I am pleased to be here today and to able to talk about the sharp improvement in world meat export prospects that appears to be occurring in the World Trade Organization. The WTO’s current trade liberalization talks, the Doha Round, have suddenly taken an important turn for the better, after a virtually complete breakdown a year ago at Cancun, Mexico.

Six Months Ago: Farm Trade Gridlock

Over the past 50 years, the world has liberalized its non-farm trade, with tariffs on manufactured goods reduced from about 40 percent to 4 percent over the past 50 years. As a result, world non-farm trade has increased perhaps 15-fold in value. Farm trade has barely doubled in volume over that time period, and only recently has rising Third World meat demand produced any significant trend in farm trade value.

Six months ago, I expected the world’s pervasive farm trade barriers to continue, virtually intact, for another five to ten years. As a result, I was predicting a crash of land values in farm exporting countries, especially in the United States and Western Europe as their subsidy funding dried up. I was forced to predict extremely slow growth in all farm exports. I expected the densely populated and increasingly affluent countries of Asia to continue overcharging their consumers for “national food self-sufficiency”-achieved only by hiding behind the massive food import barriers that have been typical of the world since the 1860s.

Six months ago, I predicted that only Brazil would gain farm export volume in the coming decade. However, I expected that Brazilian farmers would gain only minimally from their small and low-priced export sales expansion. And this only because Brazil’s extremely low land costs put it ahead of subsidized farmers when competing for the small increase that would be allowed in world food and feed exports.

Today: The Beginnings of Real Farm Trade Reform?

Now, fortunately, the picture looks far more optimistic-both for the world’s farm exporters and for the billions of consumers in Asia.

Until recently, the European Union said it could make no changes in its farm subsidies. Now, the EU has agreed to end its massive, long-term program of farm export subsidies, as part of a liberalized set of WTO farm trade regulations.

The United States, after putting in place a major increase in its farm subsidies just two years ago, has now agreed to radically reduce its farm subsidies-also as part of a WTO farm trade liberalization.

The developing countries, after their much-publicized walkout on the WTO talks in Mexico, are back at the negotiating table and working seriously toward the first-ever liberalization of farm trade since Napoleon III reduced French food tariffs nearly 150 years ago. The likelihood is that the WTO will soon require more openness to farm imports in the densely populated Asian countries.

Bullish World Demand for Livestock Products

The French in the 1860s were quickly frightened into re-installing their tariffs by the advent of the steam locomotive and the steamship, which unleashed 500 million acres of additional farmland in such places as the Great Plains of North America, Western Australia, Argentina, and Brazil.

At that time, the only affluent markets in the world for farm commodities were a few cities such as New York and Paris. Western Europe quickly became terrified that its farming regions would be depopulated, with all of its food coming from overseas and the former farm workers standing in unemployment lines in the cities.

Today, the situation is far different. Most of the world’s good farmland not in Brazil is already growing crops. The future of feeding the world lies not in clearing more forest, but in using the farmland we already have more intensively.

Even more dramatic changes have occurred in the world’s consumer markets. Today, roughly 1 billion people are affluent enough to afford high-quality diets, and by the year 2050, we can confidently expect 7 billion affluent consumers. Only Africa, and to some extent the non-oil Middle East, are failing to participate in the modern global surge of prosperity. Non-farm employment is expanding much faster than farm employment, and will do so for the foreseeable future.

The intensification of farming will depend on stronger consumer demand (fueling somewhat higher real prices) to produce more food, especially more feed and more meat, from the existing farmland base.

The world is still rapidly increasing its demand for farm products, driven not only by population growth but even more by rising incomes. Twelve years ago, I predicted world farm demand would nearly triple by 2050. I expected the demand for high-quality foods-meat, milk, eggs, fruits, and vegetables-to increase five-fold.

Since then, total world demand for farm products has been increasing pretty much on that schedule.

World grain consumption has been increasing by about 18 million tons per year, world oilseed demand by about 7 million tons per year, and world meat demand by more than 5.5 million tons per year. To date, as in the past, most of the demand has been met domestically behind trade barriers.

Unfortunately for the world’s export farmers, virtually all of the demand growth has been occurring in Third World countries pursuing the myth of food security through national food self-sufficiency.

Unfortunately for the world’s consumers, virtually all of the demand growth has occurred at high cost, behind trade barriers that prevent rational use of the world’s scarce land and water. They also suffer higher levels of food insecurity because individual countries’ food production is far less stable than that of the world as a whole. Especially if they’re trying to rely on marginal farming resources subject to drought, flood, pests and diseases.

Unfortunately for the world’s wildlife, the continuing drive for national food self-sufficiency has left huge tracts of Third World wildlands at risk of being cleared for more unsustainable, low-yield cropping. For example, Indonesia has been clearing low-quality, species-rich land with massive erosion potential on the island of Kalimantan-to grow chicken feed. China is now forced to reforest millions of acres of steeply sloping land in the Yangtze Valley because stripping it produced more floods and soil erosion-and not much more food.

What Free Trade Can Achieve When Given the Chance

It’s no accident that the strongest growth in global pork imports has been in Mexico, where the United States and Canada got duty-free market access through the North American Free Trade Agreement. Mexico’s pork imports have risen by 155,000 tons per year in the past five years, to a projected 345,000 tons in 2004. Without NAFTA, Mexico, too, would have forced its consumer to overpay for domestic livestock products, even though Mexico lacks the rainfall to support expanded pastures and feed crop production.

Nor is it any accident that the strongest growth among pork exporting nations in the past five years has been in Brazil, where low land costs and the construction of new pork processing facilities have enabled Brazil to reach more export markets with processed products. Farm land values, and thus farmers’ costs, have been driven up in many of the other export-worthy countries by government farm subsidies.

Without farm trade reform, of course, the U.S. and European farmers have been at risk of their subsidy systems collapsing and their land values crashing to Brazilian levels, and the ancient competitive forces in agriculture re-emerged full force.

The new turn of events in the WTO seems to lift the pall of gloom that had re-settled over the farm export markets after the Cancun Collapse.

The World’s Fast-Fading Population Growth

The world’s population is still rising, but far less rapidly than in the past 50 years. Within the next 50 years, human population numbers will start a long slow decline.

Back in the 1970s, people were afraid of population growth. I can understand why. Agricultural research had just created the Green Revolution, which was tripling crop yields on good land over most of the world, except Africa. Famine was becoming outmoded. In addition, DDT and other synthetic chemicals and vaccines were radically cutting human death rates. Paul Ehrlich, author of The Population Bomb, wrote eloquently of his fears that human population would top 20 billion.

High-yield farmers were accused of “growing too much food.” We were seen as the root cause of global overpopulation.

Since then, we have learned that while poor farmers mostly have large families, affluent, urban couples have small families. We have learned that the countries which increased their crop yields the fastest also brought down their birth rates the most rapidly. Now, the world is moving rapidly toward good diets and urban affluence, and birth rates are plummeting.

Europe is now down to a fertility rate of about 1.7 births per woman, with Germany, Italy, and Spain at 1.2. (Italy is now offering a $1200 subsidy for 2nd Italian children, to ensure the country is not totally given over to Albanian and North African immigrants.)

In the Third World, birth rates have fallen 75 percent of the way to stability, from about 6.2 births per woman in 1960 to about 3.1 births today-with stability at 2.1 births. Fertility levels continue to decline rapidly in all countries. The UN Population Division has just lowered its peak projection for human numbers-again-to between 8 and 9 billion people. That still means a substantial increase in people, but not nearly the fearsome expansion predicted in The Population Bomb.

Rising Incomes: the Last Frontier of Farm Product Demand

In 2004, income gains for emerging economies are the last frontier of farm product demand growth. To date, my long-term demand growth forecast has been largely on target and Asia remains the key area.

China, with its massive population of 1.3 billion people, has been increasing its GNP by roughly 8 to 9 percent per year, with virtually no population growth. That has meant very rapid increases in consumer incomes. The “precious three” desired household purchases in China have changed radically from the 1970s (bicycle, digital wristwatch, and transistor radio) to the 1980s (telephone, TV, and refrigerator) to the current moment (cell phone, computer, and car). Yes, the Chinese will have cars, lots of them. They bought 2 million last year.

Chinese pork consumption increased nearly 70 percent in the decade of the 1990s, and is currently expanding by more than one million tons per year. So far, China has been supplying virtually all of that pork domestically. China is fostering domestic pork production with import barriers, high consumer prices and investments in its own animals and facilities.

Chinese pork imports this year will about match the EU’s pork imports. They will total a pitiful 70,000 tons, less than 0.2 percent of China’s annual consumption. China is now a member of the World Trade Organization, but the WTO farm trade rules have not yet required its members to open their farm commodity markets.

Perspective for farm imports: China has about 20 percent of the world’s population, about 7 percent of its arable land and a huge proportion of its economic growth.

India has been expanding its GDP by nearly 6 percent annually since it began to liberalize its economy in 1990, while its rate of population growth has been declining from 3.2 percent to 2.9 percent. That means India’s per capita incomes are now finally rising rapidly.

India’s milk consumption has been increasing by about 1.4 million tons per year, and its poultry consumption is also rising by about 8 percent per year. (Even India’s pork consumption has risen nearly 5 percent annually, though from a small base.) Again, the expanded livestock consumption has been met through domestic price supports protected by import barriers. However, in the last five years, consumer demand has been constrained by high prices. Milk consumption has increased only about half as fast in the last five years as in the especially high, government-set grain prices of the 1990s, partly because milk prices have sometimes been three times as high as on the world market.

India imports significant amounts of pulses and palm oil, but virtually no other farm products.

Perspective for farm imports: India has 17 percent of the world’s population and about 11 percent of its arable land and most of the Third World economic growth not occurring in China.

Indonesia, with 225 million people, has not recently achieved the 7 percent annual GDP growth it registered from 1990 to 1997. However, the economy has lately been expanding by 3 to 3.5 percent per year, and household consumption has been rising by 6 percent per year.

Indonesia’s poultry consumption has recently been about 50 percent higher than a decade ago, despite the economic ravages of the “Asian Collapse” of 1997. Indonesian meat consumption is heavily focused on poultry because it is a Moslem country and eats virtually no pork. (It does produce some pork on its northern islands to supply Singapore.)

Perspective for farm imports; Indonesia has 3 percent of the world population and only 2 percent of its arable land.

Combined, these three countries have 40 percent of the world’s consumers and less than 20 percent of its farmland.

Asian Incomes Will Continue to Rise, Especially in China and India

Fifteen years ago, the new phenomenon of rapid Asian economic growth was a startling development, seemingly shaky by its unprecedented nature. Eight years ago, the Asian Economic Collapse seemed to portend the end of a brief, soaring, unsustainable skyrocket of economic spurt and collapse. Today, in contrast, we see strong, continuing growth in both incomes and long-term prospects for at least the 2.5 billion Asians who live in China, India, and Malaysia.

The industrialization that started in Europe 200 years ago has been spreading, with increasing speed, around the world. It took Britain 70 years to double its living standards in the 19th century. South Korea did it in 15 years, and China in 10 years.

Growth is now so strongly embedded in Asia that it’s said the recent deliberate slowdown in Chinese GDP growth, from 10-11 percent to about 8-9 percent, will primarily stimulate higher GDP growth in India.

China has also successfully managed a massive employment shift in the last decade. Employment in the inefficient and money-losing state-owned industries has been reduced by 20 million, even as self-employment by Chinese businesspeople has risen by about 20 million. This is a huge movement toward increased Chinese growth in the future financed in major part by a rise in foreign direct investment. In 2002 alone, China received more than $52 billion in foreign direct investment, close to half of it from Hong Kong (i.e., the global Chinese community). That was more investment than in any country not in the OECD “rich nations” club. Chinese exports, already large, grew by more than 34 percent last year.

India is more and more integrated into the world economy. Until 1990, India was content with what economists used to call “the Hindu rate of growth,”-less than 3 percent annually. Its recent economic growth has been 5-6 percent annually, a little higher than its population growth. Since 1990, India has begun to unravel much of its bureaucratic red tape, and is taking much greater advantage of its strengths in textiles, computers, and most recently, modern medicine. India is now attracting patients who need major surgery, both from Third World countries that lack the facilities and skills to perform them, and from First World countries such as Britain and Canada where public health systems have long waiting lines and higher costs.

There is little doubt that the unleashing the energy and creativity of tens of millions of well-educated Indians will generate strong economic growth over the next decades.

The Problem of Moslem Extremism

Neither China nor India will be much hampered by Moslem extremism. In fact, they are likely to receive extra foreign direct investment as businesses try go avoid the negative impact of Moslem zealots in such countries as Pakistan, and Bangladesh-and perhaps even in Indonesia with its milder approach to Islam and its new democracy.

The Asian Development Bank estimated, before the terrorist attacks on the World Trade Center, that Asia could be producing 40 percent of world GDP by 2020 or 2025. Terrorism will necessarily slow down that timetable in South Asia’s Moslem countries. The need to re-establish the will of the moderate Moslem majorities in Asian countries could cost these societies as much as a decade, though it may be resolved in somewhat less time. Ultimately, there is little question that Asian societies will reject murder and violence as the guiding principles of their societies, as all societies have done in the past.

To date, however, the lack of representative government in most Moslem countries, and the fear of fundamentalist retaliation against moderate spokespeople, has stalled the inevitable debate about extremism and moderation among Moslems. The World Trade Center and the Pentagon became unlikely surrogates in the religious debate for control of their countries.

At the moment, it does not seem as though Moslem extremists are having a major impact on world meat demand, since Moslems have traditionally been too poor to eat much meat per capita. And, of course, they eat virtually no pork at all. Let us think more broadly, however, about the reality that Moslems are just as hungry for high-quality protein and the valuable micronutrients in livestock products as other humans. The surge in poultry demand in Indonesia since the Asian Collapse is testimony to this fact.

Moslems will eventually achieve economic growth. The competitive nature of societies virtually guarantees that they will. The replicated model of modern industrialization- and the massive, unprecedented decline in world trade barriers-will make this easier to achieve with each passing decade.

When the Moslem countries achieve economic growth, they will demand poultry, lamb, and milk, if not pork. Those commodities will require more feedstuffs. That will add Moslem demand to the already-apparent demand among Christians, Confucians, Hindus and Buddhists for better diets. The global surge will stimulate the demand for more intensive and productive use of the land and water in agriculture. This will then stimulate somewhat higher real prices to call forth the new farming efforts and investments.

The Pet Challenge

There will even be a pet challenge.

Brazil is already in the midst of a massive expansion of its pet population. There has been a one-third increase in dog and cat numbers in the last half-dozen years, and more cats and dogs are undoubtedly to come. Pet food statistics were not even kept until the last decade, but sales are rising rapidly in both volume and value as more affluent households want their pets to have “the best.” The only creatures that stimulate more intensive caring than children are pets. (And pets don’t argue or want the car keys.)

In China, with its one-child policy and rising incomes, we can expect a surge in pet ownership as people divert their parenting instincts to companion animals. The traditional Chinese pets were crickets and small birds, but with affluence we can expect Chinese people to stop eating dogs and put them on leashes. Pet stores will be a growth industry in China, as they already are in Brazil. We can expect perhaps 500 million companion cats and dogs in China in 2050, and their dietary demands will be added to the length of the world’s “grocery” list.

The pet challenge, like the better-diet challenge, will reverberate around the world.

The Farm Subsidies Were Already Shaky

The stifling effect of farm subsidies on world farm trade is a well-known story. However, the First World’s farm subsidies have been on shaky ground for decades. The first problem was rising yields, which not only increased farm subsidy costs, but produced massive food surpluses for export-even in Japan with its limited cropland.

More recently, the commercialization of agriculture has made it much harder for politicians to claim that subsidies are helping the “small farmers” of the world. However, politicians are very reluctant to stop buying votes with public funds.

Witness the United States in 2002. The U.S. was split 50-50 between Democrats and Republicans. Control of the entire U.S. government seemed to turn on a few farmer votes in the Midwest. To make matters worse, the federal budget seemed to be in surplus at the time, so there was no political constraint against increasing American farm subsidies. A lavish new farm bill was passed by the congress, and President Bush did not dare to oppose it.

Unfortunately for farmers, the 2002 election also proved that American voters were ready to hear about reforming our massive Social Security system. It’s basically a pyramid scheme, and we will soon have less than three workers to support each of the 77 million “baby-boom” retirees-an impossible tax burden for our younger generation.

Within the next five years or so, the United States will be forced to reform its entitlements for the elderly-Social Security and Medicare. The unfunded obligation on those massive social subsidies is so huge that a pay-as-you-go system would double Americans’ taxes. The outlook for farm subsidy money in Washington, D.C. after the current farm bill ends in 2007 is bleak.

Nor does Western Europe’s capacity to finance future farm subsidies look very promising. EU economic growth is currently less than 2 percent per year, and Germany has lately been achieving about half of that. Europe has not been creating many additional off-farm non-government jobs in recent decades, and there is no indication of a new flow of off-farm income that could be “painlessly” shared with EU farmers. Yet the EU has just taken in 10 new countries, millions of additional farmers and tens of millions of hectares of farmland. The EU needs WTO farm trade liberalization perhaps even more than the United States or Brazil.

My prediction is that EU expansion and WTO farm trade liberalization will lead to fundamental Common Agricultural Reform-keyed not to commercial production but to direct income payments favoring small farmers.

Who Will Be the Winners in the Export Markets of the Next Decade?

Unless the current WTO negotiations successfully lower the world’s farm trade barriers, there will be few winners in farm exporting over the next decade-and the winners will not win much. There might be modest gains for farmers who do not currently get very much government subsidy, and thus have been forced to keep their production costs low. The biggest of these winners are likely to be the South American giants, Argentina and Brazil. Of these, the biggest is likely to be Brazil.

However, slow market growth and low prices will not finance much improvement in Latin America infrastructure, the biggest weakness of most farm exporting countries.

The real “winners” in an unreformed farming world would be farmers in China, India, and other Third World countries where economic growth is raising incomes for formerly poor consumers. Their governments-and consumers-would likely continue overpaying for low-yield crops and the rape of the Third World environments.

In that sense, all of the world’s export farmers and all of its urban publics share a strong interest in farm trade liberalization. If Brazil, the United States, the EU and Third World consumers succeed in liberalizing the WTO farm trade rules, many people and many countries will be winners, in many ways.

Among the major winners:

Brazil, which has low land costs and relatively low labor costs, also gets relatively high yields. Brazil also has much of the good farmland not yet being cropped in the world. Most nations are pasturing only land that cannot be cropped because of arid climates, steep slopes, or short growing seasons. The U.S. Department of Agriculture believes that 70 to 90 million hectares of Brazilian pasture could be converted to cropland in the future.

Brazil’s ability to expand rapidly is constrained by its lack of infrastructure and a shortage of capital. Brazil suffers from high transport costs, because it lacks railroads, export-suited rivers, and even paved roads over much of its Western frontier. Nor will farm exports likely finance new railroads.

The United States has ultra-high yields and the world’s most cost-effective farm exporting infrastructure. Many of its farms are near low-cost river transport and the rest of them within reach of good railroads already built and amortized. Even its remote country roads are paved, and it has plenty of trucks. The U.S. has burdened itself less severely than Western Europe with high land costs driven by high farm subsidies. The U.S. also has about 16 million hectares of usable cropland in the Conservation Reserve.

Turkey, too, is capable of major increases in crop production. This is partly through the development of its huge new irrigated projects in the Upper Euphrates Valley, where it is creating the equivalent of a new California. Turkey also has the potential to sharply increase its dryland crop production through extending conservation tillage across its large tracts of semi-arid rainfed land. Conservation tillage could double dryland production, by radically reducing soil erosion, and retaining much more of the rainfall in the root zone of its fields. Turkey has now finally been promised membership in the European Union, a move virtually forced by the extremism in other Moslem countries. Thus Turkey will benefit from broader and cheaper access to capital.

Romania is farming with horse-carts and saved seeds, but it has the broad, fertile plain of the Danube Valley in its favor, and now is a new member of the EU. Expect Romania to radically increase the yields-and export potential-from its 10 million hectares of cropland.

Biotechnology: Wave of the Future?

The United States has doubled its yield of meat per acre of farmland in the past 30 years. This has been due to higher grain yields, higher soybean yields, more complete feed rations, better livestock pharmaceuticals, and better animal genetics. Pessimists, however, have said technology was running out.

On the contrary, America has just harvested a record-busting yield of corn and soybeans. Corn yields this year are estimated at nearly 8.9 tons per acre, on 30 million hectares of harvested land. The yield is nearly 13 percent higher than any previous U.S. corn yield average, but it fits the long-term trend of increase a slight gain of 2 to 3 percent per year. The soybean yield was also a record, but not by as much. It, too, fits the long-run trend of increase. Both crops obviously benefited from good weather-but it is also likely that they benefited from the new biotech seeds that permitted better, more cost-effective weed and insect control.

How much of this record yield was due to biotechnology? We don’t yet know.

We do know that China and India are getting much higher cotton yields, due to the improved pest control of Bt varieties.

I am impressed that Bt corn test plots in the Philippines outyielded farmers’ corn fields by 80 percent, testifying to the importance of insect control in tropical fields. Biotech has given us our first victories over plant viruses (in bananas, papayas, and sweet potatoes).

I am highly impressed by the new blight-proof potatoes bred in both the U.S. and Europe. The blight-resistance gene was discovered in a wild potato some 50 years ago, but it had defied efforts to cross-breed it into modern potatoes that taste good and yield well. Now, biotech will prevent a recurrence of the Irish Potato Famine in modern Asia. Will that encourage more densely populated countries to rely more heavily on the ultra-high food yields per acre of the potato? It’s too early to know, although Rwanda tripled its potato production in the 1990s.

In the future, if Europe wants to continue importing non-biotech soybeans, it may actually have to pay a premium to get them. Will that put EU livestock producers at a further disadvantage in world competition?

In almost any case, it seems likely that the rest of the world will proceed with genetically modified crops, and eventually even biotech animal developments.

The Organic Alternative

Many non-farmers have praised organic farming as the appropriate path for Europe and American agricultures. We can understand why they believe it. Affluent city-dwellers see modern agriculture as producing too much food while employing too few farmers. They think organic farming will solve both problems at once.

The reality is that few people want to be organic farmers; doing the hand weeding and the composting, being too often at the mercy of insects and crop diseases; and needing far more land to get the same food production.

In 1999, Denmark’s high-level technical committee on organic farming, the Bichel Committee, revealed (if only in the fine print of its report) that a true organic mandate would cut Denmark’s human food production by 47 percent. Its pork and poultry industries would be slashed 70 percent for lack of feed. Much of the countryside would have to be planted to green-chop forage, to be hauled to feedlot cattle, so their manure could be slathered over the countryside. All of this to replace the natural N from the air (which is 78 percent N) captured today by the Haber-Bosch industrial process invented in 1908.

If Europe went all-organic, it would probably not be able to export any farm products at all, even with the best efforts of newly energized farmers in Poland and Romania.

Dr. Vaclav Smil, author of Enriching the Earth, a fine book on the history of nitrogen in agriculture, says the world would need the manure from another 7 to 8 billion cattle to replace the 80 million tons of N we currently take from the air industrially. America would need the manure from another 900 million to one billion cattle, at three to 30 acres of forage per beast. The U.S. has only 2.1 billion acres in its lower 48 states, so we’d have room for our cities and manure production, but no room for food, forests or national parks.

The Crucial Importance of Farm Trade Reform

Wheat yields in Argentina are double those of Brazil. Sugar yields in Brazil, on the other hand, are double those of beets in the temperate-zone countries. Dairy cattle suffer in the moist tropics. Desert countries have trouble growing feed for livestock and poultry. All over the world, the comparative advantages are far greater and more permanent in farming than in any other industry.

At the same time, the world’s best farmland has relatively few wildlife species. The Great Plains of North America had 60 million bison, 100 million antelopes, and a billion prairie dogs-but that’s only three species. Researchers have recently counted more wild species in three square kilometers of the Amazon rain forest than in all of North America.

The goal of world farm policy should be to use its best land as intensively as sustainability permits, and to leave as much of the poorer land as possible to Nature. Free trade and agricultural research are the two powerful ways to do this.

Without farm trade liberalization, the 21st century promises to be a period of stifling stagnation for the world’s export farmers, and a period of high food costs and wildlands destruction in the densely-populated parts of the Third World.

With farm trade liberalization, there will be a hugely dynamic interaction between population growth, increased incomes, consumer tastes, pet numbers, cropland, and new technology. There is no way we can pick all the winners in advance-but we can be sure that this competition will be healthier and more constructive than the subsidy-imposed stagnation of world farm markets that is the alternative.

You have heard today of the tremendous opportunity emerging in Asia due to the combination of population growth and rising living standards. Despite the recent Asian economic crisis, the unprecedented economic growth in Asia over the last decade represents the largest increase in per capita income for the largest population in human history. There are strong indications that Asia is already started its recovery and is preparing to move on. Thus, the trends in dietary changes and increased animal protein consumption we have seen over the last decade will continue into the next.

Worldwide poultry consumption has been growing at about ½ a percent per year. This growth rate should actually increase during the next five to ten years as more Asian populations reach the critical development stages where meat consumption increases most rapidly.

So the question is not whether or not there will be growth in the demand for poultry products. The question is will North American poultry producers have free access to those growing export markets and how fast will they get that access. The next round of World Trade Organization talks, starting this November in Seattle, will hopefully settle many of these issues. However, they will likely take several years and there is still time for public opinion to influence the outcome and direction of the negotiations. That is why environmental and anti-trade activists will be out in unprecedented force in Seattle. They smell blood. They have even been holding week-long activists commando training camps all summer long, teaching how to scale buildings and barbed wire fences to fly Greenpeace banners. The battle over agricultural free trade and fair access to open markets has just begun.

This brings us to the other large question: what regulatory constraints will be placed on the poultry industry and what impact will they have on the competitiveness of our poultry products in the global market. Public opinion has a great impact here, as well.

Currently, there is a new push to tighten regulation of agricultural nutrients as part of the renewal of the Clean Water Act. The EPA is focusing a significant share of its early efforts on livestock operations, including poultry. While hog farming has taken the brunt of environmental criticism over the last two years, poultry has not been left unscathed. Rightly or wrongly, the poultry industry has been assigned the blame for Pfiesteria in the Chesapeake Bay and other eastern shore waters. That debate has been settled and we lost. We’ve lost so bad that poultry farming gets blamed for fish kills which the experts all agree were due to natural anoxic conditions in the Bay, not Pfiesteria.

As a result of this public relations loss, the Virginia Poultry Federation has agreed, at least on some level, to a phosphorus standard for applying poultry litter to pastures and fields-limits on phosphorus application which are arbitrary and poorly justified at this time. The bitter irony is that there is little evidence that phosphorus is a significant problem in our watersheds, including the Chesapeake Bay. This example perfectly illustrates the power of public opinion over facts or science.

In fact, the public is turning against production agriculture in general. Fueled by nostalgia for an agricultural past most have only read about and a more direct connection to earth, the public (at least as portrayed by the media) has convinced itself that it doesn’t want production agriculture. Of course, the public has always sided with small, family farms over large agribusiness when asked in polls, but the difference is that today the anti-agribusiness sentiment runs much deeper. It’s not just who is farming and how big they are, but what they produce and how they produce it. There is no better example of this than biotechnology.

Agricultural biotechnology is being rejected by consumers around the globe. Europe, Japan, Australia, New Zealand, and South Korea all have labeling requirements for genetically-modified foods. This even applies, in many cases, to livestock fed genetically-modified feeds. Far from adding value to the farmer, premiums are instead being paid for commodities free of genetically-modified crops. This is Monsanto’s and the rest of the biotech industry’s worst nightmare.

A recent report by a biotech stock research firm was understandably grim. According to their analysis, “rebuilding consumer, regulatory, and political confidence in the economic and social value of agricultural biotechnology, will not only take time, but will require a different message than “the science is safe,” as well as the need to…reach out to all stakeholders.” The question for this firm is “not whether, but to what degree farmers retrench from their use of biotech seed technologies.”

In preparing for this panel discussion I was directed to the recent report by the Council on Agricultural Science and Technology which concluded that animal agriculture was essential to ensuring an adequate global food supply. While we like to see that others have made the same conclusions as us as far as the role for production animal agriculture, it would be a mistake of the highest order to assume then that the public will see the light and finally appreciate the poultry and livestock industry. Biotechnology is only the most visible example of the recent backlash against agricultural technology. This is true with livestock production technologies. There is a fundamental reason for this backlash: lack of understanding. One of the most important and neglected areas in agriculture today is communicating with the public. Only two percent of the public farms, with many of those farming only for the tax break. The vast majority of the food produced in this country is produced by a tiny minority. The public doesn’t care anymore about protecting the farmer’s way of life-in fact they want to reshape it. Environmental organizations have convinced the public that farming is controlled by corporate moneymen who will rape the environment for profit. The enemy has become production agriculture in much of the public’s mind.

Therefore, it is time that agriculture engage the public directly. We cannot afford to continue hoping that the media will get the story right. The biotechnology industry is learning the hard way that unless the public is shown the benefits of new technologies, they will happily reject them. But there are examples of success from which we can learn. While considered a long shot, the plastics industry was faced with a potential ban on many plastics on environmental and health grounds. But they considered the threat realistic enough to launch a PR campaign aimed directly at consumers. The campaign is surely one of the most successful in recent memory. Greenpeace has had to abandon their Ban Plastics campaign and the failure in plastics may be what led to the anti-biotech campaign.

The lesson is that the public will listen and react reasonably when given the full story about new technologies or industries. Poultry farming is in the situation today where few understand what they do, how they do it, or how it benefits them. They see only what the media tells them: that poultry farmers destroy the Chesapeake Bay and pollute the water.

The poultry industry cannot afford to lay low any longer. Public opinion is far too important in today’s business world to leave it to hope. If the industry fails to communicate its message to the public, they risk losing the support of government leaders needed to open foreign markets and continue operating profitable operations in the 21st century.

The Chinese curse, “May you live in interesting times,” certainly applies to us today. We’re in the middle of a farm crisis. For those not hurt by flooding or drought, prices are at record or near record lows. Politicians are proposing various bailout strategies and calls for a cancellation of the 1996 reforms are rising rapidly. At the same time, however, the U.S. is about to begin negotiations on agricultural trade liberalization with its World Trade Organization partners. To add even more complexity to the situation are a whole raft of consumer and environmental policy issues coming to a head, ranging from the use of biotechnology in farming to proposed fertilizer and manure restrictions to protect rivers and coastal waters from perceived nutrient pollution.

All in all, the next 10-15 years promise to be the most “interesting” and tumultuous time in farming history. Where will it all end up? That is the $50 billion dollar question. The stakes are at least that high for U.S. farmers as far as global agricultural trade is concerned. The most important issue for the future prosperity of American agriculture, both short and long term, is the securing of a framework and timeline for liberalization of global agricultural trade rules through the WTO.

The Seattle meetings this fall will be contentious, fractious and exhausting. They will likely take several years and even then, as we’ve seen with other WTO agreements, members will dissemble and stall in the implementation of the new rules. But make no mistake, these negotiations are the lifeblood of American agriculture for the 21st century.

Here’s why: Asia is already pulling out of the economic collapse of the past two years. Diet improvement will soon be driving further change in consumption patterns in a number of up-and-coming countries with huge market potential. In some of these countries, most notably China (see Meat Consumption graph), the Asian crisis barely impacted the growth in their meat and high quality protein consumption.

China’s overall meat consumption has more than doubled in less a decade. And the average Chinese consumer still consumes less than half the daily protein of the average Japanese consumer, so there is significant room for continued growth in meat consumption.

In all, Asia will have nearly half the world’s population by the year 2040, yet a significantly smaller amount of the world’s agricultural resources. To stick with China, it has 20 percent of the global population, yet only 7 percent of the world’s arable land. And do not forget that this land will have to support China’s rapidly growing urban population, industries and infrastructure, as well as compete with non-agricultural uses for water. Even still, the Chinese will want more cotton clothing and textiles, more beer and alcohol, more fruits and vegetables, and even more pet food-all from the same limited land base.

The role for world trade is clear in this context, the trick is knocking down the trade barriers currently hampering the growth in global trade and limiting trade relationships. But we cannot blame international trade barriers for all of our trade problems and we must acknowledge that for American agriculture to prosper in the 21st century, we must pay more than lip service to foreign markets.

The figure at right shows the total wheat imports of the “core” wheat importing nations (regular wheat importers, not including the former Soviet Union, India and China as these countries resort to imports only when their own production falls short), representing 80% of world wheat imports. While overall wheat imports doubled over the past 30 years, U.S. share of imports steadily declined. In the 1970s, U.S. wheat exports captured half the market of these core nations but only one third of this market in the 1990s.

According to Lee Schatz at USDA-FAS, the main reason is that U.S. wheat farmers are not producing for the export market. Partly this is the result of dependence on U.S. government sales central government customers who buy mostly on price. But this is an erratic customer, too often dependent on U.S. government credit guarantees. The export customer to target is the private buyer supplying the rapidly growing premium foods market in these countries. Garnering this market requires attention to quality and growing wheat varieties with specific characteristics targeted to regional diets. Too many U.S. farmers are still living in the past of U.S. government ag market control.

The good news is that the prospects look good for a strong stance at the WTO meetings and beyond. All of the major presidential candidates, save for Pat Buchanan, are strong free traders and the Seattle meetings will keep the issue focused.

Europe’s Common Agricultural Policy (CAP) is also in store for major changes. This is due primarily to the need to bring Poland and other Eastern European nations into the EU fold as a buffer from a communist resurgence in Russia. But bringing these countries into the EU also means doubling the number of EU farmers eligible for CAP payments, and they simply do not have the money to extend such generous subsidies to so many relatively productive farmers. Already the CAP consumes more than half the total EU budget. Europe’s commercial farmers saw this coming several years ago as EU support payments shifted to smaller, more politically correct farmers.

However, the current trade disputes over beef growth hormones and genetically modified foods are a vitally important aspect of the agricultural trade debate. They are important because at the very least they have the potential to disrupt the progress of agricultural trade negotiations as well as potentially huge loopholes through which countries can protect domestic farmers from fair competition.

The bad news is that Greenpeace, Friends of the Earth, the World Wildlife Fund and all the other environmental and “consumerist” groups have decided that their best fund raising scheme is to demonize genetically modified foods and free trade. They will be in Seattle making as much noise as possible. One group is even holding summer training camps to teach activists how to climb barbed wire fences and buildings to disrupt the WTO meetings.

I am an optimist and feel that these issues will eventually be worked out, but the stakes are enormously high which means the negotiations will be difficult and could drag on for several years. Our only comparison, the Uruguay Round negotiations, took eight years to complete.

At the same time, environmental regulations here in the U.S. are taking a decidedly uneducated and knee-jerk direction. The EPA has just released the latest draft of its new confined animal feeding operations regulations and the White House Task Force on Hypoxia in the Gulf of Mexico proposes cutting fertilizer “losses” by 20 percent in the Mississippi Valley to mitigate the size of the “dead zone” which forms naturally each year off of the Louisiana and Texas coasts. Never mind that the task force could document no environmental or economic harm from the hypoxic zone nor demonstrate a credible link to Midwestern fertilizer use.

To summarize the situation for American agriculture over the next 10-15 years, there is enormous opportunity in the growing export markets. In 30 years, the world’s annual food demand will be double what it is today. This is the foundation for economic prosperity for all of the world’s farmers, especially those with the abundant resources in farming, geography and infrastructure as U.S. farmers have. But there are many potential pitfalls ahead and getting to that point of prosperity means negotiating a tumultuous and rocky period of trade liberalization and potentially onerous environmental regulations. Indeed we are cursed with very “interesting” times for American agriculture.