RENO, Nevada Ñ American president George Bush has a new budget proposal that isn’t sitting well with that country’s wheat producers.
Bush’s rollback in crop program payments is their primary concern, but producers are also anxious about the changes Bush is proposing to food aid.
In his 2006 budget, Bush slashes P.L. 480 Title II spending to $964 million from $1.35 billion in 2005. Most of that money will be reallocated to a different food aid program run by the state department.
That program is money-based rather than commodity-based, which means the $300 million may be used to procure food abroad rather than buying it from U.S. farmers.
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One aid expert said a large portion of the money likely would be spent in Africa, buying locally grown products.
Bush’s plan has upset one of the wheat industry’s main government lobby organizations.
“The Wheat Export Trade Education Committee has already begun strategizing with other commodity groups on how to oppose this new proposal,” WETEC executive director Barbara Spangler told delegates attending the North American Grain Congress.
Food aid represents about 10 percent of all U.S. wheat exports, so a 28 percent cut to that program is a serious blow.
Canada and other major wheat exporting regions have attacked American food aid programs, arguing they are simply another form of subsidy for getting rid of surplus commodities.
Critics say recipient countries turn around and sell some of that food into other markets at cheap prices, using the money they raise for more pressing development needs. That drives down world wheat prices.
That is why a clause was included in the World Trade Organization’s Doha Framework Agreement to establish international rules that would prevent such market-distorting effects of food aid.
Ron Krystynak, agriculture counsellor at the Canadian embassy in Washington, D.C., said Bush’s budget proposal suggests his administration may be willing to accept those restrictions.
“It sends a signal that the U.S. is prepared to discuss food aid as part of their WTO negotiations.”
But he pointed out that the proposed budget is far from a done deal.
“It’s really the president’s wish list. It then has to go to Congress and it’s Congress that determines what the budget will be.”
Senate and House of Representatives agriculture committee members are already pushing back against the proposal and commodity groups are cranking up lobby efforts.
“The EU and other countries have targeted our programs and have insisted that donations are grant only, rather than commodity donations. WETEC is working with U.S. negotiators to help make sure that these efforts fail,” said Spangler.
Mary Chambliss, an official with the U.S. foreign agricultural service, said food aid is such a small percentage of total world wheat trade that it couldn’t be market distorting.
