“Agriculture Remains Basic to Trade”

            World Bank President Robert Zoellick warned Sunday at the Washington conference with the International Monetary Fund that food price inflation may drive one hundred million of the world’s poor much deeper into need. His call for a ‘New Deal’ in agriculture underscores the interconnections of developed as well as developing countries.

            President John F. Kennedy quipped to John Kenneth Galbraith that he wanted to hear about farming only from the Harvard professor, who had started his career as an agricultural economist, and he didn’t want to hear much from him either. By 1960, when Kennedy won the White House, a plurality of American voters was in the suburbs. Rural America was already rapidly declining in population.

            Yet U.S. farming remains more powerful than ever. Our nation is the largest agricultural exporter as well as importer in the world. Trade related to food underwrites much of our current prosperity. Accompanying this enormous success is the great political influence of agricultural lobbies.

            Clayton Yeutter, former Secretary of Agriculture as well as U.S. Trade Representative, just completed several days at Carthage College in Wisconsin, where he emphasized both the dangers of protectionism and promise of science. Virtually all nations shield agriculture, including the U.S., reflecting the exceptional political clout of this primary sector. Much of our sugar, for example, is produced behind large trade barriers.

            Biotechnology is becoming steadily more important, reflecting the innovation as well as productivity of American farms. In contrast to the U.S., European nations have generally been skeptical about and resistant to this trend.

            This complicates trade relations, but also promises the U.S. global leadership. Dr. Yeutter believes the biotech revolution will be at least as profound as the information revolution of the 1990s, which was also driven by technology.

            During the now legendary 1960 presidential debates between Kennedy and Richard M. Nixon, both candidates referred explicitly to the importance of the American farmer. Presidential candidates today are much less likely to single out the tillers of the soil, especially since machines rather than people are how doing most of that labor. Mechanization facilitates the application of science to production.

            The current growing support for protectionism, especially in the Democratic Party, is significant for agriculture as for our economy as a whole. The U.S. today holds 5 percent of the world’s population, and that proportion is shrinking steadily. Yet the more we restrict our domestic market, the more we exclude ourselves from rapidly growing markets elsewhere.

            Kennedy appointed Galbraith Ambassador to India, where he was notably successful, and Yeutter singled out that country along with China as particularly promising as well as challenging for American market expansion. In the 1960s as today, farming provided a shared dimension spanning very different cultures – as well as an arena for economic cooperation, competition and profit.

            Zoellick’s New Deal is to be financed by $500 million, about half of which has been raised. World Bank initiatives include conditional cash transfers, new plantings and food-for-work programs. Continued technological innovation is crucial to the success of such development aid.

            The World Bank president urges that one percent from the approximately $3 trillion held by sovereign wealth funds of national governments be devoted to investment in Sub-Saharan Africa. Emphasis on biotechnology could be highly persuasive in encouraging such investors.