International Agriculture

Program 0220 May 14, 2002

Related links:

http://europa.eu.int/pol/agr/index_en.htm

(This text has been professionally transcribed, however, for timely distribution, it has not been edited or proofread against the tape.)

Pavel Nauratil: [via a translator] When the
European Union will eliminate the subsidies—my opinion is that the farms will
be concentrating from the small family farms to the much more bigger units.

KRISTIN
MCHUGH:

This week on Common Ground, an
agricultural controversy hits the European Union. Plus, farming may help open
US trade with Cuba.

GEORGE RYAN: We’re constantly looking
for new markets, new places to sell our, especially our agricultural products,
but other products as well.

KEITH PORTER: Common Ground is a program on world affairs and the people who
shape events. It’s produced by the Stanley Foundation. I’m Keith Porter.

MCHUGH: And I’m Kristin McHugh. Agriculture is a hot topic
as the negotiations for the next round of enlargement in the European Union
enter the final stages. Poland, with its huge, inefficient farm economy, would
bankrupt the EU’s common agricultural policy if the EU maintains its current
farm subsidies.

PORTER: That prompted the EU to
tell potential new members their farmers will only get a quarter of the price
supports given to current EU members. As Common
Ground
’s Max Easterman reports, that’s not going down well in
efficient-minded places like the Czech Republic.

[The sound of a vehicle, perhaps a truck or a
tractor, in the background.]

MAX EASTERMAN: Trhovy Stepanov is a small
town about 50 miles southeast of the Czech capital, Prague. Before the Velvet
Revolution of 1989, it was the headquarters of a collective farm, a big one by
local standards, nearly 8,000 acres, taking in six of the surrounding villages.
It grew wheat and vegetables and reared cows, pigs, and chickens. By communist
standards it was highly productive.

[The sound of farm animals in the background.]

Today, Trhovy Stepanov is no longer a collective.
It’s a cooperative. Most of the former landowners and farm workers didn’t take
their land away and farm it privately, which they could have done. They were
persuaded it would be easier to get investments to modernize if they kept the
land holdings much as they were—in a kind of common ownership. And it was clear
they did have to modernize to meet the competition from the European Union. The
farm manager is Pavel Nauratil. He’s brought me here to his new cow shed to
explain what he’s achieved.

Pavel Nauratil: [via a translator] First of
all we were pressed to make the complete change of technologies. Because before
the Velvet Revolution all the cows were put together in the closed buildings.
Now, practically as you can see in accordance with the European Union standards
we moved them, they are standing in a free stance. Secondly we changed the
productivity of labor. In early ‘90s we have the output from one cow 4,000
liters per milk per year. Nowadays we have 10,000 liters per one cow per year.
in 1990 70 people were taking care of all the cows. Nowadays only 15.

[The sound of people getting into a vehicle and
shutting the doors.]

EASTERMAN: Mr. Nauratil is proud of
what he’s done with this old collective farm. We’re just off to see his new pig
pens. It’s a 10-minute drive away. It gives you some idea of how big this farm
is. They cost him over a quarter of a million dollars. Czech farmers don’t get
much money from the government. It can only afford to fund interest payments on
loans. So all the capital has to be borrowed from the bank and repaid out of
profits. This means that farmers already inside the European Union are getting
about four times as much in subsidies as here in the Czech Republic.

[Easterman questions Mr. Nauratil]

[With the sound of hogs in the background]

EASTERMAN: When you do join, do you
expect that you will get that level of revenue support?

Nauratil: [via a translator] As far
as I know I don’t think so. If there’s a single market then conditions should
equal in this case. Otherwise it is not a single market. Otherwise it is only
the way how to get another markets for the excess of overproduction. We have
the already experiences the European Union. The original old farmers in the
European Union are getting 70 or 75 percent more. Then you’ll be able to sell
its products under the cheaper prices than we will be able to. And we will be
liquidated on the market. We won’t be able to be competitive. This is not a
fair play.

EASTERMAN: But Pavel Nauratil isn’t
about to go under just yet. He’s making another big investment, here in his
chicken production, to triple output to 3,000 tons a year. He says it’s all
about economies of scale. And EU policies will encourage that trend.

Nauratil: [via a translator] When the
European Union will eliminate the subsidies my opinion is that the farms will
be concentrating from the small family farms to the much more bigger units.
This process, you know, already came to agriculture in Australia as well as in
the United States. The bigger farm will buy the smaller farm. This is the
question about the concentration of the capital.

[The sound of goats or sheep in the background]

EASTERMAN: Well, that’s exactly what
worries the Czech Republic’s 7,000 or so private farmers. Their farms are
usually 10 times smaller than the cooperatives, about 700 acres on average. And
they’ve struggled against what you might call a dung hill of obstacles to get
them up and running. In this village, about 25 miles west of Prague, people
were only able to get their land back from the collective when one of their
number, Emil Beer, was voted in as mayor and used his position to force
restitution through.

EMIL BEER: [via a translator] The
chairman of the cooperative was a big communist, strong communist, and
therefore was hard fighting with her. The animals and the tractors and so on,
it was very hard. A big battle. And we received the old machinery from the
cooperative, therefore we have to resolve to repair it step by step.

EASTERMAN: And there was no help from
the government?

BEER [via a translator] No, no,
no.

[The sound of people walking through a farmyard.]

EASTERMAN: Many private farmers have
faced far worse than that. There was no land register under communism. The
comrades bulldozed hedges, boundaries, and rounds in their enforced
collectivization. So come the 1989 revolution even if you could prove you had
title to a piece of land you often couldn’t get to it because the road had
gone. Michel Pospetiel—he’s the man you heard translating what Mr. Beer had to
say—Mr. Pospetiel is a small farmer himself. He gave up his safe desk job and a
warm flat in Prague for the uncertainties of a rundown country farmhouse.

MICHAL
POSPISTIL:

People get the land back and the land is in the small pieces. It’s spread all
over. Therefore they are not able to work on it because they are not able to
found it. They know they own it on the map but in reality they are not able to
say, “That is my piece of land.” And from this point of view it’s also not
possible to make a really free market of the land. Because when somebody would
like to buy it I have to show him where the field is and I have to guarantee
that he is able to farm on it. The land reform was not started yet in the Czech
Republic fully because the lobby of the cooperatives are against it because
they will lose the right of the farming on it. They want to keep the land and
they want to keep the machinery without any clear relations of the owners.

[A dog barks and people continue walking through the
farm.]

EASTERMAN: Small farmers worry that
the big boys are just in it to exploit the land for what they can get. Michal
Pospistil admits that they are often much more efficient than he could possibly
be. But at the cost of damaging the countryside and soaking up subsidies,
private farmers, he says, don’t want price supports. They need something much
more fundamental.

POSPISTIL: They would like same amount
of the money but for private farmers it’s better to spend it by the investment
through the infrastructure of the farm and the infrastructure of the land. And
that means to invest to the country and also to invest to the new equipment, to
the nature also, to the new biotechnology. The results of the direct payment
support price on one side will be the very high price of the land and the other
side also, establish a group of very rich managers of the big farms. Because
the money are to the pockets of the managers. [laughing]

EASTERMAN: It’s fair to say that so
far the Czech government hasn’t paid that much attention to the private farmers
when it’s been negotiating with the European Union. It’s been banging the table
for higher price supports. Perhaps that’s not surprising, as the President of
the Association of Cooperative Farms, Miroslav Jirovsky, is one of those whose
been involved in the talks. And he’s outraged at the attitude taken by the
member states.

MIROSLAV UROVSKY: [via a translator] We
thought the EU took us seriously and realized we were doing everything we could
to raise standards and efficiency. But now we’ve reached the finishing line, it
seems everything they’ve said over the last 10 years has just been hot air. If
all they’re offering is 25 percent of current subsidies then I can’t support
joining. We’ve got a $60 million trade deficit with the EU now; what they’re
offering will mean more reductions and total bankruptcy for a lot of our
members. If the government accepts this I shall resign.

EASTERMAN: The EU is going to find Mr.
Jirovsky a tough opponent. But bankruptcy is also the threat facing the Union
itself. The key to the problem is Poland, which has a huge and very inefficient
agricultural sector. If current price supports were an offer, Polish farmers’
incomes would go up by more than a half overnight. But the EU could not afford
it. The solution might be to keep Poland out till its economic performance has
improved. But the Prague-based analyst Pavel Bratinka says that is a political
impossibility.

PAVEL
BRATINKA:

It’s because of historical guilt that European Union especially Germany wants
to see Poland integrated as soon as possible.

EASTERMAN: You mean guilt about the
Second World War?

BRATINKA: Second World War, the
partition of Poland; it’s a collective European guilt. And so this is the
reason why it’s a must to see Poland taken in. On the other hand there is this
huge cost because of Polish agriculture, this cannot be done without cutting subsidies.
And we Czechs are thus victims of this game.

EASTERMAN: Well, inside the EU they
don’t see the Czechs as victims of a game but as potential beneficiaries of a
carefully constructed process. The main beneficiaries may well be the private
farmers. Here’s why. Brussels is becoming acutely aware that it can’t go on
paying out huge price supports, even to its existing farmers. Quite apart from
the environmental problems it causes, the World Trade Organization basically
accepts the view of the Americans and the Australians in particular that the
common agricultural policy is anticompetitive. It’s got to change. And the
European Commission spokesman in London, Geoffrey Martin, says this will happen
before the new members get into the Union.

GEOFFREY
MARTIN:

There will be a fundamental change in the way in which agriculture is to be
funded. Away from price supports towards a world class competitivity. The
smaller farmer will get huge advantages from rural development, away from
agriculture and into, for example, small business and tourism. Whereas the
larger farmers will face the challenge of world price rather than the advantage
of price supports in an internal market.

EASTERMAN: There is a warning bell for
the bigger farmer, then?

MARTIN: There is the challenge, if
you like to put it, rather than the threat—the challenge of competing in price
terms with the world market rather than receiving protection within what the
Americans would call a protected market. And this will mean added costs on the
part of large producers in the incoming countries.

[The sound of trolleys and vehicle traffic in the
background.]

EASTERMAN: I have the impression that
the significance of that hasn’t yet sunk in here in Prague. The debate rages
about the low level of price supports and the fact that several existing EU
member states have said that the deal on offer to new members is actually too
generous. Politicians and civil servants here are angry about that and worried
about what it will mean for the referendum they have to hold next year on
joining the EU. I’m on my way now to the Foreign Ministry to meet Petr Jezhek,
the Deputy Secretary who’s in charge of EU integration.

PETR JEZHEK: There may be forces which
would like to make the package offered to the candidate countries unacceptable,
totally unacceptable, and then to blame the candidate countries for
prolongation of the, the accession process. But hopefully this is only speculation.

EASTERMAN: But for it to be
speculation there has to be a greater truth there.

JEZHEK: There is no smoke without
fire. It causes political problems here but if the deadline is not met it will
cause a problem for the whole enlargement process and for the credibility of
the EU. Because, well, citizens will be tired of waiting and knocking the EU door.
So expectations regarding the better economic performance after the enlargement
will be diminished.

[The sound of Czech band music playing in the
background.]

EASTERMAN: It’s clear that for many
Czechs, like those enjoying the spring sunshine here on the Charles Bridge,
joining the EU is not going to bring the good times they imagined a few years
ago. Farmers in the existing member states are a powerful lobby and there are
elections in France and Germany this year. Politicians there can’t afford to
ignore voters who think enlargement could damage their incomes. So there’s more
than an element of grandstanding and shadowboxing in the enlargement talks.
It’s all perhaps strangely appropriate in this city, famous for its black
theater, where what you see is more illusion than reality. Sadly though,
reality suggests there are tough times ahead for the farmers and for everyone.
For Common Ground, this is Max
Easterman in the Czech capital, Prague.

[The sound of Czech band music playing in the
background.

MCHUGH: A Midwestern state ends
Cuba’s trade isolation, next on Common
Ground
.

GEORGE RYAN: We’re number six in all the
states that would benefit if an embargo was lifted. So it’s worth doing for us.

PORTER: Printed transcripts and
audio cassettes of this program are available. Listen at the end of the
broadcast for details, or visit our Web site at commongroundradio.org. Common Ground is a service of the
Stanley Foundation, a nonprofit, nonpartisan organization that conducts a wide
range of programs designed to provoke thought and encourage dialogue on world
affairs.

MCHUGH: The governor of Illinois,
George Ryan, has long been surrounded by controversy. A campaign finance
scandal has dogged his administration since he took office in 1998. And he has
taken some unusual positions for an elected official from the Republican Party.
For example, in 2000 he suspended enforcement of the state’s death penalty.

PORTER: And his unorthodox views
extend into international affairs and global trade. In 1999 he took the first
of his two trips to Communist-controlled Cuba, where he became the highest
ranking American official to visit that island in 40 years. To learn more about
Ryan’s bold approach to foreign policy I spoke with the Governor in his Chicago
office.

GEORGE RYAN: There isn’t anything more
important, I think, to our economy than exports. It accounts for a lot of the
employment in the state of Illinois. It’s very important to the largest
industry we have, which is agriculture. We’re constantly looking for new
markets, new places to sell our, especially our agricultural products but other
products as well. We’ve opened an office in South Africa that I think has been
very successful thus far. And we continue to search for places to sell our corn
and grain for the farmers.

PORTER: Who are the biggest trade
partners.

RYAN: Certainly Canada I think is
one of our biggest. Mexico. Being the neighbors that they are, are our biggest
partners.

PORTER: I think that our listeners
might be surprised to hear that late last year there was a shipment of corn
that went from Illinois to Cuba and it was all completely legal. How did that
happen?

RYAN: The United States
Government has had an embargo on Cuba for 40 years. And they’re starting to
soften a little bit on it. And they lifted the embargo for humanitarian reasons
on agricultural and food products and on medical supplies and pharmaceuticals.
We took a trade mission down, a humanitarian mission, just to set up the stage
for the opportunity, maybe, to do some business there. And we took down about a
million dollars worth of food and pharmaceuticals and school supplies and
donated it to the government and to the people of Cuba. Then we were invited
back to sell some products, namely pharmaceuticals. But in the meantime Cuba,
when they lifted the embargo on food decided that they were going to buy some
grain from us, and they did. They bought about $35 million worth of corn and
grains from Illinois—mostly from Illinois, and we’ve had two or three shipments
since then. So we’re very happy about that.

And the next step was medical supplies. And they
called and asked us to bring some companies down and we did that, about three
weeks ago or a month ago. And have had I think some success with that. I
haven’t had a full report on it yet.

PORTER: Going to Cuba is certainly
an interesting thing for a Republican governor to do. It almost reminds me of a
Nixon going to China kind of thing. And you’ve had a lot of criticism over
this. I mean, has it been worth it?

RYAN: I suppose that you can do
anything and get criticized for it. And that seems to be the mood today.
Whatever you do, you get criticized for. But that’s not what this is about. I
don’t care what I’m criticized for. And I think it’s the right thing to do. We’ve
had an embargo on Cuba for 40 years and it hasn’t worked. I think the American
government should lift that embargo, frankly, and open it up for trade. It
means a great deal to states like Illinois and Midwestern states, especially in
an area where we need to have all the help we can get and all the markets we
can get. We think that if the embargo were lifted we could create another 1,400
jobs here in Illinois, just related to that operation in Cuba. We’re number six
in all the states that would benefit if an embargo was lifted.

PORTER: Are you concerned at all
about the human rights violations? Or, just the fact that it’s a communist
government and by giving them humanitarian supplies you are helping to prop up
the government there.

RYAN: Cuba is a little island
nation that can’t defend itself too well in a lot of cases. And the big country
like the United States can bully them around a little bit, if that’s the right
term. But we, we don’t seem to care about other nations that may have the
similar kind of violations, or civil rights violations, and human rights
violations. And that’s countries like China, where we’ve given favored
treatment to, favored nation treatment for trade. Cuba ought to have that as
well. I would think that if we’re concerned about those conditions the best way
to eliminate them would be to open up the country to democracy and to be a part
of it. Every country in the world is doing business in Cuba but the United
States. And we ought to be down there doing business and having our people
there and expressing the democracy that we believe in. And I think that would
help their human rights problem.

PORTER: Have you talked about other
kinds of interaction? I mean, besides selling them the products? Have there
been cultural interactions? People-to-people exchanges? That kind of thing?

RYAN: We’ve had a lot of that
since I went down. You know, I was the first governor in 40 years to go to
Cuba. And we, we had spent one evening before we came back after I think a
five-day trip, had dinner with Fidel Castro, and had some interesting
exchanges. We worked very closely with the federal government on that trip. And
we had some requests from the Catholic church here in Chicago, the archdiocese
asked to see if we could get more priests into Cuba for the religious practices
that just had reopened in Cuba not too, too long before we went down. And they
needed more practicing priests there to, to help with the churches. And we
presented that to the President and he said, “Yes.” And I think that there have
been some, some additional priests that have gone from the United States down
to Cuba now.

We talked about a couple of young people that were
sick and needed help and we brought ‘em back and we’ve had several children
that have come back for certain diseases and for the treatment of, of problems
that they’ve had and especially surgeries. Liver surgeries, a special kind of
liver surgery that can only be performed at Children’s Memorial Hospital or at
some hospital in London. We’ve taken these, a couple of these, or three of
these children in and given them the kind of treatment that they’ve needed and
sent ‘em back home. And they’re doing great.

We’ve had cultural exchanges with music groups that
have gone down. Softball teams, girls teams, baseball teams. We’ve had a group
that went down and donated recreational equipment, park equipment, to the
schools and to the playgrounds of Cuba. And that’s all been as a result of our
first trip there.

PORTER: People who are Cuba experts
here talk about the difference between a hard landing or a soft landing in the
future for Cuba. Hard landing being a sort of blood in the streets kind of
thing, and a soft landing being a softer turnover in the government, something
maybe like what’s happening in Vietnam.

RYAN: I don’t think that you’re
gonna have any hard landings. I think that those days are probably gone. But
certainly it isn’t anything that’s going to come fast. Fidel Castro is still
there. He’s surrounded by people that believe in that system. But they’re,
they’re smart enough to know that they have to open the door for trade, they
have to let Americans involved there. And they’ve let every, other countries
in. So, you may still have a communist operated system but we, we deal with
China and other communist operated systems. So Cuba, the small nation that it
is, can’t be too much of a threat to us. We could be a lot of help to them,
frankly. We could help them and their people a lot if we had the opportunity.
It’s the handcuffs that the Congress of the United States, that’s put on the
United States business to go in there and do business. And we need, we need to
relieve that, that embargo. Forty years of that embargo has done nothing that I
know of.

PORTER: You mentioned your offices,
your office in Africa as well. What’s the potential there? What can we expect?
You know, these seem like such poor countries. Is there really a good trade
potential there?

RYAN: Yeah, there is. There’s a
lot of potential. And since the apartheid
system is gone in South Africa now it’s much easier to go in there. And South
Africa needs a lot of things. They had generations of people that weren’t
educated, had no schooling. They need to have training and we’ve had some
entrepreneurs from the Chicago area and from Illinois that have gone down there
and set up operations to help train people in various jobs. And we’ve
contracted with the South African government to do that. The trade situation is
more, I think, a learning process for the people that are in South Africa, to
teach ‘em, to help ‘em understand what it’s about, and to have some exchanges
with ‘em. And it’s worked very well for us.

PORTER: Are there other areas—if
you were going to be governor for much longer, if you had the, the power to do
it, are there other potential markets that you see could grow?

RYAN: I would like to have an
office in Israel. And of course we, we were gonna go over there last year. But
because of the conditions there we canceled our trip and didn’t go. But I think
that there’s a lot in common with Illinois and Israel and an opportunity for
certain business and trade there. And the exchange of technological thoughts
and ideas and the promotion to stay on the cutting edge of medical research,
and a lot of things. So Israel would be a good country for us, I think, to have
a trade office in and that may come in the future. I doubt if it will come
during my term.

PORTER: We often don’t think about
governors making foreign policy or being involved in that. Did you find that
the federal system worked, has worked with you or worked against you as you tried
to open up international markets?

RYAN: Oh, no, they’ve worked very
well with us. We, even when we went to Cuba in spite of what you may have read
or heard, the federal government in the Clinton administration and even in the
Bush administration have worked very closely with us. And of course we wouldn’t
go if they didn’t want us to or didn’t permit us to go and told us not to go.
We, we wouldn’t be there. But I think they know and understand that there’s
some potential there and they tried to ease everybody in.

PORTER: What have you done to
prepare Illinois businesses for international markets and for international
business?

RYAN: We have a lot of large
corporations here in Illinois that are headquartered here and they do a lot of
international business now. John Deere, Caterpillar, they do—Boeing—those are
people that are already in the international marketplace. It’s the smaller
people that we try to help with exporting their goods and doing business in
other countries. And through the Department of Commerce and Community Affairs
we have a, a division of international trade. We’ve got nine offices around the
world and work closely with the small businesses, not like Caterpillar that
they don’t really need us. And they, they can go down and do what they need to
do, but smaller people and businesses that want to export their products and
goods to a foreign country.

PORTER: And sometimes they face
more than just the, sort of the trade barriers that you might think of with
China or Cuba. Operating with countries in the European Union, for example,
creates all kinds of problems for businesses as well.

RYAN: We’ve had an office now
probably longer than any state in the United States in Europe—out of Brussels,
frankly. It’s got to be 30 or 35 years that we’ve had an office there. We know
and understand that market and have people in those places that can work with
our businesses and help them when they go down there.

PORTER: So do you think there will
be a day when small business in downstate Illinois, say in my home town of
Mount Vernon, will be doing business in Havana?

RYAN: I think so. Yeah, I think
the day will come when, when that’ll be opened up and people will be there. You
know, like I said, every country in the world is doing business in Cuba but the
United States. And I just hope we don’t get there too late and it’s all gone by
the time we get there. But, but I don’t think that’s the case. We’re
strategically located. Transportation costs can be reduced for, for a country
like Cuba and especially in the purchase of grain. All we gotta do is throw it
on a barge on the Mississippi River and float it down. So the transportation
costs are really, are nil compared to bringing it up from South America
someplace or some European nation to get the corn and the grain that they need.
Illinois is an ideal spot—the Midwest frankly.

PORTER: Sometimes when I drive
across the state and McLean County or something and you look out at that grain
and it’s, it’s kind of amazing to think about all the places in the world where
that grain will end up.

RYAN: We’ve got grain that goes
all over the world and that’s good. We need to get more. Our greatest potential
I think for international trade is with, in the area of ethanol. There’s
countries all over the world now that are, are starting to get rid of the ingredient
that we added to gasoline—MTBE has been eliminated because of the pollution
that it causes. And ethanol is the desired product. We now think that’s going
to be the big expansion. There are countries that need ethanol and Mexico being
our neighbor is one of those countries that need some ethanol. We’ve worked
closely with ‘em. I think we’re gonna have some pretty good export numbers on
ethanol.

PORTER: And in the end it helps
ease our dependence on oil producing nations.

RYAN: Absolutely. And it
certainly helps our farmers.

PORTER: That is Illinois Governor
George Ryan. His term of office ends next January and he is not seeking
reelection this fall.

MCHUGH: Cassettes and transcripts
of this program are available. The transcripts are free. Cassettes cost $5.00.
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PORTER: Transcripts are also
available on our web site, commongroundradio.org.
Commongroundradio is all one word. Our e-mail address is [email protected]
For Common Ground, I’m Keith Porter.

MCHUGH: And I’mKristin McHugh. Cliff Brockman is our Associate Producer.
B.J. Liederman created our theme music. Common
Ground
is produced and funded by The Stanley Foundation.

© 2002 by The Stanley Foundation

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