Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade,

Harris, Harold M., Jr.

Outlaw, Joe L.

English

Research Papers in Economics

CHOICES
The magazine of food, farm, and resource issues
4th Quarter 2004 CHOICES 25
A publication of the
American Agricultural
Economics Association
4th Quarter 2004
©1999–2005 CHOICES. All rights reserved. Articles may be reproduced or electronically distributed as long as attribution to Choices and the American
Agricultural Economics Association is maintained. Choices subscriptions are free and can be obtained through http://www.choicesmagazine.org.
Potential Deficit Reduction Efforts and 
WTO Cotton Ruling Adding to Policy 
Uncertainty
Hal Harris and Joe Outlaw
2005 is shaping up to be an interesting year for agricul-
tural policy in the United States. Here we are, three years
into a six-year farm bill, and commodity organizations and
other agricultural interest groups are starting to get itchy.
Most agricultural policy observers would agree that any
changes made to existing agricultural policies during 2005
will result in less support for agriculture rather than more.
In recent years, when a cut or offset was needed, conserva-
tion programs were looked to first. But is that what would
happen now?
Several forces are converging that are likely to create
policy and therefore financial uncertainty for U.S. farmers
and ranchers. Persistent rumors of impending Congres-
sional efforts to curtail the budget deficit via budget recon-
ciliation have many interested parties asking: “How much
will the cut be, and how are they going to do it?” Obvi-
ously, the people who know the answer to these questions
aren’t volunteering any information. Budget reconciliation
may not even happen. But at this point, there have been
many comments suggesting that it is a very real possibility.
Otherwise, why would several of the major commodity
organizations consider hiring a former House Agricultural
Committee Chair to help them try to “hold the line” on
future budget cuts? Whether the threat of budget reconcil-
iation is real or not—at this point, perception is reality.
The second force causing heartburn is the WTO rul-
ing on the Brazilian cotton case against the United States.
There are some who thought (and still think, for that mat-
ter) that the 2002 farm bill is fully compliant with U.S.
WTO obligations. There are at least a few members of
Congress who take exception to being forced into chang-
ing U.S. commodity programs by foreign governments.
Although the cotton ruling has drawn a lot of attention
from the media, it was not the slam-dunk win that initial
reports indicated.  There are some who think that the U.S.
appeal will be successful, but others point to the fact that
there are several examples of countries losing cases that
have continued programs found to be in violation of
WTO rules. Whether in the court of the WTO or of
international public opinion, it will be difficult for the
United States to completely ignore a loss of the appeal.
And the bottom line is pretty clear—the U.S. cotton pro-
gram does have an impact on world cotton prices.
The collection of papers in this edition of Choices is
intended to cover four of the big issues in agricultural pol-
icy today. The article by Flinchbaugh and Knutson sets the
stage for the Agricultural Policy Outlook for 2005 theme
by reminding us how we got to this point in agricultural
policy and where we are likely to go in the future.
The article by Mercier provides an excellent summary
of the WTO, the U.S. role in the WTO, and reflections
on the Brazilian cotton case as it may or may not influence
U.S. agricultural policy in the coming years. 
The third article, by Cain and Lovejoy, provides a his-
torical perspective on U.S. conservation programs and
Articles in this Theme:
The Agricultural Policy Outlook: Looking Back 
Focuses the Road Ahead . . . . . . . . . . . . . . . .27
The WTO and US Agricultural Policy: 
Intersections and Consequences. . . . . . . . .31
History and Outlook for Farm Bill 
Conservation Programs. . . . . . . . . . . . . . . . .37
Implications of Budget Reconciliation for 
Commodity Programs  . . . . . . . . . . . . . . . . . .4326 CHOICES 4th Quarter 2004
thoughts on the increased impor-
tance of conservation programs in
the future. 
In the final article, Richardson
and Outlaw discuss the issues associ-
ated with cutting commodity pay-
ments to farmers. The reality is that
it is not as easy as one would think,
and equity issues will almost certainly
arise.
As we continue the process
toward a new farm bill, Choices
encourages readers to share ideas con-
tributing to the interesting debate
that lies ahead.
Hal Harris is professor emeritus in
the Department of Applied Econom-
ics & Statistics at Clemson Univer-
sity. Joe Outlaw, Choices co-editor, is
an associate professor and Extension
economist in the Department of Agri-
cultural Economics at Texas A&M
University. 

Potential Deficit Reduction Efforts and WTO Cotton Ruling Adding to Policy Uncertainty

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