U.S. agriculture OK to face crisis: USDA chief
SAO PAULO (Reuters) - The U.S. agriculture sector was well poised to face the global financial crisis as farmers have managed their debts well and will see continued strong demand for their produce, U.S. Agriculture Secretary Ed Schafer said on Thursday.
"The agriculture credit situation is in good shape ... the sector is probably the best positioned to survive this difficult financial time," Schafer, who was in Sao Paulo to attend a biofuels conference, told Reuters in an interview.
"If you look at the lending institutions that are focused on agriculture, they are in pretty good shape," he said, adding that demand for food was supported by an increase in the global population of 75 million every year.
External trade would be crucial to minimize the severity of the economic downturn, Schafer said, but he was concerned isolationists in the newly elected Congress would push for a more protectionist approach.
"If we're going to suffer through the economic doldrums, we need to do everything we can to increase (economic activity) and certainly trade has been proven in the past to be able to do that," he said, adding trade generated 40 percent of U.S. GDP last year.
The Agriculture secretary said priorities for his successor in the next government were the implementation of the 2008 farm bill and working more closely with the energy department.
USDA is part-way through implementation of the 2008 farm law but some key decisions have yet to be taken, including how high to set the benchmark for a new revenue-guarantee program and how to tighten rules on farm subsidies.
BIOFUELS
The U.S. import tariff on ethanol, which Brazil says restricts the market for its more efficient and competitive cane-based fuel, was likely to remain in place at least until its expiry date at the end of 2010, he said.
Schafer said he was confident the incoming U.S. administration would pursue its predecessors' drive to expand biofuel production and use.
The United States is the world's largest producer of ethanol, followed by Brazil.
The former North Dakota governor defended U.S. use of corn as a feedstock for ethanol production despite criticism the fuel provides little more energy than used to produce it but added this is not a long-term solution.
"There are studies showing energy efficiency is there for corn ethanol," Schafer said.
"Corn ethanol is a stepping stone to the second generation. Cellulosic ethanol is the way to go and corn ethanol is a way to get there."
(Editing by Raymond Colitt and Marguerita Choy)
