Forum: Institute of Politics; 3; American Farm Crisis

And. Such from WGBH radio Boston and American Public Radio. The forum from the Institute of Politics at Harvard University. I break that stereo with this week's program on the American farm crisis. Richard Price supports of encourage production in the United States and they've encouraged production all over the world. What's better than to have a guarantee that you know exactly what you can get after you raise and produce a crop as a result today's farmers are up to their ears in grain butter and debt. The American farm crisis continues foreclosures on American farms are continuing at a brisk pace and with a lot of grain and other products from the international farm community pushing U.S. farm prices down there's little encouraging news ahead.

How did the American farmer get in today's predicament. One of the speakers in this program will blame the problem on the U.S. price support system which has encouraged farmers to continue growing record crops while prices fall. He is former agriculture secretary John Block who is free enterprise and free market policies attracted him to the Reagan administration until his retirement from government in February 1986. Our second speaker however recalls the situation that led to American price supports. Charles Brennan worked in the Agriculture Department as attorney assistant secretary and finally Secretary until 1953. Former Secretary Brennan watched many forms go under during the Depression of the 1036 and was an architect of much of the government support policy that has given assistance to the American farmer. First Secretary John block the American farm crisis. What should the government do you want a personal response to that question.

An Illinois farmer's response. My answer would be one hell of a lot less than it does now. If you ask farmers farmers that I know what they think government's role should be they'd say to defend the country deliver the mail and stay out of my business. And the statement that I am from the government and I'm here to help you. It usually gets a laugh and it's an old joke. In fact it may have been around close to 350 years old about as old as Harvard and it's now a cliche but a statement becomes a cliche in the first place because it contains a large element of truth and the element of truth here is that the government has done enough already to create and to exacerbate problems in the agriculture sector.

Let's look at some of the past government policies. If you look far enough back they worked pretty well under Secretary Brown and they work pretty well. But I contend that in those days we lived with a domestic agriculture. Today we have a global agriculture. Now if you look at the programs that were started back then and perpetuated through the years they have drawn excess resources into agriculture more production and they have depressed prices easy low interest loans and there are plenty of them so the farmers home and through other options and I might give you one quick example. If you read about it the dairy that is going up in Georgia using industrial development bonds which of course gives them two or three point advantage on their money. It just happens that it's

Irish money going into it doesn't make any difference. But they're going to add 20000 cows were already swimming and now here we have the federal government program which encourages more cows to be milked so the government can buy more products and store more cheese in the caves in Kansas. Federal crop insurance. It's wonderful to have crop insurance at subsidized. Why not. What does it do. It causes people to farm land they would never farm because they take that land and they can insure their crops on it. Three years they get a crop two years they fail and they collect the insurance. Another good government program subsidize water throughout the West. It's a mainstay of the website. I'll tell you they'll protect it with the blood of their lives. But more production comes from it. Irrigation is coming I'm strong. Much of that irrigation subsidized by government programs.

We've drained swamps in this country so that we could plant more crops and government money is help to do it. We have distorted tax laws that are provided an opportunity for farmers to farm the tax code. The great vineyards of the West are a prime example. Fast write offs big money moved in from the outside. Of course it's all collapsed today in a pile because it really wasn't based on good economics to start with rigid price supports of encourage production in the United States. And they've encouraged production all over the world. What's better than to have a guarantee that you know exactly what you can get after you raise and produce a crop. Now one of these helpful programs done how have they benefited benefited farmers as a result today's farmers are up to their ears in grain butter

and debt. Obviously government doesn't have all the answers simply makes things worse by perpetuating policies of the past only Marty McFly can go back to the future. And he needed a uranium powered DeLorean to do just that. Agriculture cannot chart its forward progress while looking in the rearview mirror. I know what I grew up on a farm in Burton bill pulled a corn planter that was the era of a domestic agriculture and we used most everything at home. Some cases very close to home because of cows we milked and the eggs we gathered morning and night went to the store in Knoxville Illinois because I gathered them and I milked the cows by hand. Today big Columbines big tractors big milkers. Shipped products all over the world agriculture today a global industry

looking at government's role in agriculture its future I believe there are a few obvious principles worth keeping in mind. One government warehouses are not a good market for farm products. Too strict production and marketing controls soon become so ingrained that they generate inefficiency and fail to reward those who perform the best 3. A guaranteed price it eliminates risk generates more production. And if that same price is derived then if that same price is derived on the open market the number for farm programs designed to ensure profits for everyone soon make farming a losing proposition for anyone. As farmers come to believe that government will assure profits their expectations and behavior change they worry less about maintaining their own competitiveness and they simply opt to grow more

and more even if it's for the government perpetuating their own problems. 5 there's no such thing as a painless economic society. It's a risk of failure that generates the profit of success. Number six. Finally government support programs can no longer afford to ignore international markets. We export the production from one acre out of every three. We cannot separate domestic farm program from global trade and economic conditions. Nor will our domestic policies succeed until we relate them to the realities of the world market. All of this is not to say that there is no role at all for government in agriculture. I simply maintain that it is a supporting role not the starring role.

As society's largest and most important institution. Government has an obligation to project itself as a positive force in national life. This includes our food and fiber policies but to a limited degree our ability to produce raises same questions now that it did in other decades but today today the answers are different. We can no longer look to government programs aimed at and at large scale acreage reduction as a means of firming up commodity prices. To practice unilateral reduction which we've done means abdicating the international market. It's economic suicide for the American farmer and a broad agricultural industry. Future programs have to look towards growth and expansion in markets in demand and in the use of food. The

emphasis must be on the demand side not on cutting production. And this means that government must be actively involved in research and education. It must be a guide for health and safety regulations. It must champion agriculture interests and international trade. We must negotiate from his initiative strength government to government in order to bring fairness into the global trade arena. The question remains what does a farmer have a right to expect from government and many of us could probably accept Abraham Lincoln's answer. Government ought to undertake only those functions that individuals cannot perform for themselves. Farmers are becoming addicted to support programs and I don't mean all farmers should understand that two thirds of agriculture does not get direct support. Direct support is one third that does.

The continual expansion of these programs have encouraged farmers to regard government benefits as a basic right and somehow they think they're free. And frankly there is no free lunch. This much change. Gradually I stress this gradually in order to avoid severe economic hardship. But it must change. The federal government cannot buy prosperity for agriculture. It can only create the climate for prosperity. It cannot guarantee income. It can only supply an environment in which American agriculture is free to compete. Free to respond to world market forces and free to be the productive and prosperous power it was meant to be. Thank you.

Charles Brennan was born a Jew now and raised in Denver. He was a student at Regis college there and took a law degree at the University of Colorado. His career as been an agriculture in 1934 he joined the Department of Agriculture as assistant regional attorney in the resettlement administration in 1944. He became assistant secretary under Clinton Anderson who was then secretary in 1948 I think I can introduce this much politics that he played a leading role in the campaign of President Truman and was quite instrumental in the voting record in a number of the farm states. Piece of paper

I have particularly mentions Ohio Wisconsin and Iowa playing a key role in the unexpected when Mr. Truman and thereafter the president appointed him as secretary of agriculture which he served until nineteen hundred and fifty three. After that he became the general counsel to the Farmers Union postie out until nineteen eighty three. Secretary Dunlop and my former my predecessor in I mean my successor in a very very difficult job. John BLOCK Secretary John Block commissioners Schumacher if you ladies and gentlemen if you came to hear a difference of opinion you're not going to be disappointed.

I will start out though with complete agreement on the quotation from Abraham Lincoln. Abraham Lincoln said it was a duty of the government to do for its citizens what they cannot effectively do for themselves. And you know I'm certain that in 1935 Lincoln would have approved the decision of this government to provide farmers with an opportunity to secure a fair return for their crops. I was one of the steps the government took to lead this nation out of a Great Depression which had been started in an agriculture arrangement and was as they said in those days farm land and farm fed. I'm also certain that Lincoln would be equally affirmative about the federal

government's obligation in this year of 1986 to provide farmers with a like opportunity. Agriculture is this nation's largest industry both in terms of dollars involved and persons employed in producing grain and fiber in the fields preparing them in our factories and mails for consumption or use and delivering them to the consumer involves equipment manufacturers truckers railroads elevators for processors where Hauser's many merchants along Main Street wholesale and retail distributors even including Colonel Sanders and Ronnie McDonald this industry has its foundation in a rural America. It's basic social unity is the family farm the hub of its operation is the once prosperous towns with their retail businesses their schools their churches

and other rural community enterprise. American farmers are the most efficient operators in the world bar none. And they continue to improve. In 1940 one farmer produced food in 500 for 18 U.S. consumers. Today he produces food for 86 of our domestic consumers and also an additional food for an additional 30 people overseas. Not all of it sold are purchased by them overseas because we have given away all of our abundance. And I say we should have we have given away of our abundance to the needy of this world. And I'm happy that we do have the reserve reserves our column surpluses if you want to give when when others need. But throughout history

farmers in the United States have had no control over most of the factors which determine the compensation they receive for the commodities they produce. At the beginning of the growing season farro farmers borrow operating funds at interest rates at lest at least 2 percent above the rate of businessman in the city with no better credit rating is required to pay. They purchase the equipment the fertilizer and other production needs in a market in which acting separately as they must. They have no bargaining power. After planting the crops are at the risk of drought flood disease and insects. And when harvested farmers will sell their crops and prices are alleged to be determined by the law of supply and demand in so-called free markets but for the most part are dominated by the purchasers because they

cannot effectively organize. They have few marketing options and are generally without bargaining power. In addition to these the disadvantages inherent in our domestic marketing and distribution system farmer two Fs crops can be exported are confronted with pricing impacts which they cannot remotely anticipate or influence or are in many cases just stand on too many occasions over the past decade the prices of our wheat cotton soybeans and feed grain have been sharply depressed by the interaction of unpredictable political events. Producers alone absorb the resulting price impact of these political events all their all of their power to influence or anticipate the event is nil. For example in 1980 Jimmy

Carter when Barbro the export of grain to the Soviet Union. DO indicate the outrage to this country with the invasion of Afghanistan. Now the Soviet Union is normally the second largest importer of U.S. grain. Well perhaps our boycott achieves something in terms of world politics. I don't know. But for certain it caused American farmers to forego large sayings of grain to our major customers for several years thereafter and to give that market to competitors who have held it pretty well ever since the producers of the embargoed grain had no import. Yet they bore the entire economic impact of that purely political decision. And then the example of another time this nation's producers of food and fiber of lost some of their export market because of the high value of the dollar with respect to the currencies of our

traditional customers. Even now when the dollars are as receded by 30 percent from the peak level of February 1985 our exports continue to decline seriously only this government has any control over the exchange rates. The farmers certainly have no control or no input on that situation. Then I read the other day a discussion of the farm problem in a Federal Reserve publication and it concluded with this a reduction in the federal deficit would enormously. It would be enormously helpful to agriculture. And may I add to everyone else no one will seriously contend that farmers contributed to our 200 billion deficit by increasing the price of food. Or in any other manner. On the

contrary prices to farmers have steadily declined although prices for food processed from their crops have steadily increased. Unfortunately for everyone in my judgment over the last six years this government has rejected Lincoln's concept of its responsibility so far as it would apply to food producers while embracing it or embrace it in a principle when applied to a lackey and a Chrysler in the Continental Illinois bank. Every recommendation or Congress has been designed to remove or weaken all the existing forms of economic assistance to this nation's farmers and ranchers and to do it to depress farm prices as a result. In every rural community across the country local newspapers carry numerous notices of farm foreclosures in

liquidation. Not only are farmers going broke by and I say thousands but an alarming number of the banks which serve them are closing. Farm machinery dealers are liquidating the business along Main Street are closing and many towns are beginning to disappear. Hands they didn't gentleman I believe this government has a responsibility to provide farmers with an opportunity to secure a fair return for their investment of capital in land equipment production supplies their labor and their skills just as government has accepted responsibility to industrial workers by adopting the Wagner Act establishing a minimum wage protecting Now Demonio industry with threats of import corridors and bailing out Lockheed and banks that make stupid oil low.

Federal appropriations. In my opinion to stabilize prices of foreign products to producers at reasonable levels are just as justifiable as appropriations for any other function of government including national defense. A fair return for the farmer who produces the soldiers food is as important to our national security as a fair wage to the man who produces the soldiers weapons. And I don't think you can say that I'm pleading the cause of a special interest group. A sound federal income stabilizing program for farmers will be of great benefit to consumers certainly to all of us as taxpayers and the US is clearly in the national interest preservation that traditional rural social structure

based on prosperous farm families operating a fishing family farms surrounding and being serviced by flourishing business communities schools and churches is essential to the social well-being and economic strength of this nation. Now I agree that the present farm legislation need true vision in several basic aspects but most of all it needs sympathetic administration and I believe further that a sound workable law can be adopted that will stop the economic and social disintegration of rural America. Restart of the pattern of sound inefficient family farm revive the town and business communities that serve farm families provide consumers with an abundance of food at reasonable prices and

save taxpayers 20 or 30 billions of dollars annually. How to provide for sympathetic and ministration at least for the next two years is not within my knowledge. But that cannot excuse us from trying to provide a workable legislative vehicle a new script that will put a happy ending on this present tragic scene must be written soon. Thank you. Here now the next part of our program is an occasion for each of our guests to comment in any way they wage for two or three minutes on the others remarked. And

we'll just sit here and carry on this discussion informally. And John I take it you go first. Well thank you very much Secretary Brown and I appreciate your remarks and. And it is true we come a Disfarmer problem from two different perspectives. Be honest with you there are probably many perspectives but ours are poles apart. That's something that I noted through five years that there were a lot of different perspectives in addressing the the problems of Agriculture. And first of all I certainly accept and acknowledge the failures of government. I think the government has done some things that have hurt agriculture they hurt other industries in this country to the let me ask good or bad. In the 70s even maybe before that we were building up processes that created high interest rates rapid rate of inflation.

We were headed frankly towards certain self-destruction economically if we didn't do something about it. We brought inflation down it was publicly public enemy number one five years ago and a lot of it been a lot of fallout from that. Agriculture has suffered along with a lot of other industries and a grain embargo was imposed no one fought harder against than I did and got it lifted after four months. But at the same time once again what we really need in this country is economic policies that don't gyrate all over the board that have some certainty that are steady. And frankly we need less government and agriculture too. I'm I'm quite happy to plead the cause of the special interest group of Agriculture. But when I plead the cause I just say that I

think government has done quite enough already. I listed for you all of these subsidies that go into agriculture every one of them have one thing in common they all encourage production. And the reaction of course is more production. The logical consequence has already occurred. Low prices inadvertently I think I'm not going to put the finger on anyone but these heavy subsidies to agriculture have been the ultimate engine in a cheap food policy and the farmer has suffered. We do have cheap food. We have good food. We have the wide variety of food. I think we'd have a very good variety at a reasonable price if we didn't have so many subsidies into the farm. But I'll tell you this much. If we didn't subsidize the farmer as much as we do today in the agricultural industry food would be modestly higher in price

because the farmers would not be paying. Getting paid from the Treasury they would be paid by the consumers that buy the food. And frankly I think that's the way that it ought to be. We do need and have been have suffered in our exports. We need to expand those. They're important to us as secretary Brennan suggests. I don't see how we can expand them if we have rigid high price supports. That's one reason we were losing ground throughout the early 80s. We were priced out of the world market. You have to compete. You just look at the oil industry. You want to think about another industry that's suffering today. You're not going to sell the oil if you keep it at $20 a barrel might use it for your own domestic consumption. If you need some but you won't sell it. We're not going to sell our farm products if we keep them priced above the

world market. Either we can service the domestic market if we want to build a wall around the United States and keep out the Argentine wheat and so forth and so on. And then to be all kinds of retaliation back and forth because of that because it's not something that can be easily done. Furthermore if we give up the export market what you give up if you price out of the world market or else you have huge export subsidies to penetrate the world market. If you give up that export market you lose a lot of jobs in rural America and small town America. You really do see the agricultural plant shrink. So I think the fundamental difference is really quite clear in the discussion that we're having here is that I believe that agriculture will be healthier stronger. It will still be a family farm dominated agriculture in my judgment but it will be healthier and stronger and more prosperous and and better serve the people of this country in the rest of the world if it's

freer of government intervention and government manipulation. Trying to bring the difference and sharp focus as we can and let me say parents radically. There when I'm critical of the past and ministration are the current event astray she refused me. I'm sure I'm not being personal with John Locke because I think the good part of these decisions were are made in the White House and the Cabinet officers execute them as they see fit. However we do have.

It does seem to me that what John Bach is saying and what the administration is saying frankly they've got a very simple analysis of the problem and and its solution. The problem is excess production. John is referred to excess production. A number of times and their solution is to prevent excess production and reduce the price and let the mythical free marketplace control even if it wipes out that last family farm. Now I don't think philosophical terms yes you can waste much time debating this as a matter of fact all we need to do is to look at the record and ask when lower price support ever begin to work in

terms of. Increasing farm prices. We are in the sixth year now. Successive lower crop alone lives. That's the support level that has been the focus. And also the sixth year in the decline of the value of our farm exports our agricultural trade balance and in our share of the world market for six years all these principal factors have been declining for 1986 the loan rate on a car on corn is a dollar ninety two a bushel about 50 cents below the rate in 1981 for wheat that alone radius 240 which is 80 cents a virtual less than 1981. What do we have to show for the results of these support cuts. Well our agricultural exports totaled a record forty three point eight billion

in 1981 in 1986 they will likely be about twenty eight billion. Our agricultural trade balance which was twenty six point five billion in 1981 will be about 10 billion in 1986. Our share of the world export market is dropping for the sixth year in succession overall. And inside two major commodities as we feed grains and soybean. So. In my judgment there must be a different approach to the stabilization of income. I can't refrain from reminding you that in 1953 when Mr. Truman turned the reins of government over to Mr. Ives enough. The costs of running the department of agriculture including all the price support operations was slightly below

1 the parity level of all agricultural products was well above 100 percent of parity and parity II. So we all understand it was a fair price as determined by a formula made by the Congress of the United States not by John block and it certainly wasn't by me. They were made by the Congress of the United States. In short the reason the deal between farmer was enjoying the opportunity to secure a fair return for his crops and may I add a couple of other facts at that time. The government of the United States had a surplus. And it's served well despite the fact that we had just come out of the Korean operation. We also had a very substantial balance of trade built in great measure on the export of agricultural

products. Now this year we will spend as much as 40 billion dollars probably drunk on agricultural programs. The price of agricultural products will continue to fall from its present level of forty nine percent of a fair price as defined by federal legislation. And many thought that thousands of farmers will sell out or be forced out and leave the land to look for jobs in this city and this country will look more and more like it did in 1929. While for the next few minutes I'd like to engage my colleagues a little more specificity that's possible. As to the role of government in output and in price of

agricultural products I think we've heard a couple of very eloquent statements of general perspective and general approaches and general policy orientation. I'd like to ask each of you to pursue a little bit more specific. John you talked about transition that you shouldn't do. What are you going to do or not do you recognize that. But and some of the things you said lead me off. Carly I do want to be a little more specific about what you would like to see the government do. In the course of the current and a few years ahead about agricultural prices and agricultural output How should government should it get all the way out should it set loans as in the past. And in answering that question this is an important part

of I think the comment I dressed you both use your usual lapse of recognizing the realities of the Congress of the United States. Rather than painting simple objectives that we would all like to wish away with one. I mean since the reality of the legislative process cannot be ignored by any sector. I'm sure we would all three agree. Charlie I. I'm giving you a chance to see an opportunity to develop further and I don't want to give the same the other way. It is a point of joining this at the ideological or general approach with a little more specific. That's really what Mr. Secretary your letter is an open invitation to restate the

Brennan plan. In terms of length in period in 1986 and I don't know whether you really want me to do that but I would like to say this much about it that I did present it to the Congress. It did get a hundred and 75 or 80 vote in the house and I don't know whether John Block had much to do with it at that particular time but it got defeated by the Farm Bureau and the back of the lobby and then Mr. Truman and I left Washington. And there hadn't been another Passat it saying but let me just simply say this. I would let

all farm products go into the marketplace and get whatever price they get in a genuine supply and demand market. No loans no government supervision no government price of Ford of any kind. Then at the end of the season I would determine the average price per unit per bushel per cwt. received by producers for all of that crop during that marketing season and if the average price received by farmers is below the so-called parity price then I would pay farmers directly in cash. The difference. We call it direct payment. We call it compensatory payment. We call the production payment. But

in the final analysis it's the difference between the average price received by all farmers in the marketplace for that crop during that marketing season and a fair price. If the average price equaled Arias greater than parity there would be no. Payment and your goal was the vote. If the average price received by farmers is substantially below parity price because of excessive production then the government would ask each farmer to reduce his next year's marketing by an equitable proportion of pro rata basis this is not in any sense a regulatory measure at all because no farmer has to reduces it. His production after requires. But if he'd decides not to come within that program then he gives up

his right to the two the different payment or the direct payment. And I would do one one other thing. I would limit the total amount of the direct payment to any single farm but I would equate the maximum to a historic average annual growth return from the sale of all crops produced on a typical family farm. Some percentage of that. I think there's genuine public interest in providing farmers is such an opportunity. This leaves the grain or whatever it is freed to work or move in the world market at the supply and demand price determined in the United States. We now subsidize. We now hold the price high with the price of fart. Then when the big grain company ships it to

some countries we pay them that sort of export subsidy so we do it we just pay the price in in the cost of getting the grain off shore I think. What I've been writing very rarely done so is to be more specific about his philosophy of his and I think the same question to you. What I what would you like to see done in nine hundred eighty six seven eight as a way of getting the government now that someone of the process. Why would it influence decisions on output and right. Surely the first recollection I have of the Brennan plan was when I was at West Point debating and we debated one year for a

portion of the year farm program farm programs in the Brandon plant is right up front all the time which is rightly nohow I don't know I can't remember what we had. We debated both sides yet to be ready to take on either side. I like your plan. I buy the part of letting the products go and sell them on the market and let the market forces work and let the system work then have compensatory or direct payments to farmers to the extent that the Congress and the people of the country want to pay direct payments to farmers to keep them on the land to maintain this social program support. Which of course when you make a payment limitation on it you're not really limiting it to the smaller farmers and it becomes a social program. Fine if the country feels that they want to do this to keep their farmers on the land I think it's good.

And frankly we would do something. That's why we're spending one of the reason we're spending as much money as we are right now. The farm programs we have today are not the best. I'll buy yours I just won't buy the part about guaranteeing that they get necessarily that they get 100 percent of parity as a farmer I'd like to have it. I don't think it's practical and we were saying we're going to talk about what's practical in terms of what Congress will deliver. Frankly it's not practical to think the Congress is going to deliver that kind of compensatory payment to each and every farmer across the country. Indy's basic program crops already. But anyway to be to be practical about this whole thing we're not going to we're not going to have probably a program like I just described Secretary Brennan just described in some people's minds as might be ideal. But we're going to live with the program we have right now and will be taken with and changed around. The Congress always has a tanker with these things even though they don't mount to a hill of beans some of the things they do they like to make it sound big. Back home

in a country where they come from but they try to make a few changes. I think if they leave the program in place and ensure that we stay with this plan of bringing the payments on a gradual reduction over the years it will be alright I do think there's one other good feature about the bill and that is a conservation reserve. Given the fact there's no question about it. There is too much land of production there's too money resources in agriculture. Everyone must share some of that blame government. The farmers the banks the farm magazines the lending institutions the Wall Street Journal. This is that article from November 1980 just before I became secretary of agriculture. Do you think it predicts what happened. Not a chance it says big increases in food prices loom as world demand more U.S. grain U.S. can no longer be breadbasket the World Food will be in the 80s what oil became in the 70s.

Scarce and expensive on and on everything. Absolutely wrong. I had a wonderful time as secretary of this at all happy that. You should. It would have been so easy though it would have been a ho hum life it wasn't. But anyway I think that we ought to recognize that there were a lot of mistakes made in the Conservation Reserve which does is I think a wise method of the government participating in helping farmers retire some of our excess production capacity I think it's a good one to take these ruble acres out we would take 45 million acres out over the next five years unless Congress changes it. Yes ma'am and both of you gentlemen tell me what is the most important problem facing farmers today. I think the most important problem disappeared which farmer you know what. There are so many different segments of the economy some are reasonably healthy Some are healthy and some are pretty

sick. But. I think it's adjusting to the new conditions under which they're living their land values have declined in some cases as much as 50 to 60 percent as of the extremes. That's the hardest thing to live with because your balance sheet goes to pieces pretty fast and they borrow money because of their their equity in their business and their cashflow projections and I think farmers adjusting their operations to live with the changes in the conditions of Agriculture is a toughest thing they can do. Land values are down and and that and of course inflation has come to a halt. So nothing's going up for them all the time the prices are not strong but the farm program

payments are pretty generous I might say. Next question up here. Thank you Terry block. I'm very sympathetic here argument that the that our real problem is overproduction and that part of the problem has been technology in another part of involvement in agriculture and I was wondering if the solution is to create better markets abroad if you could comment on how gov American agriculture policy has influenced our cultural production abroad and also on influence of American technology on production abroad which is obviously going to be involved in the United competition that we're experiencing right now. I think it's a good question that you have there about our policies and the impact they have internationally and I said my presentation that we live in a global market today and there's no way to deny it. We live in a very small world today. It's getting smaller every day and it's going to be smaller next year than it is this year we just will gear up for RECOGNIZE IT appreciate it and design policies to accommodate that condition.

First of all our loan rates without any question have encouraged production in countries all over the world. Articles like this will encourage production all of the world to I might add. But when you put loan rates up at a level that would guarantee considerable profit for farmers in Argentina and Brazil and Australia and other countries. They go ahead and raise a crop because they have the guarantee are low rates have had enormous impact. Secondly our technology is it's good that we have countries all over the world using it. I was in Hungary in a Soviet Union last August and what kind of cap was the agronomist wearing there as we were looking at this field of corn. A pioneer cap on his head. And that was in the. That was in Hungary in the Soviet Union. The same thing. They had some decal seed that they're using. That's just one example but the machinery equipment business and industry in

this world today is International and they're everywhere. They sell where there's a market and it doesn't make any difference where it is. What the A Like it or not you can't change it frankly I think it's a good thing if you're not going to change in any way except. And so all of this technology flows like water all over the world. The United States is having a very talky hard time trying to to get control of technology that has military and security implications it where we can hardly do that to be honest with you we're trying. Let alone to think about putting some kind of control on the flow of production technology for products such as grain or milk. So the United States is going to have an impact. Don't ever think that we have a corner on all the technology and Europe they raise bigger great deals that we do. There are better wheat farmers and we are and they have learned how to be better wheat farmers. I'll tell you why they have higher price supports there than we do. And people work harder and do a better

job of producing more and more for higher and higher support. Thanks. My question is I love the Wall Street Journal article that you pulled out and I wonder if What's the Agriculture Department doing today to provide farmers with some sort of of a really realistic look into the you know even if the next five years so that we don't repeat those kinds of just as sort of abysmal lack of foresight. That's a good question I think. Many of us are saying what we think. That's what they did before or they said what they thought. The same thing happened to the oil industry you know no one was predicting this. This from the collapse of that industry seen a dish owes it to the experts don't really know very much anyway. And just good common sense probably the best way to look at the Department of Agriculture does do all kinds of more analysis reporting projecting but

I don't know I guess you just have to realize people have to if they can always remember to look back at history and realize that most everything that goes up must come down and everything that's down. Every dog has its day and it will go up and it happens that way. I don't know why but there are cycles in all of this. And when you're sick you think you'll never get well and when you're well you'll think you'll never get sick. And those are very scientific. But then I get home a lot more sense than some of the stuff you read. Well ladies and gentlemen they're. Practical. Oh. It's my pleasure on your behalf to thank your credit for. Very interesting evening. We keep me appreciate

it for that. On today's forum from the Institute of Politics two former secretaries of Agriculture have looked at the American farm crisis. John Block is the former secretary of agriculture who served during the Reagan administration. Charles Brennan a long time agricultural official during the Roosevelt and Truman administrations was also on the program right and left his post as secretary in 1953. The moderator for the program was former secretary of labor. Now the Lamont professor of economics at Harvard John Dunlop. The program was recorded on April 30th 1986 for broadcast at this time the production engineer Jeff Burton. If you would like a cassette of this broadcast send a check for ten dollars made payable to Harvard University and send it to the forum. Box 1 6 6 6 Cambridge Massachusetts 0 2 2 3 8. That's the forum. Box 1 6 6 6 Cambridge Massachusetts 0 2

2 3 8. This program is a co-production of WGBH radio Boston and the Institute of Politics at Harvard University dedicated to fostering an understanding between the academic community and the world of practical politics. I'm great That's terrible. This is the American Public Radio Network.