January, 2001

Fruits of Thought

Veneman's Dilemma

By the time you read this, Ann M. Veneman will probably have been confirmed as the new Secretary of Agriculture. From the standpoint of the produce industry, it is hard to think of a better choice.

Raised on a peach farm in Modesto, CA, she already has held the Number-two position in the U.S. Department of Agriculture, and she ran the California Department of Food and Agriculture. She is a fixture in produce circles as she has spent over a decade giving speeches at almost every agribusiness forum in Visalia or Fresno and half the graduations in Bakersfield or Salinas.

Veneman’s appointment is unusual and not just because she is the first woman to be nominated for the post. Traditionally the Secretary of Agriculture has been a Midwesterner, perceived to be close to grain interests. The Number-two position has traditionally gone to a Californian, perceived to be close to other forms of agriculture, including produce producers.

As an attorney, Veneman has represented many agriculture-related clients, including Dole Foods, and she has served on the board of Calgene, the company involved in developing genetically engineered food. So she knows the produce trade, and certainly it is likely that the industry will have good access to the Secretary if we need it. She has a perfect resume for the job, a master’s degree in public policy, a law degree and, by all accounts, she is very intelligent.

As such, she has my sympathy as she undertakes her new job.

The problem is that being Secretary of Agriculture in a Republican Administration is a thankless task, because the Department of Agriculture sits astride the fault line of Republican thinking.

Conservatism and thus the Republican Party in America wrestles with a contradiction at its very heart. On the one hand, it is the root of American conservatism to praise the rural life. It is the yeoman farmer tending his own land who inculcates the values necessary for a good society and self-government. Yet, though affection for the values nurtured in rural America is a bedrock conservative principal, it is not all that defines conservatism in the modern age.

Republicans and conservatives have come to appreciate capitalism. Indeed, on every issue, there is a substantial voice in the conservative community and in the Republican Party that points out the folly of government subsidy and the wisdom of letting the free market allocate capital.

Which brings us to the heart of the dilemma that the new Secretary of Agriculture will have to deal with, or at least finesse. Farm country is experiencing a real problem all across America. Countless billions upon billions of dollars are poured into the rural economies in grain country. Other areas, such as dairy and sugar lands, are sustained with the help of regulations that keep milk and sugar prices artificially high. Fruit and vegetable growers, such as growers of apples and cranberries, are starting to get small amounts of federal aid to support their industries.

So what do we do?

The economic philosophy of the party dictates an obvious course of action: 1) don’t let support programs spread to fruits and vegetables, 2) dismantle laws and regulations that artificially inflate prices for certain commodities, and 3) end mass subsidy programs on grains.

However, the cultural conservatives are going to scream bloody murder. After all, Federal support to farmers in all its forms is a significant contributor to the economies of rural areas. One could imagine large swathes of the country in areas such as the Dakotas or Iowa losing half their population if agriculture was left to its own devices.

The issue is not new, but the enormous cost of farm programs, combined with the struggles of farmers to stay in business, is coming to a head. The Secretary of Agriculture has to bridge this unbridgeable divide.

Secretary Veneman has, in the past, managed to finesse the divide by focusing a great deal on expanding international trade. Her start in Washington was in the Foreign Agricultural Service. She was involved in the negotiations on GATT, NAFTA and the U.S.-Canadian Free Trade Agreement.

She is a shrewd politician because she recognized that the only way to bridge this gulf between free marketers and cultural conservatives was to urge a path to free up international markets so U.S. growers could export more product, more profitability. Then the family farmer and the rural economy could survive – thus pleasing the cultural right – and subsidies could be reduced or eliminated – thus pleasing the capitalist right.

Perhaps there was a point in time in which we could credibly believe that such a policy might be sufficient to solve the problems of American agriculture. Now, even if we make progress that it would materially change the situation. So we are approaching the moment in which the values of the Republican administration and, indeed, of America itself will be tested.

Yet the chance of a real choice being made is unlikely. So the most likely outcome is to muddle through. Cut the cost of uncontrollable subsidy, but try to head off the total devastation of the rural economy and the end of the family farm.

Had a Grain Belt boy been appointed Secretary, there would have been a greater danger that in all this “muddling through”, some errant mud might wind up muddying the produce trade. With a California girl at the helm, that is much less likely. So the produce industry is saved…now we just have to worry about the country.  pb