U.S. agricultural exports are forecast to increase more than $5 billion in the current fiscal year (FY04) to a record $61.5 billion, Secretary of Agriculture Ann Veneman says.

In a May 26 U.S. Department of Agriculture (USDA) press release, Veneman said agricultural exports to China will have more than tripled since that country's entry to the World Trade Organization (WTO), making China the fifth largest U.S. agricultural trading partner.

China is the top U.S. market for soybeans, cotton, and hides and skins, she said.

U.S. agricultural imports are also expected to rise in FY04 to $51.5 billion, $5.8 billion higher than in FY03. Most of the import gain will be in horticultural products, the release said. Fiscal years run October 1 through September 30.

Briefing reporters the day of the press release, Veneman said that because of an expanded cattle testing program to be implemented June 1, the United States will be able to detect early any potential cases of bovine spongiform encephalopathy (BSE). The program will significantly increase the number of cows tested for the disease.

USDA is also implementing other science-based measures to ensure the continued safety of U.S. beef, said J.B. Penn, under secretary of agriculture for farm and foreign agricultural services, during the briefing.

Veneman added that USDA is working with Canada's agriculture department to better coordinate BSE testing guidelines.

On other trade matters, Veneman said the United States welcomes the European Union's (EU) willingness to discuss a phasing out of agricultural export subsidies in WTO negotiations.

She added that a final ruling by the WTO on a case brought by Brazil involving U.S. subsidies of cotton exports is expected by June 18.

Veneman also said that USDA will rescind recently announced changes to organic food standards that would have allowed antibiotics in dairy cows certain chemicals in pesticides and non-organic fish meal in livestock feed.

U.S. Department of Agriculture (USDA)

May 27, 2004, Washington D.C.

Transcript of Tele-News Conference with
Agriculture Secretary Ann M. Veneman
Under Secretary for Farm and Foreign Agricultural Services J.B.Penn and
USDA Chief Economist Keith Collins

Veneman: As you know, just last week marked the one-year anniversary of the first find of BSE in Canada May 20th. At that time in accordance with our established protocols, we cut off all of the trade from Canada in beef and beef products and live cattle.

Subsequent to that in August I announced that we would allow certain products to come in, and then we would publish a rule to allow additional products to come in.

And that rule was actually published in the fall. Subsequently we found BSE in the United States, a single case. We then let the comments close on that rule on January 5th. We then released the rule in April, closing again in May. We are in the process now of reviewing that overall rule for additional products to come in from Canada. That rule should be completed in the near future, but at this point I cannot give you an exact time.

It's, there were many, many comments that came in on that rule from a variety of different sources. And there is a large number of varying comments that have to be reviewed completely in terms of overall risk assessment with regard to this rule.

So it's impossible for us to at this time predict when the rule might be published.

QUESTION: I wanted to ask about -- you've talked a great deal about trade. I wanted to ask about subsidies, the WTO ruling regarding cotton, and some of these impending trade agreements, the FTAs [free trade agreements] for instance. And are we going to see basically a real phasing out of U.S. subsidies in other farm products with some of these agreements?

VENEMAN: Well, let me first comment on the WTO case involving cotton. As you know, this case has come before the WTO. It was brought by Brazil. It challenged a number of our programs related to cotton. There is a preliminary ruling that has been shared with the parties to the case. That is now being reviewed and commented on, and the final version will be out in mid-June, June 18th.

So at this point, it is impossible to comment any further on the Brazil cotton case situation.

But I think it's important to remember that the United States in the summer of 2002, after we had a successful launch of the Doha Round in 2001, put a very aggressive proposal on the table to say that if other countries would do the same, we would accept additional disciplines on our own subsidies. We have been aggressive about this. Our agriculture community has supported that position, that if the world takes these steps that the United States will follow suit.

And I think that's very important. I think it's important also that the European Union has indicated some movement just in the last week or so in indicating they finally will discuss, allow to be discussed in these negotiations, these WTO negotiations, the phasing out of export subsidies. They use 90 percent of the export subsidies in the world.

A key to us in these negotiations of course is market access. Average tariff for U.S. food and agriculture, for products coming into the U.S., food and agriculture products coming into the U.S. is about 12 percent; worldwide it's about 62 percent.

So it's very important to us that we get tariffs brought down, that through these negotiations we get increased market access for our farmers and ranchers.

Q: My question is regarding milk protein concentrate [MPCs] imports. And of course with the opening of the border to Australia and the Free Trade Agreement there's growing concern in the dairy industry about unlimited imports. Are we going to see some move by USDA to try to restrict imports in some manner, or are we going to change rules?

VENEMAN: Well, I think it's important to recognize that in the Australia Free Trade Agreement while there was some additional market opening, it is quite limited and also very slow to be phased in. With regard to MPCs, there is not currently, as you know, a restriction on MPC from coming into this country. And I know that there is some legislation pending in the Congress that may address that issue, but it is not something that we see, that we will take a position on in terms of the restriction of that product.

I think it's also important to point out that MPC plants are now being built in the U.S. so that U.S. dairy product is being used for the production of MPC for use in this country.

Q: Just before your news conference the folks at RCALF [Ranchers-Cattlemen Action Legal Fund] held their own news conference calling on USDA to maintain the current ban on Canadian beef and cattle imports until the scientific analysis can be conducted by National Academy of Sciences people. And they also want you to track and test all Canadian cattle now in the United States to determine the actual prevalence of Mad Cow and test all Canadian cattle slaughtered for beef destined in the U.S.

VENEMAN: Well, I'm pleased that the RCALF folks believe that we need to do things based on sound science because we completely agree with that, and that's what we've tried to do in all of our decision-making with regard to BSE in this country.

And it goes back, you know, several years. We began initially -- and this is very important to protecting the overall food supply -- and in implementing a ruminant-to-ruminant feed ban back in 1997. That's one of the most important things that a country can do to prevent any spread of BSE. As you know, the single cow that we did find in Washington State was born pre the feed ban. So that's one thing that we've done.

We also have done several risk assessments in terms of BSE, how it might spread. But since the find of BSE in this country I think it's important to recognize that we are looking at a very aggressive surveillance plan based upon the advice that we got from an international scientific review panel that we appointed but with experts from all around the world on BSE. And so we have put together this increased surveillance plan that will give us a baseline as to how prevalent this disease may or may not be in this country.

We are in the process of implementing that. It is a very aggressive move on our part as well as we are doing a number of other things to protect the public health, most important being we announced the removal of what's called SRMs, or specified risk material, from the food supply. And that is according to all of our scientists the most important thing that we can do to protect the public health. And that is our ultimate goal.

Q: Madam Secretary, you mentioned the growth of the Chinese market. We continue to see stories where they are wanting to slow their economic growth and reduce perhaps some of their imports. How much would you anticipate that we would see a decline from some of these levels and percentages that they have had in the past?

VENEMAN: Well, we aren't projecting a decline at this point at all. In fact, our numbers for China in the estimates that were released yesterday went from $5.4 billion estimate for 2004 to $5.9 billion in exports. And we are certainly not anticipating any decline at this point.

But I might want Keith Collins to comment a bit further.

COLLINS: Thank you, Madam Secretary.

Indeed, China's economy has been growing very strong -- last year 9.1 percent. The Chinese government is concerned that some sectors have had some over-investment, and it's going to take awhile for that excess capacity to be absorbed by the overall economic growth so that they've implemented some limitations on loan volume and things like that that banks can lend out.

They are shooting for an economic growth-rate somewhere in the neighborhood of 7 to 8 percent, down from 9 percent.

Even at those rates, that's huge by world standards. And we would expect that even if they are able to achieve some slowing of their economy it's still going to be a booming economy, and they're going to be looking increasingly toward the United States.

Certainly in any one year they could have a big crop, good weather, whatever, which might cause them to pull back some on imports of a particular commodity. But I think with respect to China the trend is up, and I don't see the economic growth slow-down that the Chinese government has talked about is going to be that substantial or will impede that long-term growth.

Q: My question is to you also in regards to the Mad Cow situation in our export markets. Next month we of course ramp up our testing of suspect cattle in the U.S. 250,000 or as many as we can get. Have our export partners given us any indication as to whether they will keep their markets open if indeed we do as expected find another case of Mad Cow?

Or is that going to depend on basically the epidemiology of the cow that we find, be it a younger cow or an older cow as of the case in Washington State?

VENEMAN: I think it will depend on the country and their rules. I mean, what we have tried to do is approach this as I said before from a very scientifically sound basis -- as the International Review Committee asked, basically recommended to us, that we increase surveillance for a period of time to establish this baseline. That is what we're attempting to do.

And as you say, we anticipate that we may find a few additional cows. And we are prepared for that. Certainly we've discussed this with our trading partners in terms of a very robust system that we are implementing in terms of surveillance in this country.

And so hopefully our trading partners will look upon this as a very important step that we are trying to be, take as stringent of regulations as we possibly can with regard to finding additional cases that may or may not exist. And that's what we're trying to do with this surveillance program.

But I think it's very important also to recognize the fact that we have fully engaged our trading partners to try to open up markets that had been closed after the find of BSE on December 23rd. We've succeeded in our discussions, particularly with Mexico, which was one of our largest beef markets, to open up nearly all of that trade again. And we continue discussions with the Japanese, with the Koreans and with a whole host of other countries to reopen our markets because that's very important for our farmers and ranchers.

I might ask Dr. Penn to comment a bit on some of the specific things that we've been doing with regard to market opening around the world.

PENN: Thank you. I think the Secretary has pretty well summarized the situation. With respect to the ramped up surveillance system, we have provided information about that system. We are providing updates as we get closer to the June 1 launch-date. And we of course have made them aware that if we have additional BSE in our livestock herds then we'll very possibly find it.

But as the Secretary has emphasized, we have tried to, with our amelioration measures, put in place a system that is robust enough to ensure both domestic and foreign consumers that we are protecting the public health and that we are moving to the eradication of this disease from our livestock herd.

We are engaged with all of our major trading markets. We are exchanging technical information, exchanging technical specialists, and we are very hopeful that we can get some of those major markets reopened in the near future.

Q: Thank you. Madam Secretary, we again just came back from the RCALF press conference. There's a claim that I believe is coming from not just RCALF but the Consumer Federation that the USDA's misrepresenting the Harvard Study saying that it does not account for the introduction, the possible introduction of diseased cattle from Canada or other countries and therefore you cannot make any presumptions about the state of the safety of the supply in this country.

Can you respond to that, and refute that if necessary?

VENEMAN: Well, I don't have the benefit of having heard the RCALF press conference first of all, so I can't respond to specific allegations they may be making. But let me just say a word about the Harvard Study.

The Harvard Study was a proactive step on the part of USDA and FDA to look at the potential risk for BSE in this country. And in order to do that assessment, Harvard put together some scenarios to assess various levels of risk.

And through that study it didn't say that we didn't have BSE or we wouldn't have BSE. But it said, if we have it they believe that based upon actions that had been taken in the past, primarily the ruminant-to-ruminant feed ban which I mentioned was taken in 1997, that that would have prevented any wide spread of the disease in this country.

And I think again, you know, scientists can differ about, you know, assumptions that may have been made. But Harvard did that study to really look at what the risk was, what actions had been taken, and what additional things we should do. We took that very seriously. And in fact, it helped to form the basis of our BSE response plan, which we immediately put into place partially on May 20th with regard to the Canadian find, and then completely we put this plan into place on December 23rd.

I think the very important thing to recognize here again is that our first and foremost objective is to protect the public health and that we are doing everything that we can to make sure that it is not compromised.

In addition to the feed ban, the SRM removal is critical in that regard. And it is I think very important that we put this disease in perspective and that we have taken very, very aggressive steps in working to make sure that we do not have any risk to public health.

Q: Secretary Veneman, the Bush Administration in the past has been a strong supporter of accountability. In the Texas cow situation and the Canadian beef imports, has anyone been held accountable for USDA's mistakes in the past few weeks? And if not, why not?

VENEMAN: Well, I think it's very important to recognize that we worked aggressively to look at the issues surrounding both of these incidents that you bring up, particularly in looking at the Texas situation.

One of the things we found is that there was a lack of consistent guidelines being used by our two agencies. That shouldn't have been happening. We should have tested the cow. But we have used this as a means by which to look at where the flaws in the system were and to clarify and to make sure the situation doesn't happen again.

It is, I think, important that as we're looking at how we use this incident to make sure that this kind of thing doesn't happen in the future. As has been indicated we now have implemented a policy as a result of this Texas incident that any animal that's antemortem condemned in the plant--there will be no question -- it will be tested. That is our policy at this point as a result of that incident.

If it appears that we need to take additional actions with regard to any of this, we will not hesitate to do so. I think again, it's important to recognize that our number one objective is to protect the public health and that there is nothing in either of these incidents that has in any way compromised public health.
Quinn bidding you a good day from Washington."