Washington

Well, after not all that enthused about the Washington leg of our trip, I have actually quite enjoyed. Its a pretty interesting city and well, staying at the Sheraton has definitely helped as well!

 

Hope was our host for the 2 days of meetings whilst we were here. She had us all very organised and lined up some interesting speakers for us. On Wednesday we headed to the Australian Embassy and spoke with both the Australian and NZ agriculture representatives, and also a MLA representative here in Washington as well.

We spent the afternoon talking to firstly the Senate committee staffers, so those people that help the senators with all their research, then secondly the house committee staffer, the people helping the polies in the house. I was able to learn a lot about US politics and I am ashamed that I actually don’t understand politics better. I endeavour to learn more about Aussie politics before the next federal election!!

Anyway – I am going to give a rough summary of what I learnt on the Ag side; (Italics stuff)

 

Agriculture is only a very small part of Australian GDP (3%), but in the US it is much more important. The Farm Bill is a major bill that has to be created and passed every year that outlines all the policies and budgets in the Ag sector for the next 5 years. It is a massive task, and often is not passed in time to meet the 5 year timeline. I think it was due to be passed this year, but that is not going to happen and it especially won’t happen if there is a change in political power after the election coming up in 18 days.

 

It is a bit unusual but 80% of the farm bill, is not actually agricultural spending but rather social security for the poorer people, mainly in the form of ‘food stamps’. So when we hear of the billions of dollars that the US govt spends on Ag, it is actually not that large. It is still a significant amount of money that gets spent on ‘subsidies’ for the American farmers. These subsides have mainly been in the form of direct farm payments, crop insurance, price support systems for sugar and dairy, and disaster assistance programmes. In 2012 the Budget for the Ag farm bill has been severely cut to meet the 4 trillion dollars that has to be cut from the US government spending in the next 10 years, so the direct farm payment system will be removed however the multi peril crop insurance subsidies will remain.

 

The insurance subsidy programme involves the US government paying for 65% of the insurance premiums that farmers should have to pay. And depending on the policy, this would cover any shortfall in yield that the farmer does not reap compared to what they insured for. So this year, farmers affected by the drought will still receive income for the yield that they insured for.

Will we ever get this in Australia? There has been a push by some farmers in Australia for the government to support an insurance programme for farmers like this one. But at the end of the day, the premiums would be extremely high, and the pov from the Chris the Aussie ag rep, was that there are better ways for the Australian government to spend their money.

 

Sometimes it makes you wonder why we are farming in area’s that no-one in their right mind would consider insuring??? As I have travelled over the last 6 weeks, it has really hit home how difficult our farming is and how tight our margins are compared to other parts of the world. We have low and inconsistent rainfall, pretty poor soils, only plant one crop per year and no local domestic demand for the potential to value add to a big consumer market (ie no people). So there is my grumble J but at the end of the day it is our choice, so Im over it J

 

So what do these subsidies mean for world trade? Well, the WTO classifies subsidies as green, amber and red in terms of how trade distorting they are, with green being the least and red the most trade distorting. Direct payments are only green box, as although they affect the price of land, they do not have a huge effect on the type and area of commodity planted and therefore do not affect commodity prices too much. Insurance is classified as amber box as it can make people plant crops in areas where they usually wouldn’t take the risk to plant a crop.

 

We also learnt about the TPP, trans pacific partnership. Which is negotiations taking place between may countries over the pacific ocean including US, Canada, Mexico, Australia, New Zealand, Singapore, Brunei and many more all trying to free up trade and create multi-national trade agreements. These negotiations have been going for many years and due to be concluded 2013/14. I am not sure exactly how much benefit we will see at the WA farm gate?

Also China and Japan are also trying to join the negotiations.

 

On Thursday we met with the American Farm Bureau Federation, equivalent to our NFF. The lobbying group represents agriculture all over America, covering all commodities. They have 6.5 MILLION members, 80-90% of America farmers. Non farmers are also allowed to join. It is organised at alocal county level, and then there is also a state level, then the national level. Membership only costs between $20-$60 per year, but different to our PGA membership at about $1500 a year. The policies come from the farmers at the local level, and work their way through the system to the national level, for them to lobby the government. They do not support any political party as “ its great when your candidate wins, but really shit when they don’t”.

 

We spoke to a director of kraft foods who works in international trade negotiations, a US trade rep in the dept of ag affairs and a US farm policy specialist. And by the end of this my brain was well and truly frazzled and sitting in the office all day was a real struggle. A couple of points, the US subsidy programmes are well below their WTO commitments, and also SPS (sanitary and phyto sanitary) like customs and quarantine measures are becoming one of the major barriers to trade. Eg kiwi apples into Australia – which with our NZ’s in the group we hear plenty about!!!

 

We finished with a chat to a rep from WALMART, telling us about their sustainable food commttments. Basically WALMART is trying to be seen to do the right thing, buy becoming ‘sustainable’. They aim to be supplied by 100% renewable energy, create zero waste and sell products that sustain people and the environment. It all sounds a bit waffly, but the highlights we saw, was that rather than getting their product in bulk from large suppliers, they are trying to get their stores to buy from local producers to get a fresher product with less transport. They do a lot of other ‘nice’ things, all looking good but also just marketing at its best. One interesting stat was 1 in 5 of their customers don’t have a bank account, and rely on cash day to day, and the average walmart customer income is 35,000.

 

MLA points

-          50% of Aussie lamb is exported

-          US highest importer, then China, then UK

-          Lamb exports to US have been decreasing because of the US economy

-          Americans are not really that keen on lamb, and unless they get a domestic lamb industry going here, lamb consumption will probably continue to decline

 

So, after all these meetings and listening to talk, we were booked on this bus tour 7.30-10.30pm, to do a tour of Washington. I was complaining my head off, as all I wanted to do was chill out and have a few beers, instead of hanging out with a bunch of oldies on a bus. It turned out to be really good and I had to eat my words J

We checked out Capitol Hill, the white house, monuments for different presidents and wars (so many places that you recognise out of the movies!). I caught up on a bit of American history, and only hope I can remember what I learn! Pooped we made it to bed by midnight.

 

Today has been another day off, so Stu, Ewan, Linda and I hired bikes and rode around the city, seeing a lot of what we had seen last night, but great to see it in the day time. It was great fun to get some fresh air and cruise around on the bike we all really enjoyed. There are SO many museums here, but I was totally not in the mood, so I left the gang at the air and space museum and headed back here to the hotel to catch up on all this sort of stuff.

 

Driving to Pennsylvania tomorrow for the last leg of our trip. COUNTDOWN till hometime, yahoo buckeroo

Oh and Ill add photos later as I have to steal them all from Linda....