Vilsack to Brazil: No more cotton payments, buy wheat, beef and pork, and cooperate on biotechnology and biofuels
August 07, 2013 | 08:09 PM
Agriculture Secretary Tom Vilsack has told Brazilian officials that the Agriculture Department is running out of money and authority to make payments in the WTO cotton subsidies agreement, but urged them to buy U.S. wheat, beef and pork exports and find ways to cooperate with the United States on biotechnology and biofuels policy.
In a telephone interview from Rio de Janeiro, Vilsack told The Hagstrom Report that he traveled to Brazil with the goals of giving Brazilian officials an “honest assessment” about the situation of the cotton case while the farm bill is still pending, to “see where we are aligned,” and to learn about Brazilian agriculture.
After a World Trade Organization panel ruled that U.S. cotton subsidies had inflicted harm on the Brazilian cotton industry, the United States agreed in 2010 to make an annual $147 million payment to Brazil until the next farm bill changed the subsidies. The payments have been made to avoid Brazil imposing retaliatory tariffs on a range of U.S. products.
But Vilsack said the budget restrictions placed on USDA by the sequester will allow him to make only half the payment promised to Brazil in September, and that on October 1 he will lose authority to make any payments.
Vilsack did not say how much the September payment would be, but dividing the $147 million payment by 12, and that amount by half comes to $6.12 million.
Jim Miller, then Agriculture undersecretary for farm and foreign agricultural services, developed the program of payments to Brazil without congressional action. But even though it was an executive branch decision and the money comes from the Commodity Credit Corporation, Vilsack said he cannot continue the payments because President Barack Obama did not include it in his fiscal year 2014 budget.
Vilsack noted that the administration assumed that the farm bill with provisions to establish a new cotton program would be passed before the beginning of the fiscal year on October 1.
The secretary said he told Brazilian Minister of Agriculture Antonio Andrade and Brazilian agriculture and foreign ministry officials, that he had no authority to continue the payments and that the proper resolution to the case is the passage of the farm bill.
According to Vilsack, the Brazilian officials said their country’s patience is “is not limitless, and absent a payment or resolution of the dispute with passage of farm bill that we leave them with very very little options,” a reaction that seemed to indicate Brazil would be under pressure to impose the tariffs that it agreed not to impose as long as the payments were made and the farm bill addressed the cotton issue to Brazil’s satisfaction.
Vilsack did not say whether the Brazilian officials expressed views on the new cotton program in the farm bill. He emphasized that Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and Sen. Roy Blunt, R-Mo., his traveling companions, were with him when he delivered the message to the Brazilian officials.
The Brazilian reaction, he said, means that the House and the Senate should “get serious” about finalizing the farm bill.
A congressional resolution to continue USDA funding will not give Vilsack authority to continue the payments. Congress could pass a measure to fund the Brazil payments, but Vilsack noted that there has been opposition to the payments in Congress.
Earlier this year, Vilsack told Congress that the sequester made it impossible for the Agriculture Department to move money around to pay meat and poultry inspectors. That position forced Congress to pass a special measure moving money from one USDA account to another to provide money for the meat inspectors.
While members of Congress might argue that the administration started the Brazil payments and could use executive branch authority to continue them, the administration’s unwillingness to continue them places more pressure on Congress to finish the farm bill or create a trade crisis that would involve industries beyond agriculture.
Vilsack said he also urged the Brazilian officials to live up to their Uruguay round commitments on wheat and wheat quotas and to make the United States “a primary supplier of wheat.”
He also said he pointed out that the World Organization for Animal Health has classified the United States as at “negligible risk” for mad cow disease, which should lead to more U.S. beef exports to Brazil, and that the Brazilians should not be so concerned about trichinosis in U.S. pork that they “require tests that have no scientific value.”
On biotechnology, Vilsack said he urged the Brazilians to join with the United States in a “coordinated effort” to encourage China to “synchronize” its regulatory processes with other countries and establish policies under which “low levels” of biotech presence would be acceptable.
He also said he told the Brazilians, including the Brazilian Sugarcane Industry Association, known as UNICA, that their countries should work together to expand market opportunities for biofuels.
Vilsack said he was focused on China and was surprised when the Brazilian officials suggested that they should focus together on India as a market. The Brazilians also expressed support for the U.S. Renewable Fuel Standard, he said.
He also noted that USDA staff in Washington and embassy staff in Brazil had arranged a briefing on Brazil’s “science without borders” program under which the country intends to pay for young scientists to study overseas for a year and then bring them back to work in its research parks.
Vilsack, who also visited Sao Paulo and Brasilia, said he was leaving Brazil “very impressed” with that nation’s 294 percent agricultural expansion over the past 30 years. But, he said, he is also very aware of the country’s infrastructure problems and its determination to improve rails, roads and water transport.
Brazil’s soybeans must be trucked 2,000 kilometers to be exported, he noted, and getting the crop to China costs $182 per ton, compared with $132 from Iowa to China.
But the Brazilians are planning to spend a lot of money to improve their infrastructure, he said, and “made great reference” to the Mississippi River and the ability to use barges. The Brazilians, he said, can still put a lot of land to work “without damaging the Amazon.”
Congress, Vilsack concluded, needs to act on the farm bill, immigration reform and water and resources development, to keep up with Brazil.
“I come out of here more committed and more concerned about the lack of a farm bill,” he said.
In a telephone interview from Rio de Janeiro, Vilsack told The Hagstrom Report that he traveled to Brazil with the goals of giving Brazilian officials an “honest assessment” about the situation of the cotton case while the farm bill is still pending, to “see where we are aligned,” and to learn about Brazilian agriculture.
After a World Trade Organization panel ruled that U.S. cotton subsidies had inflicted harm on the Brazilian cotton industry, the United States agreed in 2010 to make an annual $147 million payment to Brazil until the next farm bill changed the subsidies. The payments have been made to avoid Brazil imposing retaliatory tariffs on a range of U.S. products.
But Vilsack said the budget restrictions placed on USDA by the sequester will allow him to make only half the payment promised to Brazil in September, and that on October 1 he will lose authority to make any payments.
Vilsack did not say how much the September payment would be, but dividing the $147 million payment by 12, and that amount by half comes to $6.12 million.
Jim Miller, then Agriculture undersecretary for farm and foreign agricultural services, developed the program of payments to Brazil without congressional action. But even though it was an executive branch decision and the money comes from the Commodity Credit Corporation, Vilsack said he cannot continue the payments because President Barack Obama did not include it in his fiscal year 2014 budget.
Vilsack noted that the administration assumed that the farm bill with provisions to establish a new cotton program would be passed before the beginning of the fiscal year on October 1.
The secretary said he told Brazilian Minister of Agriculture Antonio Andrade and Brazilian agriculture and foreign ministry officials, that he had no authority to continue the payments and that the proper resolution to the case is the passage of the farm bill.
According to Vilsack, the Brazilian officials said their country’s patience is “is not limitless, and absent a payment or resolution of the dispute with passage of farm bill that we leave them with very very little options,” a reaction that seemed to indicate Brazil would be under pressure to impose the tariffs that it agreed not to impose as long as the payments were made and the farm bill addressed the cotton issue to Brazil’s satisfaction.
Vilsack did not say whether the Brazilian officials expressed views on the new cotton program in the farm bill. He emphasized that Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and Sen. Roy Blunt, R-Mo., his traveling companions, were with him when he delivered the message to the Brazilian officials.
The Brazilian reaction, he said, means that the House and the Senate should “get serious” about finalizing the farm bill.
A congressional resolution to continue USDA funding will not give Vilsack authority to continue the payments. Congress could pass a measure to fund the Brazil payments, but Vilsack noted that there has been opposition to the payments in Congress.
Earlier this year, Vilsack told Congress that the sequester made it impossible for the Agriculture Department to move money around to pay meat and poultry inspectors. That position forced Congress to pass a special measure moving money from one USDA account to another to provide money for the meat inspectors.
While members of Congress might argue that the administration started the Brazil payments and could use executive branch authority to continue them, the administration’s unwillingness to continue them places more pressure on Congress to finish the farm bill or create a trade crisis that would involve industries beyond agriculture.
Vilsack said he also urged the Brazilian officials to live up to their Uruguay round commitments on wheat and wheat quotas and to make the United States “a primary supplier of wheat.”
He also said he pointed out that the World Organization for Animal Health has classified the United States as at “negligible risk” for mad cow disease, which should lead to more U.S. beef exports to Brazil, and that the Brazilians should not be so concerned about trichinosis in U.S. pork that they “require tests that have no scientific value.”
On biotechnology, Vilsack said he urged the Brazilians to join with the United States in a “coordinated effort” to encourage China to “synchronize” its regulatory processes with other countries and establish policies under which “low levels” of biotech presence would be acceptable.
He also said he told the Brazilians, including the Brazilian Sugarcane Industry Association, known as UNICA, that their countries should work together to expand market opportunities for biofuels.
Vilsack said he was focused on China and was surprised when the Brazilian officials suggested that they should focus together on India as a market. The Brazilians also expressed support for the U.S. Renewable Fuel Standard, he said.
He also noted that USDA staff in Washington and embassy staff in Brazil had arranged a briefing on Brazil’s “science without borders” program under which the country intends to pay for young scientists to study overseas for a year and then bring them back to work in its research parks.
Vilsack, who also visited Sao Paulo and Brasilia, said he was leaving Brazil “very impressed” with that nation’s 294 percent agricultural expansion over the past 30 years. But, he said, he is also very aware of the country’s infrastructure problems and its determination to improve rails, roads and water transport.
Brazil’s soybeans must be trucked 2,000 kilometers to be exported, he noted, and getting the crop to China costs $182 per ton, compared with $132 from Iowa to China.
But the Brazilians are planning to spend a lot of money to improve their infrastructure, he said, and “made great reference” to the Mississippi River and the ability to use barges. The Brazilians, he said, can still put a lot of land to work “without damaging the Amazon.”
Congress, Vilsack concluded, needs to act on the farm bill, immigration reform and water and resources development, to keep up with Brazil.
“I come out of here more committed and more concerned about the lack of a farm bill,” he said.
