Improving Agriculture’s Global Competitiveness and Profitability Discussion Comments Barry Goodwin

Issues and Questions: Global competitiveness versus U.S. profitability—are they compatible? –Production of some commodities may be more efficient elsewhere (e.g., sugar, rice?) –Policy plays important role in determining “profitability” of U.S. agriculture- around 50% of net income in recent years Biotechnology— –Consumer acceptance, labeling, trade disputes, intellectual property rights, etc. –11/3 AP Headline “Sales of cloned cattle multiply”

Policy Questions: Policy distortions are critical-- $190 billion U.S. Farm Bill A fundamental question: –What would competitiveness and profitability look like in a different policy environment? Policy and “Profitability” — Whose profitability? – Close to 50% U.S. farmland operated by tenant –$1 payments raises rents by $0.80 –Land values capture policy benefits WTO Reforms—what is the outlook? –JIE paper of Andy Rose concluded WTO had little effect

Emerging Market Players: China –Much potential for growth as export market –Accession to WTO should constrain government South America –Major growth in exports, fundamentally changing world markets Expanding EU –Poland, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Slovakia, Slovenia, Cyprus, and Malta FSU (except meat, exports down)

China Source: ERS China Briefing Room

Example: S.A. Soybeans

Questions to Ponder: What is the outlook for policy reform? Who really profits from policy benefits? What is the role for private versus public R&D and education funding? WTO, G21, U.S., and E.U.—where are we going? Biotech acceptance and regulatory issues