US and European Community poised to battle over farm exports

The United States and the European Community appear poised for confrontation on world agricultural markets following warnings by both sides that they will make aggressive export initiatives this year. A senior US Department of Agriculture official said last week that the Congress's recently approved farm bill will enable farm-product exports to begin their ascendancy once again by year's end. This will happen, EC officials said, just as the community is launching a special multi-billion-dollar program designed to offload massive quantities of food surpluses on international markets.

``I warn you,'' Thomas Kay, administrator of the Department of Agriculture's foreign agricultural service, told the annual European Agricultural Outlook conference in London last week, ``we're going to regain that competitive edge.''

Under the US farm bill, $2 billion has been earmarked specifically to finance exports. Noting that US farm exports had fallen by 30 percent over the past five years, Mr. Kay said that the 1985 farm bill will enable the US to re-enter the world market and compete once again.

The US official's remarks came as EC officials were disclosing the broad outlines of a three-year program aimed at reducing the community's huge stockpile of food products, now estimated to be worth more than 10 billion European Currency Units (about $9 billion), up from 1.87 billion ECUs only four years ago.

The existence of these stocks represents a time bomb, EC Agriculture Commissioner Frans Andriessen told the conference. It threatens to destroy the EC's entire agricultural policy. Another senior EC official, however, cautioned that the destocking program was not likely to make much of a dent in the EC's huge food mountain.

US Department of Agriculture official Kay said that, ``the health of the American agricultural industry depends on our regaining export markets. The US must export 50 percent of its production because it only consumes 50 percent,'' he said.

``We aren't mad at anybody,'' Kay said, alluding to the Reagan administration's past criticism of the EC's policy of heavily subsidizing farm exports. ``We're angry at ourselves for not having acted sooner.''

According to US Department of Agriculture statistics, the US share of world wheat trade has fallen from 41 percent 10 years ago to 33 percent today. This forced the administration to make available $2 billion in special bonus commodities over the next three years under a program called Bonus Incentive Commodity Export Program (BICEP) aimed at boosting US exports.

So far, 2.9 million tons of wheat, wheat flour, and poultry, worth $337 million have been sold under the program to Algeria, Egypt, Iraq, Turkey, the Philippines, Zaire, Morocco, and Noth Yemen. EC officials are currently studying whether the BICEP program is consistent with internationally-approved trading rules.

EC External Relations Commissioner Willy de Clercq has said that the program could have a destabilizing effect on world agricultural markets and make the projected international trade negotiations due to begin next year more difficult.