Trade Talks Are High-Stakes Game for State’s Farmers : Agriculture: World leaders meeting in Houston agreed on farm trade reform but set no timetable for changes. Some California growers have much to win; others have a lot to lose.

Ask a California kiwi fruit grower or marketer about the economic summit in Houston and the response is likely to be subdued, cautiously optimistic at best and that only if he’s having a good day.

The reason is simple: Trade liberalization would come too late for the California kiwi industry.

Over the past several years, heavy production subsidies were paid to French, Italian and Spanish growers to get them to tear up their wine grapes--of which there was a glut--and start planting kiwi.

“That’s why we have lost the market,” said James Llano, export sales manager for Blue Diamond Inc., a Sacramento-based fresh fruit marketing cooperative. “The kiwi fruit currently being produced in Europe were planted with government subsidy. . . . We really would have benefitted from this three to four years ago, before planting had taken place.”

On Wednesday, the last day of a Houston meeting between the United States and six of its major allies, the Group of 7 issued a carefully crafted compromise on the question of international farm trade reform, backing a U.S. demand for cuts in subsidies but putting no timetable on that goal. But while the compromise set a framework for negotiations, it included no specifics.

Because California leads the nation in agricultural exports, it also could become the country’s biggest winner if quotas and government subsidies to foreign growers are outlawed in upcoming General Agreement on Tariffs and Trade negotiations.

But some of its agricultural segments could also stand to lose if trade is liberalized through the GATT talks. The United States hopes that the European Community will ease government subsidies and import quotas, and there was some evidence Wednesday that that could happen. But the United States has a few of its own import quotas, including those governing sugar, dairy products and peanuts.

California is the biggest producer of beet sugar in the nation, and sugar beet growers are understandably nervous about what the United States gets and gives away in negotiations.

“What could cause us to have major losses in the industry is an inequitable change in our current policies,” said Luther Markwardt, executive vice president of the American Sugarbeet Growers Assn. “What’s at stake here is 361,000 jobs and an $18.5-billion industry. Out of that, California is probably the most vulnerable.”

But Paul Drazek, an international trade specialist with the American Farm Bureau Federation, contends that U.S. farmers are efficient enough to do well in a fair international market. Therefore, no matter what the United States concedes, it will still be better off.

“The Department of Agriculture has estimated that unfair trade practices cost us $11 billion in agricultural exports annually,” Drazek said. “Last year we exported a total of $40 billion. California was top agricultural export state and could be the single biggest winner, because many of the commodities that face the toughest foreign restrictions are the types of products produced in California.”

The USDA is particularly optimistic. According to its Foreign Agricultural Service, the United States could increase its export of dried prunes to the European Community from $49 million at present to $64 million with trade liberalization.

The United States currently exports $64 million worth of raisins to Europe each year; that amount could increase to $83 million. And rice exports could shoot up from $91 million to $159 million.

“We’re delighted” about the progress made in Houston on Wednesday, said Kelly Shipp, spokeswoman for the USDA. “It moves us off the dime. We’ve been stalemated for some time. It’s also the first time that the European Community has agreed to negotiate on export subsidies and import quotas.”

* SUMMIT ENDS IN COMPROMISE, A1