THE WHITE HOUSE
Office of the Press Secretary (Little Rock, Arkansas) ________________________________________________________________________ For Immediate Release July 18, 1998
PRESS BRIEFING BY SECRETARY OF AGRICULTURE DAN GLICKMAN AND ADMINISTRATOR OF AID BRIAN ATWOOD
8:05 A.M. CDT
MS. WEISS TOBE: Good morning. The President in his radio address this morning will make several important announcements about problems facing farmers in many parts of this country. Secretary of Agriculture Dan Glickman and Brian Atwood, Administrator for the Agency for International Development, are here to brief you on these announcements and answer any question you may have.
As you know, the radio address is embargoed until 10:06 a.m. and it will be piped into the briefing room.
SECRETARY GLICKMAN: Good morning, everybody. Following my few remarks I'm going to ask Brian Atwood, the Administrator of AID, to make some remarks. And we also have with us today Chris Goldthwait, who is the General Manager of the Commodity Credit Corporation, and Under Secretary of Agriculture Gus Schumacher, as well.
Let me just say that the President is actively engaged in the whole farm crisis issue and is taking executive action to strengthen the crisis afflicting certain parts of the farm economy. And he understands that while the general economy is good, and, in fact, it's the strongest in over 30 years, there are portions of the economy, particularly the farm economy, that are troubled right now. And in that context, when the President signed the 1996 Farm Bill he specifically stated that it did not provide an adequate safety net, particularly when times were bad and when prices began to decline. And this administration continues to advocate a comprehensive approach to helping farmers through this crisis. And this initiative that we're talking today is one part of that plan to try to help the farm situation.
The President's new program which he will be announcing today is a bold initiative to respond directly to one of the primary weaknesses in the farm economy, which is large surpluses, price depressing surpluses, which largely are as the result of weaker exports and an international economy which is not as strong as we would like.
Starting next week, USDA will begin buying wheat that then will be used for foreign food donations, opening new export channels for American farmers. This will be done under the authority that I have under the CCC, or the Commodity Credit Corporation, Charter Act, and it will not require any additional appropriations nor congressional action.
We estimate, combined with USDA as well as AID, that about 2.5 million tons of wheat, a little more than 82.5 million bushels of wheat are worth approximately $250 million will be used. However, USDA figures on the current wheat surplus, when measured as the stocks-to-use ratio for this year compared to the last 10 years -- that tells you how much wheat we actually have compared to what we will use -- suggests that substantially more than 2.5 million tons might eventually be used. But the first tranche, the first goal, is 2.5 million tons. If other commodities begin to show similar surpluses, the program will be used for those surpluses as well.
The price effects on this action may vary, but our analysis of historic trends suggest moving about 2.5 million tons, or 82.5 million bushels, of wheat from the market would boost the price of wheat somewhere between 10 and 13 cents a bushel and would probably have some impact on the price of corn as well.
We intend to stage the purchases strategically to sustain and to maximize the price effect, and we intend to begin this process immediately, next week. The first five recipient countries -- and Brian Atwood will talk about that -- will include Ethiopia, Eritrea, Indonesia, North Korea, and Sudan -- countries that currently cannot make commercial purchases from the U.S. And I want to repeat, these purchases are being made for those countries that cannot purchase wheat commercially from the United States. As further assessments are included, other countries may also be included.
Today's announcement is a first step, but the President strongly believes that we must do more to deal with this farm safety net. As you know, the President has strongly endorsed the language offered by Senator Conrad in the Senate which would add approximately $5 million for disaster related emergency spending, building on crop insurance and other programs that we have. And I'm pleased to note that the Speaker yesterday indicated positive words for this particular announcement. We are also looking at other things in terms of crop insurance, in terms of our own programs to deal with a variety of problems.
I also point out that last year we recommended that deficiency payments, or actually market transition payments, that farmers would get be advanced, and we also recommended that on April 4 of this year that they be advanced. We're pleased that the Speaker has announced that he would move legislation to advance those payments. I would point out that is no new money, however. That is money that was going to be paid out anyway in December and January of this year, and what the Speaker has proposed, which we support, is that farmers will be given the option of moving that up about 45 days, until after the end of September, so into this next fiscal year anyway. And that may be helpful for some farmers at their option. But that is not a fundamental answer to the problem of getting price up and dealing with the disasters that farmers have to face today.
So we welcome those steps, the steps that we're talking about today. We'll begin to have much more profound effect on the farm economy and we'll also bridge the gap where the surpluses can go to help hungry people, needy people around the world as well.
So I would like to call on my colleague, Brian Atwood, the Administrator of AID, for his comments in this regard.
MR. ATWOOD: Thank you, Mr. Secretary.
Let me just say that for those of us in the humanitarian relief and emergency food business, this has been one of the worst years on record. We've had the El Nino drought; we've had a larger number of conflicts than usual; we've had the Asian financial crisis that has caused, in the case of Indonesia, the economy to virtually collapse. And as we reach the end of the fiscal year here, most of our Title II resources that we use for emergency food have been depleted.
So we have a confluence of factors here that I think are very favorable from our part of view in order to respond to the world's needy. We have here a food surplus that is driving food commodity prices down, and overseas, we have serious starvation and famine and a real need for the food that the American farmers can produce.
Let me just give you some examples. In his radio address, the President will refer to Indonesia and Sudan in particular. In Indonesia, we have a country of about 200 million people; by the end of this year we will see approximately 95 million people fall into extreme poverty. That means they'll be making less than a dollar a day, they will be unemployed, they will not be able to purchase food.
Indonesia has a requirement for food purchases outside its own country of 4 million metric tons, so they're not able to purchase that food, and so they have a very dire need for the kind of food that the Secretary has been discussing.
In Sudan, we have 1.2 million people that are currently at serious risk of dying. We have -- you've already seen television photographs of people dying in the Bahr al Ghazala area of Sudan right now. We have a serious problem of getting food to them. We, however, now, have coincidence of a cease-fire that has been called by both sides in the war in Sudan. So we have an opportunity now to get food into that region and the rest of Sudan. There are nine other countries, mostly in Africa, that have very serious shortages of food, and this food and, perhaps even more that might be forthcoming later, will be of real use to the people that are suffering from famine and the like.
So this is, again, a very good confluence of interest here. We can both help the American farmer and in the tradition of the United States, provide humanitarian relief to the needy and the developing world. Thank you.
SECRETARY GLICKMAN: Open up for any questions that anybody has.
Q Mr. Secretary, under what program, CCC program, will this all fall under?
MR. SECRETARY: Well, it operates under the CCC Charter Act, which was enacted in 1948, and it gives the CCC broad authority to engage in the buying and selling and transporting of farm commodities and products relating to farm commodities and related facilities. It's very broad authority. And we have very great flexible authority in order to operate under that act. And over the years it has been used to carry out a number of programs. In fact, the Export Enhancement Program and the Payment In Kind program were first authorized under the CCC Charter Act, and they were then separately authorized and appropriated as individual type programs. But we believe that the authorities are clearly there.
And what has happened to make this more realistic now is that in 1986 and 1987, the surpluses and the stocks-to-use ratios were in much different circumstances than they are right now. That is, in '86 and in '87, we were talking about very small stocks-to-use ratios and very low carry-overs. But we have had a combination of extensive production both at home and around the world -- dramatic enhancement of production. And then coupled with this continuing extraordinary hunger that continues to exist.
And one of the things that people constantly ask me about, both in farm country and other areas, is why can't you get this grain, these surpluses, to those hungry people. This is largely the statute to do it, and we do have a confluence now of large surpluses and the wherewithal to get it to hungry people. And working cooperatively with AID and the other agencies of government, the President just says, marry these two things; get this done as quickly as possible. It will help farm programs, it will help farm prices to some extent; but it will also, perhaps, resolve some international social problems.
Q I notice the President does not mention seeking authority from Congress for fast track this year, and he talks about IMF and so on. But can you explain why he's going to submit it?
SECRETARY GLICKMAN: The President strongly supports fast track, but the most pressing problem right now, short-term, is IMF funding assistance, because that will make the difference in the very short-term in terms of commodity sales overseas.
We want fast track authority to enter into trade agreements. I worked very hard on this in this room to try to get the votes before. And we obviously continue to want that. But from a priority perspective, from a more emergency perspective, the IMF assistance is number one on the list. And we just provided some assistance to Russia, as you know, out of the reserve fund. Not much money is left in that fund to deal with problems dealing with international and country-wide economic and currency problems.
So IMF is number one in terms of its significance to American farmers and American businesspeople in the very short-term. And I think the President recognizes that there are a certain number of things that Congress can probably end up doing this year before adjournment. And he has not backed away from his commitment from fast track, but he is, I think, more concerned about the emergency nature of getting IMF assistance finished right away.
Q How will you determine which farmers you'll buy the wheat from?
SECRETARY GLICKMAN: Chris Goldthwait is our CCC General Manager, he'll probably tell you a little more about the logistics.
MR. GOLDTHWAIT: Many, many of our food aid programs rely on open public tenders that are held by the Farm Service Agency out of their Kansas City office, so --
SECRETARY GLICKMAN: That's part of USDA's operation.
MR. GOLDTHWAIT: So they will simply issue a tender, and they will specify the qualities of wheat that they are seeking. And those that own the wheat will bid to fill the tender.
Q Is it your expectation what type of wheat that's going to be? Do you have any idea?
MR. GOLDTHWAIT: I suspect that it will be a variety of classes of wheat, depending on the needs of the needy countries that are targeted. There will be some soft wheat, undoubtedly, involved, but there could also be hard wheats.
Q Will it be big farmers or small farms where it will come from?
MR. GOLDTHWAIT: The wheat will not be purchased directly from farmers, but be purchased from the grain elevators and the companies that are the conduits to the farmers.
Q Do you have a date set yet for the first tender?
MR. GOLDTHWAIT: We don't have a date for the first tender, but we think the tendering could begin within a week to 10 days' time.
Q And then how long would it take? How long to move out this 2.5 million tons?
MR. GOLDTHWAIT: The initial shipments could come as soon as 60 days from now. They will continue for some time, but might be completed in three to four months.
SECRETARY GLICKMAN: We want to move this as quickly as possible.
Q Mr. Atwood said that there was a need in the country of Indonesia alone for 4 million tons of grain per year, but you've said you've just announced a program that's going to release 2.5 million tons to five countries. Couldn't you make the argument that this is just a minuscule effort to help the farmers and a minuscule effort to help needy countries?
SECRETARY GLICKMAN: Well, I'll let Mr. Atwood talk more about Indonesia, but first start by talking about that 2.5 million tons is a lot of grain logistically to move in humanitarian circles around the world. You have port facilities, You have shipping, You have countries that often don't have infrastructure to deal with it. As I said, I'd like to increase this amount if we can, but this is the first tranche.
The second thing is that we have said that we're not going to interfere with normal, viable, commercial sales. So some of these countries may be in a position to purchase part of their needs commercially. And we have several programs in the U.S. using normal credit type of operations to do that. Remember, this is just humanitarian assistance. But again, if we find the need continues to be as great as we think it is, and we have the surpluses available of either wheat or other commodities, we will use them.
MR. ATWOOD: Exactly the point, that in a normal year, when Indonesia's economy is functioning appropriately, with -- they've been experiencing a lot of growth in recent years, they purchase about 4 million metric tons outside. They're going to have a serious shortfall. They won't be able to purchase that.
And as I mentioned before, 95 million people living in extreme poverty will not be able to buy that commercial wheat or farm products of various types -- rice is another major commodity there. So we're talking about their inability to purchase that amount of food. And we've got to figure out what that shortfall is and help them, along with other countries, obviously.
Q Given the fact that the North Korea food shortage is still very acute, is it likely that North Korea will get a sizable donation from this program?
MR. ATWOOD: We really have not made a determination on that yet. As I mentioned before, there are nine countries that are on the list for consideration to receive wheat from this 2.5 million metric tons. And we're looking very seriously at North Korea and a number of countries.
Q Are there more than those countries --
MR. ATWOOD: Yes, they are.
Q Just as a follow up to that, can you explain a little bit about the criteria in which you used to select those countries and whether or not there was any concern about North Korea's nuclear proliferation policy -- if any of the politics of that particular country came into play or if that did not?
MR. ATWOOD: It did not. We looked very, very seriously at the humanitarian crisis in these countries. Obviously, we have a lot of interest in all of these countries, and North Korea is not a country with which we have very close international relations.
But, nonetheless, we looked at the humanitarian need. We look at the degree of starvation in these countries. In the case of North Korea, we've responded mainly because their agricultural system has virtually collapsed. They are, however, on the verge of a new harvest, and so we have to really analyze what the need will be. So we haven't made a determination yet with respect to North Korea.
Q Mr. Secretary, you've been around the country more than some of us in Washington and you're going next week to Carolina to look at the situation. How bad is it out there? We heard about the different areas, but how bad is it really?
SECRETARY GLICKMAN: Some parts are very bad. Obviously, the Dakotas gets the most attention because of the extreme nature of the variety of crop disaster problems, from cold to wet, to test to drought. And that's also in western Minnesota. But we're seeing some of the most extraordinary hot-dry conditions in a generation in west Texas and in the Southwest. And then I'm going d own to the Southeast to take a look at the conditions in South Carolina. But I've talked with Commissioner Irvine of Georgia, and I was in Florida myself outside of Daytona Beach.
On the other hand, there are parts of this country that the weather is exceptionally good. My own state of Kansas, by and large, has had very good weather, had some of the highest wheat yields in history. So far, except for perhaps too much rain, the Central Midwest has been pretty good. But as often happens, disaster is rather ad hoc, and it has hit people in rather unusual and extreme ways. And as opposed to previous years -- this is important to recognize -- up until 1994, Congress would generally respond to crop disasters annually through what was called Ad Hoc Disaster Assistance. A lot of people began to rely on those ad hoc payments as a disaster would come up.
In the mid-'90s, we replaced that program -- '94 -- with a crop insurance, an all-risk crop insurance program that, quite frankly, is not working as well as I would like to see it work. Like a lot of insurance, it tends to work well if you never have a claim. But if you have a claim or repeated claims, it tends to work to your prejudice, particularly if you don't have production history.
We're working on this ourselves, internally, but one of the other things the President instructed me -- if you read his letter to Senator Daschle -- he instructed me to augment our ways to improve the operation of the crop insurance program to make sure it worked satisfactorily in an all-risk type capacity.
And what we have particularly seen in the areas like the Dakotas and the Texas High Plains is repeated disasters, and where repeated disasters occur, that tends to reduce payment rates under the current crop insurance program.
Q In Texas, as you know, Governor Bush yesterday, I think, announced he wants to declare the whole state a disaster area in order to partake in various agriculture programs. Will this speed your processes along, or how will that affect --
SECRETARY GLICKMAN: Well, we get these disaster requests county by county. Texas has an awful lot of counties. And it may help if it's done on a larger area. I can't -- this money that we're talking about that's in a Senate bill, obviously, will help. As you understand, most disaster declarations do not trigger anything except low interest loans and related things. They don't trigger in the old ad hoc disaster assistance. They do trigger in both some USDA and SBA authorities.
But maybe doing it statewide might accelerate the process. I have instructed our folks to move these disaster applications as quickly as possible. I mean, I don't want any delays to take place. But a lot of folks are finding it rather depressing to note that other than crop insurance, there really is no disaster program out there that is statutorily authorized anymore, and that crop insurance under law must be run in an actuarialy sound way. So we basically have to run the crop insurance program as if we were running, in a sense, a commercial insurance program -- with some exceptions.
And I think that's where a lot of farmers are finding it unsuitable, certainly compared to what we had in decades passed. And that is one of the things the President has asked me to look at, is what changes can we make in the crop insurance program to make it more suitable.
Q Secretary Glickman, do you expect to go beyond grains into beef or --
SECRETARY GLICKMAN: Well, we will see what the country's needs are. There's been some discussion that wheat flour may be used in some areas. We have the authority to purchase what, Chris --
MR. GOLDTHWAIT: Any commodity in surplus, but we would focus on the tradition food aid commodities.
SECRETARY GLICKMAN: Any commodities in surplus -- as he said, we focus on traditional food aid commodities because they are obviously there, easier logistically to move, to transport, the infrastructure is there. I do know that flour has been one of the items that we have heard that some folks may find that they need.
Q Also, you were around during the last farm crisis in the '80s. How do you compare what's happening today with what was going on then?
SECRETARY GLICKMAN: Well, I've been around about three of them, actually. I was there in the '70s, and I would say that we've had -- one of the things we've had is we've had two fairly good years in agriculture in '96 and '97, So we have not had the dramatic reduction on land values. And by and large, the credit situation today is better than it was back in the 1980s. But saying that, you've had a precipitous fall in prices, a very rapid fall in grain prices, and you do not have a loan program, the commodity loan program acting as any kind of a floor on price today as it once did.
So I think it creates a potential vulnerability out there which could be as great as the previous crises. As of to date, it is particularly bad if you live in areas that have been hit by a disaster, however. That is why it is so imperative that Congress pass the disaster assistance -- the indemnity assistance that Senator Conrad and others have pushed in the Senate bill. That is something that must be done to save thousands of family farmers in the very short-term.
And I think the action the President is taking today will provide some longer-term bullishness and stability to the market price. But we have a lot more to do, to sit down and, hopefully, in a bipartisan effort -- work together with Congress to find creative, positive ways to strengthen the basic farm economy that's out there, both from a trade and export situation as well as from a domestic price situation.
And as I've said many times before, as the President said when he signed the 1996 Farm Bill, he said there are some very good things in this Farm Bill -- the planting flexibility provisions, the rural development provisions. But it did not provide much of a safety net when prices went way down. And ironically, a lot of money was paid out at a time when prices were high.
And so I think the President's words are coming back to be quite prescient, and we're just going to do what we can to work together with the Congress to see if there are some structural things we can do with this farm bill to ease the situation over the long-term. But these steps we're talking about will do quite a bit of good over the short-term.
Q The NAACP recently met with Mr. Gore and said that black farmers were suffering disproportionately more from the crisis. Does this initiative in any way address that?
SECRETARY GLICKMAN: Not directly. But what it will do is, of course, a lot of minority farmers have been hit by disasters in the same way that non-minority farmers have been hit. I was down there, I addressed the NAACP, myself, during that meeting. And, of course, we've seen a larger, percentage-wise, loss of minority farmers than non-minority farmers. But I would say that all farmers, all family-sized farmers had great difficulty over the last 20 or 30 years, particularly in coping with volatile prices and crop disasters. And that's one of the reasons, particularly for smaller and more vulnerable farmers, that we have a crop insurance and a risk management system that's suitable for them.
Q Just to follow up, I think both the House Ag appropriations bill and the Senate appropriations bill increase the window of time of the statute of limitations so that people who feel that they have been discriminated against or wrote letters, what have you, can pursue a case in your civil rights office.
SECRETARY GLICKMAN: Correct.
Q And when you spoke, though, at the meeting in Atlanta, were you not saying that that gives everyone a chance, who feels that they have a complaint, but they need to have some proof before they can receive any sort of settlement?
MR. GLICKMAN: During the 1980s, the Reagan administration disbanded its Civil Rights Enforcement Office. And for many years, claims, complaints were lost in the bowels of the Department of Agriculture and elsewhere. And the Justice Department has determined that there is a two-year statute of limitations that applies under the statute, which allows the government to provide affirmative cash recovery for people who've been discriminated against. And that is not waivable.
So the administration has strongly supported an effort to give people an additional two years to file their cases -- that's basically waiving the statute of limitations. It is in both the Senate and the House appropriations bill. And because of that, my believe is it will be in law. However, that is not an automatic determination of liability. People who file will still have to document their cases. And there will be a process by which they will either be accepted or rejected, as we have done previously.
END 8:45 A.M. CDT