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The Global Forces Driving Markets, Investments, Government Policies, and Trade Negotiations in Food and Agriculture

A Two Report Multi-Client Study and Monitoring Service Undertaken by

Informa Economics, Inc. Jointly with

The Tipton Group, Inc.

June 2005

The Doha round of trade negotiations has taken on a new urgency in light of the success of litigation against agricultural programs in the United States and Europe. The negotiations are at a nexus of interacting political events, including agricultural reform in the EU and the coming debate over reauthorizing the 2002 farm bill in a tight budgetary environment. US politics will play an important role, as the United States begins to address the WTO Cotton Decision and to consider the CAFTA. While the end result of these changes should be significant new market opportunities for agricultural trade throughout the world, uncertainty remains high. The proposed Trade Policy Review Service will focus on these interactions, explaining the issues as they unfold and anticipating upcoming developments. The first study report will be issued in October, prior to the Hong Kong Ministerial, with a second, updating report shortly after the negotiations are completed. Monitoring reports will be issued throughout the negotiating process. Please join us in a multi-client, stock-taking review of trade prospects for agriculture in the coming decades together with a monitoring service that will keep you abreast of developments as they unfold.

The Global Forces Driving Markets, Investments, Government Policies, and Trade Negotiations in Food and Agriculture June 2005

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Background In spite of a growing conviction that multilateral trade negotiations among 148 WTO members have become too cumbersome to manage, there are strong prospects that the Doha Development Round could end with very significant gains – including an agreement to end export subsidies and to sharply reduce domestic supports and tariffs. However, completing the Round promises to be increasingly difficult, with wide differences across many dimensions. Clearly, the willingness of the G-20 countries to challenge the United States and Europe and other developed country’s programs has changed the dynamics. There are a number of other factors at work as well, including:

• Proposed changes to EU agricultural support programs, particularly for sugar;

• The large budget deficit in the United States and growing resource needs to fund both social programs and the war on terror, and to change programs as a result;

• The need to reauthorize the 2002 Farm Bill before it expires with the 2007 crops;

• The 2007 deadline for Doha Round negotiations imposed by the expiration of US Trade Promotion Authority in 2007; and

• The WTO dispute settlement panel decisions against U.S. cotton programs and the EU sugar program, and the likelihood of further litigation in the near future.

The WTO ruling that the EU’s sugar program violates its Uruguay round commitments has added significant ammunition for opponents of the program in the EU. The EU commission has already proposed reforms to the program that will significantly lower its costs, and the EU parliament will consider the legislation this fall. Furthermore, in 2003 the EU agreed to reforms of the CAP that will also affect the degree to which their programs distort international markets. The EU will be looking for concessions from the WTO membership at the Hong Kong ministerial in return for adopting these reforms. The mounting budget deficit in the United States ratchets up pressure on farm programs just as the negotiations for renewing the Farm Bill are beginning. This combined with the cotton panel ruling, with its implications for the marketing loan programs for all commodities, could provide an incentive for the United States to seek concessions from WTO members for program changes that may be inevitable. On the other side, WTO members are faced with the expiration of Trade Promotion Authority in the United States, which could effectively end the possibility of reaching an agreement. Brazil in particular is probably highly motivated to maximize the leverage gained from its successful litigation against the United States and Europe.


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While these forces combine to increase the odds of Doha Round success, that outcome is far from certain. The WTO negotiations face increasing protectionist pressures from the agricultural sectors of many important members, and any significant setback from now on could easily derail the process entirely. In particular, the upcoming ministerial in Hong Kong, scheduled for December 2005, is a crucial step in advancing the negotiations. The progress made there will set the level of ambition for the agriculture agreement. Another Cancun-like collapse would be catastrophic. Today’s superheated agriculture and trade policy also includes growing concerns about food safety and the expanding war on terror. Informa Economics proposes to conduct an extensive trade policy review to help you understand the issues as they unfold and anticipate upcoming developments.

The Proposal As the Doha Development Round moves toward completion, we propose to evaluate and monitor current trade talks and to provide clients significant detail on the progress of the negotiations with estimates of their likely impacts. The project will update Informa’s 2004 trade study, with reports at two critical junctures, before and after the Hong Kong ministerial in December 2005, plus ongoing monitoring to keep you informed. The pre-ministerial policy review would be a review of the current state of play for trade, building on last May’s report and incorporating the numerous important events that have transpired since then. It also will provide an extensive analysis of the recent WTO dispute panel rulings concerning cotton and sugar, as well as others that may be forthcoming. This will include potential impacts on WTO provisions and domestic policies. The post-ministerial report will synthesize the outcome of the negotiations, their implications for completing the Doha round of negotiations, and the further implications for agricultural programs worldwide, particularly in the United States and Europe. In both studies, Informa and The Tipton Group would use the sharply expanded information sources from T&F Informa, a global information company that includes Agra Informa, F.O. Licht and a number of others—including some 65 publications worldwide. See, for example, www.informaecon.com and www.agra-net.com for lists of publications included in the current T&F Informa family of publications. In addition to Informa Economics’ Washington, D.C. and Memphis, Tennessee staff, staff members from Agra CEAS Consulting, based in Brussels and at Imperial College, University of London in the UK, will participate actively in the project. Additionally, the Tipton Group, with their many years of policy analysis and lobbying food and agriculture issues, will provide their insight and experience to help our clients gain a better understanding of what’s likely.


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Approach The study will be organized by Informa Economics and conducted by Informa’s senior staff, along with The Tipton Group. The project will begin with a kick-off meeting in Washington of participating clients for a review of the current policy environment and discussion of the project including the specific approach, activities and timetable. Project components will include: • Pre-Study (“kick-off”) Conference – A meeting of participating clients and

Informa/Tipton Group study staff will be held in Washington, D.C. to review the detailed plans for the study and to identify particular areas and issues to receive special attention. This seminar will address the major study topics, provide a presentation on each to update clients on current developments, and enable specific client comments and interests relating to each to be noted.

• Initial Report--Brief Review of Trade Policy and Outlook – A description of the “current state of play” for both the United States and the European Union with regard to trade policy, the factors affecting policy and the outlook for the next two years. October 2005.

• Second Report--Follow-up of the Hong Kong Ministerial – Immediately following the Doha negotiations in December 2005, Informa/Tipton Group will analyze the impacts on trade negotiations and agricultural programs in the United States and the EU. February 2006.

• Monitoring Reports – Informa will issue monthly reports on progress made and sticking points on sensitive issues in the Doha round, emphasizing the interaction between reform discussions in the EU and the United States and WTO talks. Monthly monitoring reports throughout the study and ending with the final study report.

• Final Report Presentation at Clients' Offices. Informa staff will travel to client offices to present the final report and conduct in-house seminars, as requested. These seminars are tailored to each client’s individual needs and interests, and provide a unique opportunity to stimulate discussion and bring an outside viewpoint to within an organization. These presentations will be made for only out-of-pocket expenses.

Timing The activity would begin in June/July 2005 with the pre-ministerial report complete by October 2005. The final study report would be complete in February 2006. Study Fees The fee for each participating organization is $9,500 for Informa clients and $11,500 for non-clients. The fees will be billed one half upon the study’s initiation and one half in December 2005.


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THE GLOBAL FORCES DRIVING MARKETS, INVESTMENTS, GOVERNMENT POLICIES, AND TRADE NEGOTIATIONS

IN FOOD AND AGRICULTURE Forward Executive Summary

I. Background – Political Pressures On Agricultural Trade Negotiations, Farm Programs a. EU reforms b. U.S. budget pressure and Farm Bill reauthorization c. TPA expiration d. WTO panel decisions

i. Cotton ii. Sugar

e. Protectionism in the 21st century f. Other trade issues that could derail trade negotiations, farm program

reform II. Farm Programs Under Pressure in the United States, European Union

a. United States i. Sugar

ii. Dairy iii. Cotton iv. Marketing loan program

b. European Union i. Grains

ii. Sugar iii. Dairy iv. Other

III. The Doha Negotiations a. Lessons learned from previous negotiations

i. Uruguay round ii. Seattle

iii. Cancun b. The July Framework Agreement c. Bilateral negotiations effect on Doha d. WTO Panel decisions

i. U.S. cotton ii. EU sugar

iii. Effect on Doha e. Timetable for the Doha round

i. Deadline for modalities agreement ii. TPA expiration

iii. Political outlook f. Major areas of agreement and disagreement


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i. Developing country proposals, positions ii. US position

iii. EU position IV. Conclusions – What To Expect

Preliminary Project Schedule (Dates to be finalized once signup is complete) June/July 2005 Pre-study conference and study begins

October 2005 Pre-Hong Kong ministerial seminar and first report February 2006 Post-Hong Kong ministerial seminar, final report February/March 2006 Individual presentations at client offices

Study Team

The project will be conducted under the direct supervision of Dr. William C. Motes, Senior Vice President and head of the Washington, D.C. office, together with Dr. Mark Jekanowski and Informa staff as appropriate. Participating staff will come from Informa Economics, The Tipton Group in the United States and Agra CEAS Consulting in Brussels and the UK. Brief biographies of key personnel on the project team include: • Dr. Stefan R. Osborne, Trade Policy Senior Consultant. Dr. Osborne works with

Informa clients on a range of economic analyses and agricultural policy research in the Washington, D.C. office. Dr. Osborne has extensive experience analyzing the WTO "Agreement on Agriculture" and agricultural provisions in Free Trade Agreements. He spent the year prior to joining Informa Economics in the Agricultural Affairs Office of the U.S. Trade Representative, working primarily on agriculture negotiations for the U.S. - Morocco Free Trade Agreement and the U.S. - Andean Free Trade Agreement. Prior to working with USTR, he spent several years in the Europe, Africa, and Middle East Branch of USDA’s Economic Research Service, where he specialized in agricultural production and trade policy in Russia and Ukraine. Dr. Osborne has a bachelor’s degree in mathematics from the University of Dayton and a doctorate in economics from Indiana University.

• Dr. William C. Motes, Senior Vice President. Dr. Motes has more than 30 years of experience in the evaluation of agricultural and trade policies. His relevant experience includes staff service for the Senate Committee on Agriculture and Forestry with primary responsibility for analysis of agricultural and trade policy, responsibility for direction of analyses of agricultural and trade policies for the US Secretary of Agriculture, and direction of a large number of policy analyses for private clients and client groups with Informa Economics, Inc. He has worked and traveled extensively in Africa, Latin America, Europe, and Asia to evaluate impacts of policies and programs. Under the proposed project, he will have primary responsibility for the development of the research findings and conclusions. Dr. Motes holds BS and MS degrees from Kansas State University and a Ph.D. degree from Iowa State University.


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• Bruce A. Scherr, President and Chief Executive Officer. Dr. Scherr has been with Informa Economics, Inc. (formerly Sparks Companies, Inc.) since 1987 and has worked extensively with companies to develop improved price risk management procedures, to organize and manage purchasing and merchandising programs, and to assist agribusinesses and public sector institutions in strategic and tactical planning. Formerly he was president of Sparks, Jacobs, Scherr, Inc. (SJS), a sister company to Sparks, and president of Agri-Commodities, Inc., an agriculture consulting firm based in Andover, Massachusetts, which was acquired by SJS. Prior to forming Agri-Commodities, Dr. Scherr was a divisional vice president at Data Resources, Inc., where he developed and utilized for the public and private sectors the first commercially available econometric model for US agriculture. Dr. Scherr received his bachelor's degree from Rutgers University and his master's and doctorate degrees from Purdue University, all in agricultural economics. Currently, he is a member of the Board of Trustees of North American Electric Reliability Council (NERC). He served as a member of the Board of Directors for Desert STAR Inc., an electrical transmission Independent System Operator for the Desert Southwest from January 2000 through February 2002. In addition, Dr. Scherr has served as a member of the University of Tennessee’s (UT) Institute of Agriculture Agricultural Development Board and UT’s Committee for the Future. He is a member of several honorary research and agricultural societies, a member of the National FFA Foundation Sponsors’ Board 2000 through 2001 and a former advisor to the President's Council of Economic Advisers and National Aeronautics and Space Administration.

• Mr. E. Linwood Tipton, Chairman & CEO, The Tipton Group, Inc. Mr. Tipton’s firm is a boutique consulting and lobbying firm located in Washington, D.C. providing consulting, advising and advocacy services to its clients on mergers & acquisitions, customs and trade issues, public policy and lobbying, strategic planning, marketing and other related subjects. Prior to opening the Tipton Group, Tip was President & CEO of the International Dairy Foods Association (IDFA). In this capacity he was responsible for managing the affairs of four of the nation’s top dairy processor organizations – the Milk Industry Foundation (MIF); National Cheese Institute (NCI); and the International Ice Cream Association (IICA). Tip is widely acclaimed as the founder of the processor funded generic advertising and promotion program famous for the “Milk Moustache” “Got Milk?” national campaign. Tip has led the U.S. sweetener users’ efforts to reform U.S. sugar policies, and his knowledge of international trade issues led to his appointment to the National Commission on Agricultural Trade and Export Policy created by the Congress and President Reagan. He has served as an advisor on trade matters to several U.S. Secretaries of Agriculture and U.S. Trade Representatives under both Republican and Democratic Administrations. He currently serves on the Board of Directors of Wimm-Bill-Dann Foods Company, the largest dairy, baby food, juice and water company in Russia with annual sales of about $1.5 billion. Tip’s experience in business activities, the political arena and government relations gives him a unique and extremely knowledgeable perspective of the food industry.


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• Mr. Brandon N. Partridge, Vice President, The Tipton Group, Inc. Mr. Partridge is an experienced public policy and government relations consultant with expertise in the food industry, agriculture, and international trade. Prior to his work for The Tipton Group he managed government relations for Nestlé USA, the U.S.-based subsidiary of Nestlé S.A., the world’s largest food company. Before coming to work in Washington, he served as an aide to Ohio Governor Bob Taft, working in both political and official roles. He holds a B.A. from Vanderbilt University and a M.A. from the University of Cincinnati.

• Dr. Mark Jekanowski, Vice President. Dr. Jekanowski is responsible for economic analyses and agricultural policy research at the Informa Washington, D.C., office. Prior to joining Informa, Dr. Jekanowski was an agricultural economist in the Food Markets Branch of USDA’s Economic Research Service where his research focused on the changing structure of the food manufacturing and retailing industries as well as trends in consumer demand. Dr. Jekanowski was raised on a family owned tobacco and vegetable farm in Massachusetts. He received his bachelor’s degree in resource economics from the University of Massachusetts at Amherst and his master’s and doctorate degrees in agricultural economics from Purdue University.

• Mr. Joe Somers, Senior Consultant. Mr. Somers is an expert on agricultural markets, marketing, and agricultural research. He has extensive knowledge of Brazilian agriculture and is proficient in Portuguese and Spanish, and frequently works with Brazilian farmers, agribusinesses and others on agricultural concerns. Mr. Somers brings to the project very strong experience with the Foreign Agricultural Service, USDA where he served as Agricultural Attaché in Brazil and Argentina. While in Brazil and Argentina, he was responsible for reporting on soybeans. In FAS/Washington he was an oilseed analyst with the Oilseeds & Products Division and the Crops Branch Chief with the Production Estimates and Crop Assessment Division. While in Washington, he conducted six commodity analysis trips to Brazil. Mr. Somers holds a B.A. degree from Northeastern University and an M.S. degree from University of Massachusetts.

• Mr. Conrad Caspari is Managing Director of Agra CEAS Consulting, and in a consulting career that has stretched over some 20 years has been involved in hundreds of consulting assignments for clients across the agricultural field in Europe and worldwide. Conrad has a Masters degree in Philosophy, Politics and Economics and in Agricultural Economics from Oxford University. He worked as a trainee at the European Commission in Brussels and then for the Food and Drink Industries Council and the Economist Intelligence Unit in London before joining the Brussels office in 1986. Over the years, Conrad has gained considerable experience of the operation of agricultural policies and related trade issues in the EU and the world, across an extensive range of business sectors including detailed work in the soybean sector. His specialist expertise lies in anticipating, evaluating and interpreting policy changes and their implications for commercial strategy and institutional clients. He has close contacts with key players in the EU agricultural and biotechnology industries and the energy crops field. He speaks fluent German and French.


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• Dr. Edward Oliver has a Ph.D. in Agricultural Economics and Business Management from Imperial College, University of London. Edward has also completed a BSc in Agriculture at Writtle College and an MSc in Farm and Rural Business Management at the University of Aberdeen. Since joining the company in 1999, Edward has worked on a range of public and private sector work from both the UK and Brussels offices covering almost all of the CAP sectors. He is currently managing the company’s economic modeling of the agricultural sector, which provides forecasts of agricultural markets for the EU and a major biotechnology company.

About Informa Economics

Informa Economics, Inc. (formerly Sparks Companies, Inc.) is a food and agriculture-consulting firm with a highly capable staff, a very comprehensive data/information system, and close association with major private agribusinesses worldwide. Informa Economics is an operating company of T&F Informa, a UK firm and part of T&F Informa’s Agra Group, including such sister firms as Agra CEAS Consulting, F.O. Licht, among others. Informa Economics is a world leader in the collection, analysis, and dissemination of agriculture and food information. Headquartered in Memphis, Tennessee, Informa Economics also has offices in Washington, D.C., St. Paul, Minnesota, and Winnipeg, Canada. In operation since 1977, Informa Economics, Inc. has hundreds of commercial clients, farmers and ranchers, government agencies, law firms, associations, and others with high quality analytic information and consulting services. The Informa Economics team has extensive experience in agribusiness and agricultural policy decision-making. Many employees formerly held senior policy, analysis or advisory positions in government; worked for major trade associations; held positions in land grant universities; or held senior management positions in leading agribusiness companies. (For more information on Informa Economics its staff and the services it provides see www.informaecon.com). Selected Relevant Project Experience Informa Economics routinely conducts policy evaluations for governments, private companies, and associations throughout agriculture. Recent international market assessment experience includes several projects for both firms, including: • Trade Policy in an Increasingly Protectionist World. A comprehensive evaluation

of agricultural and trade policies and the outlook for the Doha Trade Round, with detailed projections for selected major commodities. A multi client study, completed in May 2004.

• An Evaluation of the Competitive Position of World Livestock Markets in the Coming Decade. A highly detailed study of the key factors driving current and expected trends in each of the world's major markets and each of the key producing areas for the coming decade. (2003)


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• An Evaluation of the Competitive Position of World Grains/Oilseeds Producers for the Coming Decade. A comprehensive study of the key factors driving current and expected trends in each of the world's major grain and oilseed markets and each of the key producing areas for the coming decade. (2002)

• The New Economics of Agriculture. A comprehensive analysis of factors affecting farmers and the farm sector, including agricultural and trade policy. Impacts on farm structure, farmers’ returns, rural communities, consumers and the government were evaluated. Multi-client study, (2001)

• Potential Impacts of Trade Liberalization for Grains and Grain and Products. Baseline analysis of world markets for oilseeds, vegetable meals and vegetable oils prepared for the five years 1995-01. The study evaluated impacts of primary policies and evaluated potential impacts of trade liberalization on US soybean producers. Prepared for USB/ASA, (March 1997).

• Corn Co-Products Market Overview for the Coming Decade (Fall 2003). Detailed study of ethanol production in the United States, by type of plant and county location. Includes detailed projections of US feed requirements by species (including pet food) with alternative demand and supply scenarios for the future. Estimates price impacts, and impacts of corn co-product production on competing grains and protein supplements.

• World Ethanol Markets and Outlook. Agra CEAS Consulting and F.O. Licht has completed a study of world ethanol production trends, factors driving the outlook and expectations for future trends.

• Boom or Bust? An Evaluation of the World Grains/Oilseeds Markets of the Future. A highly detailed study of the key factors driving current and expected trends in each of the world's major markets and each of the key producing areas for the coming decade. The study was commissioned by two-dozen major commercial firms to evaluate basic commodity production, consumption, trade and price trends and their likely persistence for the future in the United States and worldwide (1996).

Agra CEAS Consulting

Agra CEAS Consulting is a specialist consultancy in the field of agriculture and rural economics and policy, based in Brussels and at the Center for European Agricultural Studies, Imperial College, University of London in the UK. The company is a joint venture between Agra Informa (London) Ltd., Europe’s leading specialist provider of business-to-business information on agriculture and food, and Imperial College, University of London. The firm is a leading specialist policy, economic and strategic analyst for the agribusiness and related sectors. The proposed project team has an extensive track record of working on EU agricultural and trade policy, biotechnology and energy crops in the EU. Agra CEAS’ work involves extensive contact with the Commission of the EU, national governments as well as trade associations and industry, and continuous monitoring of


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national policies and support programs as well as consultancy assignments to review the impact of specific policy programs on agriculture and trade. Main Agra CEAS Consulting areas of activity and coverage include:

• Monitoring EU agricultural policy making and market developments;

• Economic assessment of policies (national, EU and world markets);

• Evaluation of agricultural and related policies and support mechanisms;

• Econometric modeling for forecasting and policy simulation;

• Analysis of agri-environmental policy, animal welfare issues and rural development;

• Ad hoc marketing studies, both at sector and individual enterprise level;

• Competitiveness assessment;

• Impact of trade barriers and monitoring of trade liberalization, including bi-lateral agreements and GATT/WTO;

• Development of economies in emerging markets (Central/Latin America, Asia, Central and Eastern Europe);

• Marketing/promotional strategy development and evaluation of such activities;

• Agricultural, rural and forestry sector regulatory and legislation monitoring;

Agra CEAS Consulting can offer the following attributes to corporate and institutional clients:

• A specialized research and consultancy service applied to agriculture, agricultural economics, agri-food, and rural/regional policy;

• An approach to research that combines the rigor of an academic establishment with a commercial environment;

• A close familiarity with the complex aspects of world agriculture, the economics of the sector as well as with the common market organizations of the Common Agricultural Policy and policy-making;

• The use of specialist staff with considerable experience of addressing complex issues in the fields of economics, competitiveness, market structure, structural change, sectoral studies, policy evaluation, business strategies;

• Experience in evaluating and assessing the impact of agricultural, and rural/regional development policies;

• An independent and objective approach;

• An established reputation for undertaking projects of this nature and established contacts in the decision-making institutions in Brussels and the European capitals.

ENROLLMENT FORM

❐ Yes, I want to participate in the multi-client study, entitled “The Global Forces Driving Markets, Investments, Government Policies, and Trade Negotiations in Food and Agriculture.”

The cost of the study for current Informa clients will be $9,500 and $11,500 for non-clients. One-half will be billed upon initiation of the study and the remaining one-half in December 2005.

FAX to 703-893-1065

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Dr. William Motes - or - Dr. Bruce Scherr Informa Economics, Inc. Informa Economics, Inc. 6862 Elm Street, Suite 350 775 Ridge Lake Blvd., Suite 400 McLean, VA 22101 Memphis, TN 38120 Phone: 703 734 8787 Phone: 901-766-4511 Fax: 703 893 1065 Fax: 901-766-4471 [email protected] [email protected]

the global forces driving markets, investments, … global forces driving markets, investments,...

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