January 25, 2001
Ruth Laribee
Route 1, East Road
Box 263
Lowville, New York 13367
Dear Ms. Laribee
This is in response to your letter of October 24
which put forward a series of trade policy questions. As stated in your
letter, the National Milk Producers Federation has been involved in compiling
recommendations given to us during the listening sessions of the Dairy Producer
Conclave.
With respect to trade, while some producers were
hesitant about the benefits of international agreements, the majority of
producers see trade as an area worth pursuing to balance supply and demand and
to enhance producers' income through exports of high value products.
Although the dairy industry participation into the world markets has been slow,
unsubsidized exports of U.S. dairy products have consistently increased in
recent years.
Enclosed find a Producer Conclave Booklet which
includes the Producers' recommendations on trade and domestic policy among
others. If you have specific questions regarding dairy farmers' advice,
please do not hesitate to contact us.
I will try to answer some of your more specific
questions. First, all of the current U.S. programs are consistent with our
WTO commitments to the extent that payments made under these and other similar
programs (i.e., price support) do not exceed certain limits. At the
current time and for the foreseeable future, those limits for the United States
are $19.1 billion annually for all agricultural commodities that have some form
of price support. About $4.5 billion of that amount has been for the dairy
support program (this is not a limit).
The price support program is an "Amber
Box" and it is subject to the limits set for price support and direct
income support programs. Other Amber Box programs include the Loan
Deficiency Payments and Marketing Loan Gain programs for grains, some special
payments for rice and honey, and recent emergency payments made to the oilseed
and cattle sectors.
Trade policy restriction in the future will
depend heavily on decisions made by our own legislators under our domestic Farm
Bill process rather than future trade negotiations.
In reference to your question about MPC imports,
we are presently discussing and considering all the alternatives that U.S. dairy
farmers have in order to address this issue through the Federal
Government. We certainly share the concerns of dairy farmers with respect
to this matter. However, it is also imperative that information respecting
our strategies is not used by those who oppose our actions.
We are inclined to ignore self-serving
publications from competitive countries. However, we are disturbed when
those documents are used to deceive U.S. dairy farmers. Canadian dairy
representatives -- not government officials -- have indicated that they will
challenge a series of U.S. programs. Interestingly enough, the only dairy
program mentioned in the news release is a program for California that has not
been used in years. The European Union markets about $700 million worth of
dairy products into this country, mostly subsidized. On the other hand,
the U.S. has exported only about $40 million worth of dairy products into EU
markets. The main reason for this imbalance is market access.
Indeed, the EU would like to keep this disparity for as long as possible and it
fears that the U.S. through negotiations could obtain better access for U.S.
dairy products into their markets.
Ms. Laribee, we have tried to answer your
questions is a forthright manner, but we can't pass this opportunity to pose our
own question. It is our understanding that the major source of funding for
the Dairy Trade Coalition, of which your organization is the only other member,
comes from a major importer of dairy products who generates its income from
quota rents from U.S. dairy imports. Isn't this a conflict of interest,
which can impact the Dairy Trade Coalition's views concerning trade agreements?
It is our hope to continue to work with you in
this and other matters affecting dairy farmers in the United States. We
look forward to your support in our join efforts to enhance U.S. dairy farmers'
income.
Jaime Castaneda
Vice President
National Milk Producers Federation
2101 Wilson Blvd. Suite 400
Arlington, VA 22182
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