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U.S. Department of State

Diplomacy in Action

Meeting Agricultural Challenges


Remarks
Jose W. Fernandez
Assistant Secretary, Bureau of Economic, Energy and Business Affairs
America's Heartland Annual Advisory Board Meeting
Washington, DC
November 30, 2011

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Good morning. As Michael Sanford just explained, we met in Iowa in October, which was my second time there and it is fast becoming a place I love.

In the past few years we have come to associate words like “economy” and “business” with nothing but bad news. But I don’t need to tell you what the business community is feeling. The surprising and interesting thing about my job, however, is that we actually get to spend a lot of time talking about good news and the exciting initiatives we have going. And agriculture is absolutely one of them.

Now, I am a city boy to the core. My kids tease me that I can’t even grow a tomato in the backyard. I tried to grow green beans a few years ago. They have not sprouted yet, but I still have hope. As Assistant Secretary, however, I have traveled extensively and had the opportunity to spend time on farms in Zambia, India, and Iowa. Despite the lack of calluses on my hands, we still have a role to play and can contribute to the dialogue.

The Challenge

Before I get too far ahead of myself and let my enthusiasm for my work get the better of me, I want to take a moment to frame the real issue that we who take a true interest in American agriculture face in the years and decades ahead.

The world needs more food. Today, there are 7 billion people in the world and nearly 1 billion of them—that’s one in seven people globally—suffer from chronic hunger. The UN’s Food and Agriculture Organization tells us that we will see a 70 percent increase in food demand by 2050, when the world’s population is expected to exceed 9 billion people. Already, the FAO estimates a quarter of all land is highly degraded, a trend which must be reversed to meet the challenge of feeding the global population. What does this mean in the United States? Here at home, we have been able to accelerate productivity and thus lower food prices, but in order to meet global needs, the world needs to speed up the rate of productivity growth by another 25 percent annually, according to the 2011 Global Agricultural Productivity report of the Global Harvest Initiative. We need to achieve that growth despite climate disruptions, severe water shortages in some areas, flooding in others, increased salinity of soil, and the necessity to reduce the environmental impact of current agriculture practices.

The Roadmap

What do we at the Department of State do to contribute to a solution and assist in moving American agriculture to meet these challenges?

First, we help to break down trade barriers. This happens in our work in promoting Free Trade Agreements as well as more behind the scenes discussion with officials to assuage fears about removing barriers to trade.

Second, and closely related, we conduct outreach to public officials and the media to better inform them about biotechnology and agriculture issues. That’s what took me to Iowa in October.

Finally, we promote private investment, because when the private sector takes an interest in a problem, it means that people with a real stake in the issues can contribute to a solution.

Let me go into each of these in more detail and highlight for you some of the good news that I promised at the beginning of my remarks.

Breaking Down Trade Barriers

Promoting fair trade on a level playing field is one of the most important ways we address the challenge of contributing to a prosperous future.

The agricultural sector is a key component of our overall economy. New figures just released demonstrate that in fiscal year 2011, thanks to the productivity of America's farmers, ranchers and producers, the American brand of agriculture is surging in popularity worldwide. Today farm exports support well over one million jobs here at home, and agriculture is one of the rare industries that achieved a trade surplus that hit a record of nearly $43 billion.

To support more good news on agriculture in the future, we recently concluded three new free trade agreements with Korea, Colombia, and Panama. As you know, global trade in agricultural products is a highly competitive arena, and there is some debate about who will benefit and who will lose under these free trade bills. But a recent USDA study demonstrated that free trade agreements increased trade among member countries in the world agricultural marketplace.

Conversely, the same study showed that trade often contracts between non-member countries when a new agreement is implemented. This suggests the large number of agreements that do not include the United States erode the U.S. presence in foreign markets. Only one quarter of around 300 free trade agreements globally include the United States. Let me illustrate this effect with an example. In 2008, the United States was the main supplier of corn, wheat and soybeans to Colombia, with nearly three-quarters of the market share. By 2011, however, our market share fell to just over one-quarter. What happened?

What happened was Colombia and Canada implemented a free trade agreement. Even before the official implementation, wheat importers in Colombia had already switched to Canadian suppliers because duties added an additional 66% onto the price of U.S. wheat. We hope that with the implementation of our free trade agreement with Colombia we will see a reversal of this phenomenon.

Just yesterday, South Korean President Lee signed a package of bills needed to implement the free trade agreement with the United States that President Obama signed in October. This agreement will eliminate tariffs on U.S. exports entering Korea, which average 53% on agricultural products. The agreement also lays out a framework to tackle other barriers to U.S. exports, even those that might arise in the future.

Another aspect of trying to level the playing field is in science. While the United States strongly supports the right of other governments to protect their people and interests from the inadvertent import of pests and diseases, sometimes governments impose trade barriers that are not grounded in science.

For example, U.S. ranchers produce some of the highest quality beef in the world. Yet some of our most important trading partners impose unscientific restrictions that limit our access to those markets.

Japan, for instance, prohibits the import of U.S. beef from cattle more than 20 months of age. China imposes an effective import ban on all U.S. beef. And Taiwan has rejected shipments of U.S. beef containing trace amounts of a U.S.-approved feed additive that helps produce leaner meat.

We at the Department of State work in cooperation with USTR and USDA to urge these countries to reopen their beef markets in a manner that is based on science, that is consistent with international guidelines, and that is commercially viable. We’re seeing our efforts pay off, and we welcome the news that Japan has decided to consider—you have to take small steps—easing its beef restrictions.

Outreach to Public Officials and Media

This brings me to the second way in which the State Department supports agricultural interests, through outreach to public officials and media.

During the past year, I have been reaching out on biotechnology to the African Diplomatic Corps. In October at the World Food Prize in Iowa, our Bureau hosted about a dozen African Ministers of Agriculture to participate. In addition to our official schedule, we took them on a bus tour to an Iowa farm and spent some time at Pioneer Seed. Seeing fields of drought-resistant corn and hearing about seeds that will grow more nutritious cassava is more persuasive than listening to me or just about anything we could tell them in a stuffy meeting room. Several participants expressed that they wished more of their farmers and journalists, in addition to their politicians, could see this kind of biotechnology in action.

At the end of the events, we asked the ministers to consider how we could move forward together to advance biotechnology in their respective countries. As a result, we now have a core group with which we are working and for whose individual situations and needs we are actively cooperating to address.

During these talks and in recent trips to South Africa and Zambia, we’ve discussed the need for countries to implement better regulatory systems. New products such as drought-tolerant corn and disease-resistant bananas are waiting to move from public sector labs to the farmer and eventually to the market.

We spent a lot of time talking about how in order for products to thrive, we need to help countries establish and reform their regulatory systems to ensure that such systems are science-based, responsible, and rigorous yet not onerous, requiring only the modest resources within the means of most developing countries. Doing so will ensure access to advance seed technologies and will pave the way for U.S. agriculture companies looking to do business in Africa. They are afraid of how their political careers would be affected, so we should engage farmers and universities to talk to each other.

Again, we are engaging officials and local media with the hope of dispelling some of the myths regarding biotechnology. In India where I am going next week, for example, the public is skeptical about the benefits of biotechnology. However, conservative estimates for small-scale farmers indicate that the use of BT cotton has increased profits by 88 percent—nearly double what they were earning before modified strains were introduced.

In Indonesia we sponsored a biotech forum because they found that they were self-sufficient in rice production unless there was a famine or drought, at which point other countries like the Philippines would buy all of their stock.

Zambia is another example. In 2002 Zambia rejected U.S. aid shipments at the height of famine stating that it was “poison” because the shipments contained corn produced through genetic engineering. A lot of people died of starvation because of this fear. Just recently, however, the Minister of Agriculture there indicated that the government will be consulting with stakeholders about the possibility adopting genetically modified (GM) cotton seeds.

Promoting Private Investment

Our work in breaking down barriers to trade and working with public officials and the media paves the way to the crucial third component of the Department of State’s work to promote agriculture: promoting private investment.

We work with the private sector to encourage investment and cooperation with countries that need its help in modernizing and creating a more efficient agricultural system. Companies like Monsanto and DuPont have an important role to play in this area. Other companies are also seeing the potential in Africa, and are accordingly helping to address things like post-harvest losses and other challenges.

Our principal objective is to ensure that sound legal and regulatory systems exist in several key countries in Africa, thereby creating fertile ground for investment and innovation, particularly in biotechnology. As we know, such structural changes will take time and concerted effort to come about. However, it is our hope that with our continued engagement of host governments, industry, the public, and the media on the significant benefits of biotechnology for Africa, along with focus and perseverance, we can tear down the barriers that have long kept this technology out of Africa. These efforts can begin to build the foundations that will allow Africans, like their Asian counterparts, to reap the real benefits of biotechnology. To this end, this coming year we look to provide State Department funding for programs identified by U.S. missions in target African countries that contribute to realizing this overarching goal.

We know about the exciting developments in agricultural biotechnology. Researchers around the world are already working on the next generation of biotech crops, like cassava and rice, to increase their vitamin, mineral, and protein content. Work is also well underway on crops with a wider array of benefits for farmers, like drought and salt tolerance and nitrogen-use efficiency, to address challenges due to climate change.

At the Department of State, we work to promote open markets and science-based regulations that will pave the way for use of these technologies. For example, in Indonesia we sponsored an Agriculture and Investment Forum and a workshop on agricultural biotechnology, capitalizing on Indonesia’s increased political interest in the technology. As a result we were able to expand the number of approvals of biotech products, aiding Indonesia’s food security and expanding the potential for U.S. exports in Indonesia.

Next year we are going to focus on five to seven countries in Africa to work with them on creating a regulatory system, talk about what they need to do to encourage private investment, and especially engage the elite and government.

Conclusion

We have talked about the problem of the need for more food globally. We have talked about some of the things that we at the Department of State are doing to address this issue through our work in breaking down trade barriers, working to inform public officials about the benefits of science-based agriculture, and promoting private investment. We have talked about some of our plans for the near future.

In March, I went to a Frito Lay factory in Kolkata. Frito Lay there has worked with farmers to grow crops of the right potatoes for their factories, set a price so farmers know what they will receive, and bring those potatoes directly to the factory for sale. They don’t have a 30 to 40 percent loss in trying to market their products. I talked to one farmer who had brought his son along with him for the day. He told me that the system worked really well for him. “Why should I not take advantage of this when it has such material benefits for my son and his future?”



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