthy landowner.

“If we go with Sen. (Charles) Grassley (an Iowa Republican who heads the Senate Agriculture Committee) and make payment limitations in Arkansas and the South, these unintended consequences (will happen again). You're talking about totally wrecking operations… That will devastate land prices and the rural economy. Most banks will fail. You're trying to save money by skimping a few dollars from payment limitations. But the devastation you will reap in the South will be many, many times more expensive — there's just no understanding of the realities of unintended consequences.”

In response, Johanns said, “In the next 10 months, I'll be traveling all over the country to hear input on the new farm bill, which comes up for reauthorization in 2007… (Such comments) are the very thing we want to hear.”

Addressing a group of teenage Future Farmers of America members, Johanns said a focus for the next farm bill must be retaining or recruiting young farmers. “I look across this room and it's what I saw in Nebraska. Most farmers — 60 to 65 percent — are my age or older. I think the average age of a farmer is 57.”

The biggest applause of the evening came at the very end of the meeting when Harvey Joe Sanner, Des Arc, Ark., farmer, spoke on Johanns defense of proposed program cuts. “First of all, and I can't say this strongly enough: you're just wrong… The only way to keep producing for export markets (while selling for under the cost of production) is to have the safety net the farm bill provides. And now you're talking about taking the guts out of it.”

Sanner asked Johanns to confer with senators from southern states — naming Lincoln, Mississippi's Thad Cochran and Georgia's Saxby Chambliss — and then educate White House advisers. “I'm not going to say anything bad about the president, but talk to those idiots (advising him).”

Chambliss and Lincoln, said Sanner, confirmed they weren't contacted by the White House prior to announcing proposed program cuts. “That's what is so disturbing… It shows something is radically wrong with how the White House views agriculture. What's really surprising is they've taken the advice of the editors of the New York Times, the Washington Post, the Wall Street Journal and the Environmental Working Group (EWG) and put it into play. That's scary because those people don't know what it takes to farm… It seems y'all are willing to go down the road of agriculture's harshest critics of the farm bill.”


e-mail: dbennett@primediabusiness.com