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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Knauer, Virginia H.: Files
(Consumer Affairs, Office of)
Folder Title: Business International Corporation
Box: 26
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Office of Special Adviser to the President
for Consumer Affairs
Washington, D.C. 20201
September 21, 1984
Mr. Orville L. Freeman
Chairman of the Board
Business International Corporation
One Dag Hammarskjold Plaza
New York, N.Y. 10017
Dear Mr. Freeman:
Thank you for sharing your address to the March 1984 Export Conference
with us. A natural concomitant of activities on behalf of consumers is a
concern for the health of American agriculture. I have asked those on my
staff Involved with food and related agricultural Issues to review your
presentation carefully. We will transmit to you any comments or suggestions
we might have. I assume, of course, that you have sent a copy of your
paper to Secretary of Agriculture Block.
Sincerely,
Virginia $1 H. Knauer
Special Adviser to the President
for Consumer Affairs
Bob Steeves
Howard Seltzer
HS/dbc
Typed 9-21-84
Business International Corporation
August 1, 1984
Bob we have the we reply our VK with
Ms. Virginia Knauer
White House Office of Consumer Affairs
Advisor to the President
9/1
for Consumer Affairs
The White House
Washington, D.C. 20500
Dear Ms. Knauer:
Recently I had occasion to review the enclosed address with Dr. Martin
E. Abel, President, Abel, Daft and Early; Mr. Richard E. Bell,
President, Riceland Foods, Inc.; Mr. Howard W. Hjort, Vice President,
Economic Perspectives, Inc.; Mr. Edward A. Jaenke, President, E.A.
Jaenke Associates, Inc.; Mr. John W. Mellor, Director, International
Food Policy Research Institute; Dr. Don A. Paarlberg; and Mr. Clarence
Palmby, all agriculture professionals with long service in and out of
government. We agreed on three things:
1) The US desperately needs a coherent, comprehensive, long range
strategy for agriculture;
2) National dialogue aimed at developing such a policy is getting
underway;
3) As the dialogue goes forward, it will be difficult to focus on a
balanced policy because of the many groups that make up American agri-
culture.
Fractionalization, as you are aware, has always made it extremely
difficult to develop and put in place a balanced policy for American
agriculture. In our opinion, the enclosed address if widely circulated
among thought leaders and opinion makers might serve a useful purpose
in broadening thinking, thereby keeping the dialogue from drifting into
special interest segments rather than the "put it all together"
interchange necessary to consider widely divergent needs and to lay the
foundation for a sound program.
What do you think?
We would appreciate:
1) Your comments on the approach, analysis, evaluation and proposals
in my paper;
2) To whom should my paper be sent?
ECEIVE
ca:Bob
g
AUG 3 I 1984
One Dag Hammarskjold Plaza, New York, N.Y. 10017/(212) 750-6300/Cable:"BUSYMAG NEW YORK"/Telex: 234767
-2-
After we hear from you and others, another document might be circulated.
If the response justifies it, we could call a meeting later in the year
to seek consensus on fundamentals.
Chairman of the Board
OLF:jm
Encls.
Comparative
Advantage in an
Interdependent
World:
The Need for a
Realistic Agricultural
Policy for the US
Business International Corporation
Business International
Business International is an independent organization pro-
viding a comprehensive system of global information to
Address
corporations doing business internationally and to those
by Orville L. Freeman
who support and govern them, including bankers, attor-
neys, consultants, colleges and universities, and govern-
Chairman
ment officials. It provides this information through pub-
Business International
lished and on-line materials, as well as through research,
consulting, management training, special studies, and
Corporation
function- or country-oriented roundtables and seminars.
Established in 1954, Business International facilities
now span 75 countries, with 300 full-time professionals
Export Conference
monitoring and analyzing all aspects of international
Dean Rusk Center
investment and trade. These include macro- and micro-
School of Law
economic data, political development, sociocultural
trends, and managerial, functional and operational tech-
March 30, 1984
niques-all worldwide.
Business International services are designed to meet
the growing-and changing-needs of international cor-
porations, and those who work with them, for sound,
sophisticated, up-to-date information, analyzed to provide
decision makers with data and options for profitable
economic growth.
2
3
Comparative Advantage
only 2% of the population of the US is on the farm. On the
average, each of these farmers feeds 76 Americans at
in an Interdependent World:
prices that are lower as a percentage of personal income
than they are anywhere else in the world. In addition,
The Need for a Realistic
agriculture, directly and indirectly, is responsible for
Agricultural Policy for the US
approximately 25% of US employment.
Between 1965 and 1980, while farm population de-
creased by one half, annual output in constant dollars
Let me tender my apologies for this ambitious title. When
tripled, increasing by over $100 billion. Between 1970
Dean Rusk invited me to address this important export
and 1982, grain production in the US climbed from 170
conference he, reasonably, asked me to address myself
million metric tons to 330 million metric tons. And while
to "some aspect of agricultural exporting." But the more I
US exports climbed from 38 million MT to 150 million MT,
thought about it, the more it became clear to me that there
Soviet imports climbed from 8 million MT to 43 million
is no aspect of agricultural exporting that can be usefully
MT. American family farm agriculture accomplished this
addressed in isolation. Indeed, US agriculture-both its
with 350 million acres of land under plow, in contrast to
fabulous and problem-fraught productive capacity and its
the 500 million acres cultivated in the Soviet Union. The
vital function in the US trade balance and in the role the
$44 billion worth of American agricultural exports in 1981
US plays in the current world economy-cannot be as-
were an essential offset to our otherwise rapidly deterio-
sessed, or even described, without analyzing the connec-
rating balance of trade and current account.
tions and complexities that constitute reality today.
So I decided to go for broke and to share with you my
At the Crossroad
thoughts on what is needed to hammer out a comprehen-
sive agricultural policy for the US that will be responsive
Despite this unexcelled record, American agriculture
both to domestic concerns and international require-
today stands at a troubled and uncertain crossroad. All is
ments.
not well on the farm. Aggregate income is the lowest it
I would like to emphasize my profound conviction that
has been in 50 years. Farmer return on equity in 1981 and
the active participation of every one of you here is essen-
1982 was a negative 9.2% and 6.5%, respectively, and
tial in defining and structuring such a policy and in assist-
will probably be negative again in 1984. Land values de-
ing the process of implementation.
clined for the first time in 27 years. Exports have slipped
This is, I believe, a vital task. If the United States of
in the last two years, suffering a 20% shrinkage. The
America is going to continue its world leadership as well
debt/equity ratio is way up as farm debt climbed 300%
as improve the well-being of her own people, it is critical
between 1971 and 1983. Bankruptcies and foreclosures
that we have a policy with clear-cut goals and objectives.
are sharply on the rise. The cost of price-support produc-
I am certain that if there is public understanding, support
tion control programs has zoomed, reaching a record
and participation, an agricultural policy will evolve that is
$18.9 billion in fiscal 1983. If one includes the cost of the
responsive to reality, and that the President of the US will
PIK program, price support costs were actually $28.3
be able to provide the leadership to put such a policy in
billion, 10 times the average annual cost in the 20-year
place and carry it forward to execution.
period from 1961 to 1981, and five times higher than the
largest expenditures in those two previous decades.
Facts and Figures
What Went Wrong?
Before addressing directly what I think an agricultural
policy for this nation should encompass, permit me to
It is my contention that these adverse developments
identify the facts and forces that must be factored into a
call for a careful, thoughtful reexamination of where we
realistic policy. First and foremost is the critical impor-
have been, where we are, and where we want to go. Only
tance of American agriculture to the well-being of our
if there is recognition and understanding of the massive
people and to our constructive role as leader of the free
change that has taken place in American agriculture can
world. It is not an overstatement, I believe, to describe the
we develop a viable and workable policy that will make it
accomplishments of American agriculture as the number-
possible for this nation to regain lost ground and to take
one production miracle in the history of mankind. Today
appropriate advantage of the magnificent productive
4
5
plant that we have built over the past generation.
slipped into a major recession in 1980 and, with it, the
How, then, did we lose ground? How did we get our-
threatening debt overhang we face today, US agricultural
selves into the mess we're in? The answer to that ques-
exports would not have slumped. As a matter of fact, had
tion is, of course, complex. But the key point is that agri-
economic growth continued in those countries and
cultural policy, as implemented over the last two de-
around the world, the 38 low-income developing coun-
cades, has not reflected the fact that American agricul-
tries, whose increase in agricultural imports had climbed
ture is no longer national in scope. It is international. We
only to 8.7 million MT a year, would have accelerated
are no longer relatively isolated from the rest of the world
their purchases as well.
in any way.
It follows from this that, if the world returns to a
To illustrate: In the 1950s, agricultural exports were
reasonable level of growth and prosperity, with favorable
less than 10% of cash farm receipts. Today, exports rep-
growth rates in the developing world, the demand for
resent 30% of total cash receipts and 54% of crop re-
food, and particularly for protein, would again explode.
ceipts; production of four acres out of every 10 is des-
That is where future markets will be found. In fact, a
tined for foreign markets. Typically, we export a fourth of
number of studies projecting such growth conclude that
the US corn crop, half of the soybean crop, 60-65% of
there is actually a serious threat of major shortfalls. Some
the wheat crop, and over 40% of cotton and rice crops.
studies estimate a shortfall of as much as 70 million MT of
grain by the turn of the century. Obviously, if this should
The Global Connection
happen, US agriculture would respond, assuming we still
What these figures demonstrate, dramatically and in-
have the productive capacity. Prices would move up sol-
controvertibly, is that for the US agricultural plant to be
idly and American agriculture would prosper. That is one
continuously operated at an acceptable capacity level,
scenario.
foreign market share must be maintained and expanded.
A Competitive Scenario
Farmers and agribusiness alike now have a vital stake in
international conditions, economic and political, a stake
A more realistic scenario, given the current world
that did not exist before the last decade.
economy still largely bogged down in recession, with the
heavy debt overhang inhibiting growth and expansion of
The New Uncertainties
developing world markets, is that for at least the next four
or five years, there will be strong competition for commer-
Agriculture, as all of you are aware, has always been
cial world markets. During the late 1970s, the US be-
subject to great uncertainties. Historically, these uncer-
came, in many respects, a residual supplier. This OC-
tainties were predominantly on the supply side. No one
curred in part because of a very strong dollar, and also
can control the weather. Disease and pests, equally un-
because of price-support levels that were higher in some
predictable, also seriously affect supply. Adjusting pro-
instances than the prices our competitors in world mar-
duction to signals in the marketplace is much more diffi-
kets were able to offer. This we can no longer afford.
cult, and the lead time required much longer than that for
US policy, resting solidly on our comparative advan-
industry. These uncertainties continue. But uncertainties
tage as an agricultural producer, must be to move more
in demand have now become as great, or even greater, in
aggressively into world markets and be prepared to meet
the internationalized marketplace. Let me sketch for you
competition everywhere. I emphasize meet competition.
two scenarios that will manifest these new uncertainties.
We would make it crystal clear that the US will not initiate
A Growth Scenario
export subsidies. However, we should also send a strong
signal that if our competitors in the world market engage
The first scenario can be properly labeled a growth
in export subsidies we will match them.
scenario. It starts with the fact that the middle-income
developing countries increased their imports of grain
Therefore
from 12.7 million MT in the years 1960-63 to 44.7 million
This nation, built on private enterprise in a competitive
MT in 1977-79. With their own annual economic growth
market place, should firmly set the course for an open,
in a 5-7% range, these countries became an explosive
competitive world, with agriculture in the lead. In the pro-
market for agricultural products, particularly grain,
cess we can point the way for the industrial side of our
resulting in firm and growing prices. Had the world not
economy to reverse its current tilt toward protectionism.
6
7
The Skewed State of Affairs
carefully coordinated, major, sustained, integrated
agricultural export offensive. Such an offensive should
Currently, world agricultural markets are in an abnor-
take advantage of our production superiority, our efficient
mal state. On a global basis, production has been ex-
agribusiness marketing systems, and of US exporters
panded significantly as our competitors have been
geared to foreign needs. The effort must recognize that
favored by excellent yields in the last few years.
demand has leveled off in the industrial countries, and
At the same time, global demand has fallen sharply
that the developing world, now taking one third of US
because of the world recession. The result is a glut of
farm exports, offers the best opportunities for expansion
grain. The total carryover of grain stocks, plus the
in the years ahead, if and when those nations again show
equivalent of idle acres in the US, has climbed to an all-
income growth.
time high of 283 MT or, in terms of world consumption
It must be recognized that this offensive will be a dif-
days, to 68 days. For perspective, this carryover com-
ferent kind of game than we have known in the past, re-
pares to 104 days in 1961 when I became Secretary of
quiring a wider range of skills, resources and initiatives.
Agriculture. The problem we face in these terms is thus
An exporting strategy based on the notion that it can ex-
not a new one.
pand sales simply by writing orders will fail. We will have
The immediate result is weak market prices and an
to do our homework. Americans will have to research po-
acute recession in the agricultural sector of the US
tential customer countries in terms of their total require-
economy. Given these circumstances-and they are like-
ments. We will have to look at consumer needs and
ly to recur in unpredictable but inevitable cycles-the US
wants, purchasing power, political pressures, the needs
must have in place a domestic farm program to support
for infrastructure such as port facilities and transportation,
and assist the American farmer. To make the program
and customer countries' needs for new production, stor-
work, experienced and competent management must be
age, and processing technology, as well as farm prod-
in place.
ucts. In short, we will have to size up these opportunities
Policy Premises
in terms of packages that meet the customer's needs.
Happily, the US is solidly positioned to put such pack-
The policy premise for this program is twofold:
ages together and to tie them to a sensible domestic farm
First, the production capacity of the US agricultural sec-
program.
tor must not be seriously eroded. History has shown that
Since 1954, and the passage of PL 480, this country
we, at home, and the world internationally, will need
has, on a concessional basis, moved over $100 billion of
American production capacity when global economic
food and fiber to meet human needs, contribute to eco-
cycles emerge from their trough.
nomic development, and build commercial export mar-
Second, and equally important as a policy imperative,
kets in developing countries all over the world.
both fairness and equity demand support by the govern-
Shipments since 1954 have ranged from 15.3 million
ment of this nation to the farmers who have contributed
MT of grain in 1967 to an estimated 4 million MT in 1983.
so much to our economic well-being, and who are
In the process we have learned how food abundance can
uniquely subject to uncontrollable external causes, and to
be effectively utilized. We have also learned how, if
cyclical movements and global interactions.
carelessly managed, it can be counterproductive.
Nevertheless, a policy and program to accomplish
what, for want of a better word, I will call this defensive
An International Initiative
purpose, must be sensitive to global realities and de-
It is my conviction that the time has come to combine
signed in a fashion that does not result in the US pricing it-
that knowledge and our farm abundance into a solid, effi-
self out of world markets.
cient, international agricultural initiative.
A Feasible Program
Such an initiative should have four components.
1 Humanitarian We should reach out all over the
Let me offer some ideas on how I think this can be
world to help feed truly needy people. A major effort with
done and on what it will take to design an agricultural
a significant US contribution is now under way in drought-
policy for the US that will effectively integrate both
stricken Africa. That effort must be strengthened and ex-
domestic and international realities.
panded. In addition to relief, food aid should be tied into
On the international front, the US must launch a
self-help projects focused on improving production poten-
8
9
tial, aimed especially at small producers.
lems would be for the US government to make available
2 Developmental The US should expand its eco-
to the International Monetary Fund a substantial volume of
nomic development assistance program to many more
wheat, in addition to the credit already recommended by
developing countries. Food aid can be used to stimulate
the President. The IMF could use this wheat to alleviate
agricultural development in developing countries. Food-
the debt loads that now plague many of the developing
for-work programs, building needed infrastructure, can be
countries. The wheat could be supplied by the IMF to
highly successful if well managed.
grain-importing LDCs, with payment negotiated over a
Title 3 of PL 480 provides for the US to grant money it
period of time at appropriate levels of interest. Such a
receives for agricultural commodities back to the country
move would make it possible for hard-pressed LDCs to
to finance agricultural development projects, with forgive-
use foreign exchange they would otherwise spend on
ness of funds if the project is successful. The authority of
grain imports to meet their international obligations, or to
Title 3 could be expanded to help finance investment by
invest in internal growth and development,
American agribusiness companies in developing coun-
3 Marketing-Minded We must expand our market
tries. The present initiative of the Bureau for Private Enter-
development activities, coordinating them closely with
prise in the AID Agency can make good use of Title 3. It
-our economic development initiatives. Since the
should be given more support and resources.
mid-1950s, the US has run a remarkably successful for-
eign market development program for agricultural prod-
The Industrial Policy Context
ucts. It is a cooperative program between the Foreign
Our nation is engaged today in a great debate on in-
Agricultural Services of the US Department of Agriculture
dustrial policy. We are trying to identify what should be
and some 60 private commodity organizations, ranging
the relationship between the government and the private
from wheat and flour to raisins. The costs of these pro-
sector as American industry faces new technology, new
grams are shared by government and the commodity
challenges, and new competition around the world. One
groups. These market development efforts need to be ex-
can hardly pick up a newspaper or tune in a television sta-
panded. They should command top priority and adequate
tion without exposure to the question of how to relate
resources.
government and the private sector as we go forward to
4 Competition-Oriented The US must fight unfair
meet competition in world markets and successfully ac-
trade competition wherever it occurs, particularly in na-
commodate basic structural change.
tions that use export subsidies, or have erected import
There is no doubt in my mind that the private sector
barriers for agricultural products. This means developing
moves technology to use more efficiently than does the
a long-term strategy to prevent some countries from put-
government, and that this is true in developing countries
ting up new protective barriers and getting other nations
as much as in industrialized ones. Obviously, profit and
to reduce unfair levels of protection, such as Japan still
risk criteria must be met if private agribusiness com-
has for beef and citrus. Measures to fight protection and
panies are to invest in the developing world and move
subsidies must be specifically targeted. The US must
modern technology in production and marketing to small
convince other nations that we are serious about unfair
farmers in the developing countries. My point here is that
practices and that we will take steps to make these prac-
identifying these win-win opportunities for private sector
tices so costly that others will be discouraged from using
activity in the developing world, and encouraging US
them. Measures the US can use range from instituting
companies to respond, could and should be an important
countervailing subsidies to limiting access to the US
ingredient of our national agricultural policy. Designed in
market if we don't have fair access to other markets.
close cooperation between government and business at
the highest level, this kind of global enterprise would have
A Profile of US Agriculture Today
a triple dimension for the US: It would yield profits; it
Before I proceed further with my policy recommenda-
would build export markets; and it would make friends in
tions on the domestic side, let me sketch for you a con-
the political arena.
cise profile of what American agriculture looks like today.
You may find the portrait surprising.
A Grain "SDR"
At present, approximately 112,000 farms-5% of the
Another innovative way of putting American food abun-
total number of farms-produce just under 50% of the
dance to constructive use in solving pressing global prob-
entire output of food and fiber originating in the continen-
10
11
tal US. These are operations that had annual sales of
study found that, without a program along the lines of the
$200,000 or more in 1981. It is important to remember
farm program of 1981, only 42% of the medium-sized tra-
that these major producers are mostly family farms, not
ditional family farms would survive over the next decade.
what we think of as corporate farms. The great bulk,
In contrast, the Texas A&M Study found that 98% of the
somewhere around 95%, are individually owned and op-
smallest farms would be able to survive for 10 years
erated family farm businesses.
without any program. And the largest farms-those over
At the other end of the scale are the large majority of
4,400 acres-would survive without any government pro-
farms, 1.7 million of them, comprising 71% of all eco-
grams. I think we can conclude that it is the middle
nomic units classified as farms by the USDA. These are
category of farms where a long-range farm program is
generally small farms, frequently worked part time, with
needed for economic survival.
off-farm income covering a major portion of the family liv-
ing expenses. These 1.7 million farm units, with annual
No Change
farm sales of less than $40,000, produce only 12.5% of
Let me stress in this context that I foresee no drastic
total US output.
alterations in this profile. All the evidence from agricultural
The final feature of the profile consists of the medium-
scholars concurs that, for the foreseeable future, the com-
sized traditional family farms. These make up a little less
position of the US agricultural sector will remain much as
than one fourth of all farms, some 580,000. They are pre-
it is now.
dominantly family-owned and -operated, with the owner-
The real question, therefore, is how can a program or
operator engaged full-time in farming pursuits. Sales run
programs be developed to meet the economic, social and
between $40,000 and $200,000 annually. In the aggre-
cultural conditions of these diverse groups?
gate, these medium-sized farms produce 38.5% of the
I have already cited evidence that the small producers
output of US agriculture.
would survive without any programs. National agricultural
So we have three general classes of farming enterprise
policy can do little to help or hurt this group of farms.
that are different in size, productivity and income re-
However, state programs in the areas of education,
quirements. How then should a comprehensive, national
health, medical service, roads, schools, etc. are important
farm program relate to each of these three groups?
to the economic and social well-being of this group of
A Three-Pronged Approach
nearly two million American families.
The group of large farmers would also do well without
Let us consider first the largest farms-the 5% who
federal farm programs. These are educated, innovative
produce approximately 50% of the total output. Accord-
producers, well financed, efficient, highly mechanized.
ing to a number of studies, these farms have cost struc-
They can compete effectively in both domestic and world
tures that allow them to be profitable. They have, in re-
markets. They are fully poised to take advantage of the
cent years, benefited greatly from government programs,
food requirements of the world for the remaining years of
but there is considerable question as to how important
this century.
those programs really are to the continued economic vi-
The needs of this group will be best served by con-
tality of these larger farms; they could probably make it on
structive trade and macroeconomic policies. These pro-
their own.
ducers will benefit from government development efforts
The small farmers, too, are economically strong, albeit
to stimulate the national economies of the world so that
in a different way. Because their off-farm earnings are suf-
there is capability to purchase the needed food com-
ficient to fully offset the small losses of income from farm-
modities, including those produced in the US. Export
ing, these small farmers are relatively well off in economic
credit assistance efforts; export market development
terms, and apparently satisfied with their ability to live in
assistance; sensible, consistent international trade policy;
rural areas and pursue farming as a secondary, part-time,
stable and reasonably valued currency; good infrastruc-
or in some cases "hobby" operation.
ture in the way of transportation and port facilities-these
The middle group, however, is in a different situation.
are the policies that will benefit this group of highly effi-
Recent research by Texas A&M University covering cot-
cient farm businessmen. Domestically, they need some
ton farms in Texas' southern high plains clearly suggests
assistance from public institutions in research, and a
that government farm programs have been of major ben-
stable, economic climate of growth.
efit to these medium-sized farm operators. The Texas
There is, however, one additional policy element to be
12
13
considered for these large farm producers: However well
our total food and fiber output, but also because they are
trained, educated, financed, mechanized and efficient,
a vital part of the social and cultural fabric of rural
they are still subject to the vagaries of nature. And
America and, indeed, the nation. A modest expenditure
because their market is international, they are also sub-
of well under 1% of the national budget could, in my judg-
ject to global uncertainties and shifts in the economic and
ment, be justified to protect and preserve this important
political climate. These factors, coupled with the large
part of our society.
capitalization and credit requirements of farms with sales
The Need for Coordination
of $200,000 or more, subject these larger farmers to a
much higher level of risk than many other businesses.
A meaningful agricultural policy, responsive to interna-
Long-term policy should therefore provide a way to
tional and domestic realities, requires effective coordina-
cushion the risk faced by this very important part of our
tion of private and public programs and initiatives. As
productive economy.
matters now stand, a wide range of activities need to be
At a minimum, a long-range farm program should pro-
tied into logical and sensible packages. Currently, no per-
vide a world market clearing non-recourse loan program
son or group is performing this function. Recently, at the
for the large producers. This loan program would enable
initiative of the Ohio Farm Bureau, a number of agricultur-
them, in periods of extreme adverse conditions, to assure
al leaders got together in Chicago to discuss the need for
orderly marketing and some degree of risk-sharing with
a new leadership position to represent the private sector
the public. Such price support loans could be based on a
in export development for agriculture. I find much merit in
three-year or five-year moving average of the world
their recommendations. But I believe we need more than
market prices or some significant percentage of that level.
a new leader in the private sector. We need a leader/
An additional idea, which deserves further study and
spokesman to articulate and coordinate a new agricultural
consideration, is the possibility of providing a mechanism
policy for this nation, indeed for the world. I suggest that
whereby these large producers would have both the legal
he, or she, be a presidential appointee with Cabinet rank.
and economic ability to limit their production in periods
This Cabinet member should not have direct line respon-
when favorable weather conditions and unfavorable mar-
sibility, but should have the complete confidence of, and
ket conditions have combined to produce excess sup-
direct access to, the President. This would make it possi-
plies. I have in mind a system in which, under a govern-
ble for him, or her, to coordinate across the entire US
ment-refereed and -sanctioned referendum, large produc-
government and the private sector, speaking with one
ers of the major commodities could vote to decide if they
voice for, and on behalf of, the President on all issues and
wanted to have mandatory acreage and production ad-
topics involving US agricultural policy. This person would
justments so as to maintain a reasonable supply-demand
also maintain direct contact with foreign governments, at
balance. There would be little or no expenditures of public
the highest level, to measure, in concert with the resident
funds to carry out such a program. It would provide the
US Ambassador, the Secretary of State, the Administra-
economic and legal mechanisms to avoid wasteful and
tor of AID, and the US Secretary of Agriculture, how US
economically disruptive short-term surplus buildups.
agricultural policy is being carried out.
Finally, and undoubtedly the most difficult challenge, is
the effort to devise a sensible program to deal with the
Looking Back-and Forward
medium-sized family farmers. I believe we need to offer
Twenty-three years ago, John F. Kennedy named me
these farmers some system of income transfer protection,
US Secretary of Agriculture. I was privileged to serve in
perhaps similar to the existing target-price concept. A
that capacity for eight years. Then, the importance of agri-
scheme could be developed that would assure these
culture to the well-being of the people of the US, and of
farms a return from the marketplace, and from the farm
the world, did not receive priority attention. Today, as we
program, that would enable the most efficient of them—
approach the mid-point of the decade of the '80s, the criti-
and this would be a majority-to continue to be viable
cal importance of agriculture, if mankind is to advance to-
contributors to our society. Not incidentally, such a pro-
ward its goal of human betterment, is universally recog-
gram might well include a requirement that the farmer
nized. The time has come for this country, as the leader of
follow sound soil-conserving practices.
the free world, to put in place a sound agricultural policy,
Dealing fairly with these farmers is important to the na-
and to give the highest priority to carrying it out-at home
tional weal, not only because they produce nearly 40% of
and around the globe.
14
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Business International Corporation
August 1, 1984
Bob we have the we reply our with
Ms. Virginia Knauer
White House Office of Consumer Affairs
Advisor to the President
9/1
for Consumer Affairs
The White House
Washington, D.C. 20500
Dear Ms. Knauer:
Recently I had occasion to review the enclosed address with Dr. Martin
E. Abel, President, Abel, Daft and Early; Mr. Richard E. Bell,
President, Riceland Foods, Inc.; Mr. Howard W. Hjort, Vice President,
Economic Perspectives, Inc.; Mr. Edward A. Jaenke, President, E.A.
Jaenke Associates, Inc.; Mr. John W. Mellor, Director, International
Food Policy Research Institute; Dr. Don A. Paarlberg; and Mr. Clarence
Palmby, all agriculture professionals with long service in and out of
government. We agreed on three things:
1) The US desperately needs a coherent, comprehensive, long range
strategy for agriculture;
2) National dialogue aimed at developing such a policy is getting
underway;
3) As the dialogue goes forward, it will be difficult to focus on a
balanced policy because of the many groups that make up American agri-
culture.
Fractionalization, as you are aware, has always made it extremely
difficult to develop and put in place a balanced policy for American
agriculture. In our opinion, the enclosed address if widely circulated
among thought leaders and opinion makers might serve a useful purpose
in broadening thinking, thereby keeping the dialogue from drifting into
special interest segments rather than the "put it all together"
interchange necessary to consider widely divergent needs and to lay the
foundation for a sound program.
What do you think?
We would appreciate:
1) Your comments on the approach, analysis, evaluation and proposals
in my paper;
2) To whom should my paper be sent?
ECEIVE
cal Bob Roe
R
AUG 3 1984
One Dag Hammarskjold Plaza, New York, N.Y. 10017/(212) 750-6300/Cable:"BUSYMAG NEW YORK"/Telex: 234767
-2-
After we hear from you and others, another document might be circulated.
If the response justifies it, we could call a meeting later in the year
to seek consensus on fundamentals.
Sincerely
Chairman of the Board
OLF:jm
Encls.