State’s Farmers See Loss of Key Export Markets

Though the federal government expects U.S. farm exports to increase this year after five years of sharp decline, California agricultural leaders said Wednesday that they see a major loss of key markets in Spain and Portugal, which joined the European Communities on Jan. 1.

The biggest threat to exports is ineffectual machinery for resolving international trade disputes under the General Agreement on Tariffs and Trade, the farm leaders told a hearing here of the U.S. Senate Agriculture Committee.

“We must put some teeth into the GATT mechanisms to gain sincerity and respect for its rules,” said Henry J. Voss, president of the California Farm Bureau Federation, which claims to represent 85% of the state’s farmers and ranchers.

Voss and other leaders joined Sen. Pete Wilson (R-Calif.), who conducted the hearing, in praising President Reagan’s warning this week to the Common Market to compensate this country for trade losses due to the entry of Spain and Portugal into the organization, as is required under GATT, or face retaliation.

Applied New Tariffs

Effective March 1, the Common Market began applying new tariffs on grain imports to Spain and Portugal, which will increase the cost of buying U.S. grain by up to 80%. Portugal, which has bought all of its imported grain from the United States, creating a $408-million market in 1984, will now have to fill 15% of its import needs from within the Common Market.

Spain and Portugal also produce many of the fruits, nuts and vegetables that California exports to Europe, and they will likely take much of that market away through the Common Market’s system of preferential tariffs, the farm leaders noted.

Nonetheless, Wilson said after the hearing, “the worst is behind us.” He cited Agriculture Department forecasts that farm exports will increase 10% this year and another 7% in 1987.

The nation’s farm exports, which totaled $41 billion in 1981, bottomed out at $30 billion last year. California’s farm exports slid to less than $3 billion from more than $4 billion over the same period. Exports still account for about 20% of the state’s $14-billion agricultural industry.

Cite Lower Dollar

The government’s optimism that a turnaround is at hand stems mainly from a dollar that has dropped about 30% in value over the last year, making U.S. farm products cheaper in overseas markets.

Wilson noted that Congress this month must approve or reject President Reagan’s proposal to open free-trade talks with Canada, by far this country’s largest trade partner. Those talks drew qualified support from the California leaders--but only if the United States acts to end what they described as discriminatory trade practices affecting, among other areas, California wine, pork and timber.