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September 2003

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Iraq’s Agriculture Czar

By Bill Berkowitz
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I n late April 2003, U.S. Agriculture Secretary Ann M. Veneman, understanding that “the opportunities are immense,” appointed Dan Amstutz to head Iraq’s agricultural reconstruction. Amstutz will also serve as Veneman’s personal liaison with American military officials in the country. By naming Amstutz, Veneman ensured U.S. agribusiness interests that they will play a significant role in the future agricultural development of the country. 

“We are extremely pleased to be able to draw upon someone with Dan Amstutz’s background and experience for this extremely important task,” Veneman said in a USDA-issued News Release. “He will help us achieve our national objective of creating a democratic and prosperous Iraq while at the same time best utilize the resources of our farmers and food industry in the effort.” The USDA will play a “key role in the U.S. Government’s overall efforts to create a democratic, market driven economy in Iraq.” 

Amstutz brings a silo-full of government and corporate experience to the project. He was Undersecretary for International Affairs and Commodity Programs from 1983 to 1987 during the Reagan administration, and served as ambassador and chief negotiator for agriculture during the Uruguay Round General Agreement on Tariffs and Trade (GATT) talks in 1987-1989. He is a former executive with the Cargill Corporation—the biggest grain exporter in the world—and is a former executive with the International Wheat Council, as well as a past president of the North American Grain Export Association.  

More recently, he has been president of Amstutz & Company, a Washington, DC-based consulting firm specializing in agribusiness and international trade issues. 

While Veneman was effusive in her praise of Amstutz, Oxfam, the international aid agency, wasn’t nearly as enthusiastic. “Putting Dan Amstutz in charge of agricultural reconstruction in Iraq is like putting Saddam Hussein in the chair of a human rights commission,” said Kevin Watkins, Oxfam’s policy director. “This guy is uniquely well placed to advance the commercial interests of American grain companies and bust open the Iraqi market, but singularly ill equipped to lead a reconstruction effort in a develop- ing country.” 

In his first press conference—on May 1 in Kuwait—Amstutz was upbeat in his “assessment of Iraq’s food growing potential and the country’s swift recovery from what he later termed its experiment in collective farming,” reported Alan Guebert, an award-winning free- lance agricultural journalist and syndicated columnist. Amstutz believes that the future of food production in Iraq is inextricably linked to getting the country’s oil fields up and running. “We need the oil, the fuel, the turbines to generate the power and we need power to mill the wheat into flour and to pump the water in the irrigation areas,” he said. 

Iraq’s rapid decline in agricultural production since 1991 was largely due to United Nations sanctions that hampered its ability to “modernize”—buy new technology, machinery and parts—and a food price system that lacked “incentive,” Amstutz said. “Individual Iraqis paid 12 cents, not $12, 12 cents a month for their food basket which included flour, rice, vegetable oil and poultry. Clearly, a price level dictated by the government like that drains agriculture of incentive.” 

To many critics, Amstutz’s relationship with Cargill is a surefire sign that a major league corporate makeover is in the cards for the country’s agricultural sector. At the end of the press conference Amstutz was asked about that relationship. He replied: “It is absolutely true that I advocate free markets for healthy agriculture, a market-oriented system. I left Cargill in 1978 and have had no affiliation with them whatsoever. I can tell you I have never been accused of showing favoritism to any company all the time I was in public service, and the time I was in governmental service, people that know me and know my record know that comment by Oxfam published in a broad sheet press that is similar to some of the other press over there, is just not true.” 

Was Amstutz telling the truth? In late October 2000, Amstutz was named chairperson of the board of directors of a new company established by ADM, Cargill, Cenex Harvest States, DuPont, and Louis Dreyfuss. According to the company’s press release, Pradium Inc. was set up as “a separate company that will operate an online business-to-business marketplace and information resource.” 

“In short,” writes Guebert, “Pradium, owned and operated by the biggest transnational ag firms in the world, was to be a global, unregulated secondary market for ag commodities. But business was tough and on February 15, 2001, Pradium merged with Rooster.com, an electronic market for farmers operated by many of the same global firms. The merger failed to jumpstart Rooster or Pradium. On December 10, 2001, Rooster was shut down, taking Pradium, and presumably Amstutz, with it. Was Amstutz an active participant in Pradium or was he simply window dressing to attract business to the short-lived enterprise?” 

H ow will Amstutz’s agricultural plan proceed? Iraq’s 2003 wheat harvest will “match” last year’s 1-1.25 million tons, Lee Schatz, a senior U.S. official with the Office of Reconstruction and Humanitarian Assistance, recently told Reuters. That means the country will need to import about three million tons of wheat over the next 12 months. “We would expect that in an open and fair competition in agriculture products, the United States will once again have a place in the Iraqi market,” Schatz said. 

Australia, wary of getting shut out of that market, has already sent a team of agricultural experts, headed by Trevor Flugge—the former “high-profile” chairperson of Australia’s monopoly wheat exporter AWB Ltd—to work with Iraqi officials and Amstutz’s team, New Zealand’s Dominion Post recently reported. 

Schatz also serves as the deputy director of the Livestock, Dairy and Poultry division of the U.S. Department of Agriculture’s Foreign Agricultural Service. He said Iraq’s poultry, which employs between 500,000 and 600,000 people, “will have to import all its inputs this year from hatching eggs to vaccines.”  

Another nagging issue in need of settlement is the $2 billion of bad loans, plus $1 billion in interest charges, Iraq still owes the U.S. Department of Agriculture from the 1980s when the Reagan and Bush administration’s were hungry to do business with Saddam Hussein’s Iraq. “A decision about that default will have to be made before any consideration of any new (export) credits can be considered,” Schatz pointed out. 

The appointment of Amstutz could “threaten the country’s agriculture sector,” Inter Press News Service’s Emad Mekay writes. “Amstutz drafted the original text of the current Uruguay Round Agreement on Agriculture within the World Trade Organization, considered by many developing countries and pro-development groups as innately unjust. The agreement allows rich countries to dump their subsidy-backed agricultural surpluses on world markets, depressing prices to levels at which producers in developing nations can no longer compete.” 

Will the “trade wars,” “grain wars,” and “poultry wars” add to the chaos of post war Iraq? Stay tuned.

Bill Berkowitz is a freelance writer covering conservative politics.
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