—Lancaster Farming, Saturday, November 6,1971
14
Palmby Speaks on Role of Farm Exports in U.S. Economy
Editor’s Note; While the
following speech made recently
by Clarence D. Palmby was
geared specifically for a
California audience, we think it is
an excellent summary of many
recent statements by USDA and
other government officials on
current U.S. farm policy. Palmby
is U.S. Assistant Secretary of
Agriculture for International
Affairs and Commodity'
Programs.
Assistant Secretary of
Agriculture Clarence D Palmby
said recently that California
farmers, by doubling their export
of farm products in seven years,
had made a “powerful con
tribution to the U S balance of
payments ”
Palmby, speaking at a lun
cheon of the California Council
for International Trade, said that
California’s share of the Nation’s
record $7 8 billion in farm exports
m fiscal year 1971 amounted to
$555 million. Most of these were
commercial sales for dollars.
About one-third of California’s
exports were fruits and'
presparations shipments
amounting to $lB4 million The
other leading commodities were
nee at $63 million, nuts at $6O
million, cotton at $56 million, and
vegetables and preparations at
$52 million
“California’s record farm
export of $555 million puts her in
third place among all the great
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farm States. Illinois ranked first
in fiscal 1971, with agricultural
exports valued at $655 million,
lowa was second with $592
million.
“In fiscal 1971, U S. farm ex
ports reached a record high of
$7 8 billion—a rise of $1 billion
over the preceding year. All but
about $1 billion of this was
commercial sales for dollars
also an all-time high. During the
same year, agricultural imports
were $5 8 bilhon-about two-fifths
of this amount being bananas,
coffee, rubber, and other com
modities that are in no way
competitive with U S production
“US. agricultural trade thus
produced a commercial surplus
of over a billion dollars last fiscal
year while most other categories
of trade were m deficit. Cer
tainly this portrays the im
portance to our national eefcomy
of a continued high level of|
agricultural exports.
“More than anything else, it
was a decline in our overall
balance of trade in recent months
that called into being President
Nixon’s New Economic Policy.
The new policy is a courageous
and imaginative effort to. make
the U S. economy more com
petitive in the world, and already
there are signs of improvement.
“It will not be easy to set right
a problem that has been growing
for several years, but the
President has set us on a new
direction-with the gold float and
the import surcharge. If the
result is a more equitable
alignment among the world’s
currencies, U.S agriculture has
a great deal to gain.
“In the years immediately
following World War 11, there
was no question about the value
of the dollar This country was
the supplier-in many cases the
only suppher-of many farm and
nonfarm commodities. The dollar
was the means of purchasing
these goods, and was valuable
without question.
“As time went on, and the
European nations recovered, this
changed-slowly and without
always being accurately
measured. By 1960, it was evident
that foreigners held an amount of
dollars that exceeeded the value
of our gold holdings, Since that
time, there has been a rather
steady erosion of ,the U. S.
reserve position. U.S. reserves
have declined by about $7 billion
since 1960, while those of the rest
of the world rose by about $4O
billion
“During the early and middle
1960’5, the balance of payments
deficit usually ranged between
sl-'/2 billion to $3 billion a year
depending on how you measure
it. In 1969 and 1970, the balance of
payments picture was mixed,
with some measurements
showing improvement and some
showing a deterioration. For
tunately, the trade component of
this balance stayed on the
positive side, helping to offset the
negative balances on tourism,
government loans, and overseas
investments.
“But by early 1971, even our
trade balance was running in
deficitlnonth after month. It was
apparent that, without strong
action by the United States, we
were in for our first annual trade
deficit since 1892-about $2 billion.
This would have been a slump of
more than $8 billion from the
comfortable surplus of $6- l / 2
billion that we had as recently as
1964. With the trade balance in
trouble there was no longer any
doubt that the dollar was in
difficulty.
“The causes include factors
both inside and outside the United
States. The internal causes in
clude sharply rising costs of
production not matched by gains
in productivity, accompanied by
persistent unemployment and
inflation despite U S. efforts to
correct these problems. At the
same time, we were handicapped
in dealing with monetary
problems by the fact that the U.S.
and the dollar have such a key
role in the international
monetary and payments system.
We were also hindered by the
defense burdens we carry
overseas and by certain trade
policies developed during the
post-war years as we helped
other countries to rebuild their
economies.
“At any rate, we were faced
with the likelihood of a
staggering deficit and the
balance of payments if all these
trends were allowed to continue.
Hence the courageous and for
ward-looking actions by the
President to set the U.S. on a new
and positive ’course--the most
important shift in economic
policy in almost four decades.
“Already we have seen certain
corrections in the system of
exchange rates, and perhaps
most important, the nation is
moving forward with new con
fidence and a new spirit as we
look toward being really com
petitive in years ahead.”
Assistant Secretary Palmby
said that American agriculture
wants and needs to make an even
greater contribution to the
nation’s trade balance--“but if
this is to happen we must con
tinue work : ng toward an open
trading world that favors ef
ficient production and com
parative advantage.”
He said that California
producers had much to gain from
an extension of liberal trading
policies in the world. There is
ample evidence, he said, of the
benefit that can come to
California producers as trade
barriers are lowered. Lem
ons, raisins, and almonds were
cited as examples.
“California is to be
congratulated for the work that
your people have done to develop
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the overseas market for fresh
lemons, raisins, and almonds.
The growth of this trade, par
ticularly with Japan, shows how
much benefit can come to your
state as a result of trade
liberalization.
can be repeated for fresh
grapefruit. After years of effort,
by trade groups as well as
government, Japan has
liberalized the import of fresh
grapefruit, and we are of course
very pleased to see this. The U.S.
Government continues to press,
as it did last week in Cabinet
level meetings with the
Japanese, for the removal of all
remaining restrictions on U.S.
imports into that country.”
Palmby said he hoped that
cotton producers in California, as
well as other states, would plant
larger acreages next year. He
said;
“The new cotton program,
authorized by Congress last year,
gives producers the opportunity
to produce more heavily for the
export market. Current prices
and the price outlook are
favorable. I hope that the com
bination of opportunity and price
will encourage growers to plant
and produce more cotton in
1972.”
Prospects are for a 1971 cotton
crop that will fall short of
disappearance. The same is true
for world production and use.
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