Greenspan Urges More Trade Openness

April 28, 2000

Federal Reserve Chairman Alan Greenspan has called for more open world agriculture markets, saying freer trade would help struggling U.S. farmers prosper from their "remarkable productivity." The remarks came in a speech to a Federal Reserve Bank of Kansas City conference on the rural economy.

"Efforts to increase the openness of foreign markets for agricultural products will need to be maintained and intensified so that the full benefits of farm productivity gain can show through into increased market opportunity and farm income," he said.

Greenspan noted that farmers are "highly dependent" on exports to absorb production. The ability to compete internationally "depends on lowering unit costs faster than costs are being lowered by producers in other countries."

And U.S. farmers are "well positioned" to compete, he added, "given the institutions that our nation has developed for pushing agricultural innovation ahead at a rapid pace and spreading information about new innovations quickly throughout the farm economy."

Producers and consumers, said Greenspan, are being brought "into closer economic proximity" from information technologies "that squeeze the costs of distribution down to bare minimums." In response to competition from new sources, he added, some traditional distributors have "moved quickly to implement electronic linkages that complement their bricks-and-mortar outlets."

Other distributors, however, "are lagging and may ultimately have difficulty competing." Communications linkages are tightening, said Greenspan, and businesses that seek to locate where a supply of dependable workers is available "can more easily gather information about distant rural locations than in the past, and energetic rural communities with access to the Internet should find it easier to make themselves known to firms that are seeking a place."

Chairman Greenspan’s remarks are available here .