In the face of bad news for the general economy in the United States, agriculture is looking pretty good.
Last week we heard that U.S. economic growth dropped to just 1.6 percent in the second quarter of this year, compared to 3.7 percent for the first three months, and some say it could be below one percent next quarter. Meanwhile, unemployment continues to flirt with double digits, riding at 9.5 percent overall.
But the agricultural sector is showing a significant increase in both farm income and exports. It’s all up about 23-24 percent compared to last year. Granted, last year was down 20 percent from the year before, which was a record for exports and near record for farm income. But, it definitely spells R-E-C-O-V-E-R-Y, unlike the rest of the economy, despite the best of efforts to make that happen.
“The great thing about this recovery is that it’s sector-wide,” said Agriculture Secretary Tom Vilsack in a press conference today about the new reports. “While an increase in the value of livestock production accounted for much of the upward movement, the value of dairy production rose by 26.2 percent; the value of meat animal production is up 14.6 percent, and the value of poultry and egg production rose 8.4 percent.” That’s all good news for corn farmers.
USDA increased its forecast for 2010 exports by $3 billion compared to May to $107.5 billion, due mostly to greater grain and feed shipments and higher values along with increased livestock, poultry, and dairy product exports. “Agriculture is one of the few major sectors of the economy today that has a trade surplus, which we are now forecasting to be a little over $30 billion,” said Vilsack. That is also forecast to get even better next year, up to $113 billion, very close to the record $115 in 2008, thanks to sharply higher unit values and volumes for wheat and corn, as well as increases in products like distillers’ dried grains (DDGS). Vilsack points out that every billion dollars in agricultural exports supports over 8,000 jobs and generates an additional $1.4 billion in economic activity.
Kind of makes you wonder where our economy would be right now without farmers and ranchers, doesn’t it? Vilsack noted the significance of the “underlying values of rural America and its farmers and ranchers to the resilience of the agriculture sector.” In other words, farmers and ranchers are not afraid of hard work, they have kept their debt below that of the rest of the economic sectors, and they continue to increase productivity through innovation and research.
It is really a very simple solution to economic problems. Hard work + low debt + increased productivity = economic recovery. The rest of the economy certainly could learn a lot from the farm.
The event will focus on increasing exports of both coarse grains and the emerging growth market of the ethanol co-product dried distillers grains with solubles (DDGS), and features an array of international leaders in ag commerce, including Dr. Bob Thompson with the National Center for Food and Agricultural Policy and Gary Blumenthal, president and CEO of World Perspectives Inc.
Dr. Thompson is scheduled to deliver the keynote address on the first day of the conference to provide perspective and insight on the world supply and demand situation will give attendees a better understanding of the world market. Blumenthal’s remarks during the second day luncheon will focus specifically on the growing global demand for U.S. DDGS. “As long as global population continues to grow, the demand for meat, milk and eggs will increase, and subsequently the demand for livestock and thus for DDGS will climb as well,” Blumenthal says.
More than 170 international buyers of U.S. DDGS and coarse grains are scheduled to attend the event, including representatives from China, Japan, Taiwan, Korea and Vietnam. Why should a corn farmer plan to attend? Consider this. The United States grows 42 percent of the world’s corn and supplies more than 60 percent of the world’s corn exports. Nearly 2 billion bushels of corn were exported last year to about 60 different countries and the current forecast for this year is just over 2 billion, according to USDA. Exports of DDGS to Southeast Asia doubled last year over 2008 and were already up nearly 75 percent over 2009 at the beginning of this year. With yet another record corn crop expected this year, it is more important than ever to expand our exports.
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Farming on any scale much larger than a backyard garden – even a big garden for that matter – is a business and as such it must turn a profit at the end of the day to survive, if not prosper. It doesn’t matter if you are growing corn or tomatoes. This may seem like clear logic, but in truth most urbanites don’t understand the complexities of how food is grown, processed, packaged, and transported to their door.
In our society we will spend ludicrous sums on money on things like cars, cell phones, or even a cup of trendy coffee, yet we continue to demand access to all the bounty Mother Nature has to offer at discount prices.
It is a modern miracle that the largest consumptive offenders on the planet – Americans – also have the cheapest food supply on terra firma. We spend less than 10% of our disposable income on actual food items compared to other developed nations that spend as much as 15% to 50% of what they earn to put food on the table.
There are numerous factors that make this access to cheap and abundant food possible including a wildly productive agricultural core that produces key crops like wheat, corn, and soybeans. These staple crops provide the very foundation of the “real” food pyramid. These are crops that we have learned to grow fairly predictably on a large scale even when Mother Nature hits us with challenging weather. In the worst-case scenario when weather, insects or disease reduces the size of these crops we have a certain amount in reserve.
However, with a growing emphasis on more fruits and vegetable in our diet, there are also those calling for more and more taxpayers dollars to shift from existing farm programs to encourage and expand farmers markets and produce production. Striking a reasonable balance won’t be easy but it will be critical.
While many produce items have a shelf life of weeks or months at best, corn, soybeans and wheat can be transported more readily and stored for years. The authors of the original farm bill understood this and chose to put their emphasis and limited budget into programs that help growers of these keystone crops make it through tough times.
Times have changed and the farm bill is antiquated in many ways, but the importance of these key crops has not waned. The farm bill in the U.S. is not a perfect piece of legislation, few are that have become this big and cumbersome.
But today’s “farm bill” is a misnomer since the lion’s share of the expenditures go to social programs like women, infant and children, school lunches, food stamps and even forestry. Yet critics like to cultivate the illusion that it all goes to farmers.
As we continue to analyze and discuss these consumer support programs – yes, it is a consumer program that helps guarantees you the aforementioned cheap food over the long haul – it is important we do a little homework before making wholesale changes.
In the interim keep this in mind; if we stopped growing green beans or carrots tomorrow the world would not end. But if we see big reductions in crops like corn, soybeans or wheat the loss of essential oils, protein and other precious calories would change the food universe as you know it. Likely wouldn’t do our economy or our balance of trade much good either.
According to a recent Renewable Fuels Association report, the U.S. became a net ethanol exporter in 2010. A rise in global demand has many countries, including Brazil and some in the Middle East, looking for a low cost ethanol source which America capably provides.
In light of this, the consequences of the arbitrary 10 percent cap on ethanol currently imposed by the U.S. government are obvious. Instead of capitalizing on our growers’ ability to continuously meet growing demands for fuel, feed and food, regulations limit ethanol’s growth depriving the public of the economic and security benefits of homegrown fuel.
Government regulations cause the fuel we need to go overseas. If regulators tore down the blend wall, consumers could benefit immediately from the flow of renewable, economical corn ethanol into the domestic market. By increasing the level of ethanol allowed in an average tank of gasoline, our country would take a significant step toward its stated goal of energy independence.
U.S. ethanol is an international bargain. Currently, Iowa ethanol plant-gate prices are 50 cents per gallon lower than Brazilian ethanol prices. According to RFA analysis, this translates to savings of 11 cents per gallon on E10 ethanol made in the U.S. instead of Brazil. Global buyers take advantage of these savings. Shouldn’t we?
Let’s not miss out on the savings and security a domestic energy supply provides. The U.S. government should learn what the rest of the world already knows; our nation’s corn ethanol provides a viable solution to growing energy demands.
The day after USDA forecast a three percent increase in corn exports this coming year, China gave that prediction a boost by purchasing 14.5 million bushels, with the promise of more. The 369,000 tons, bought by China’s state-owned Cofco Limited, was the country’s second major purchase in less than a month, according to USDA.
This is a big deal because China is a big user of corn and normally an exporter, not an importer. The last time China was a net importer of corn was 14 years ago when the country’s crop was hit by drought. This actually marks the first time China has bought U.S. corn in nearly a decade.
It’s also a big deal because we have plenty of corn on hand and another record crop expected, so increasing exports is important for farmers to get some decent prices.
The U.S. Grains Council (USGC) thinks it’s a pretty big deal. “If this is true, and we certainly hope it is, we view it as good news,” said Thomas Dorr, president and CEO of USGC. “This may be the beginning of some opportunities to trade more consistently with China.” Dorr says it’s possible as many as 15 U.S. cargoes have been sold to the Chinese.
China has been an increasingly good market for dried distillers grains (DDGs), the by-product of ethanol production, and Dorr says he expects that to continue. “As a matter of fact, there is still very strong demand for DDGs,” said Dorr. China bought 524,000 tons of DDGs in 2009 and so far this year they have already puchased 240,000 metric tons.
Our extensive water transportation system in the United States may very well be one of our greatest national economic and strategic assets. It is definitely our most unappreciated means of moving goods because the vast majority of the population doesn’t see river transport in action, smell it, or risk getting run over by it.
That’s also the downside. People will support road projects all day because of our personal engagement with the asphalt and concrete, but ignore our most efficient and environmentally safe means of moving critical goods from coal to corn to construction materials.
So it is concerning that a critical part of our nation’s transportation infrastructure, the locks and dams along the Illinois River and the Upper Mississippi River, are deteriorating and falling behind technologically after 80 years of stalwart contributions.
Granted, this oversight may be understandable given the public and government’s focus on political issues from war to health care and economic issues that don’t need any explanation, but the consequence for this lack of vision may carry a big price tag in years ahead.
The country’s inland navigation system plays a critical role in the nation’s economy, moving more than a billion tons of domestic commerce valued at more than $300 billion per year. More than one billion bushels of grain (about 60 percent of all grain exports) move to export markets via the inland waterways each year.
Growing agricultural productivity in the U.S. and growing populations and buying power overseas provide some clues to the critical importance of addressing this issue. Population is expected to grow by 2.5 billion more people by 2050 to more than 9 billion people and many of those hungry eyes will be looking to the U.S. to keep their pantries and their stomachs full.
There are also significant environmental benefits to the inland waterway system. The backwaters created by the lock and dam system support more than 40 percent of the migratory water fowl and fish breeding grounds and are home to more than 500 miles of wildlife refuge. In addition, more than $1 billion are generated each year in recreational use – fishing, hunting and tourism.
So if the opportunity arise to tell your local, state or federal elected officials they need to get active now on updating our water transportation system it will be time well spent.
Participating in the conference is NCGA CEO, Rick Tolman, seen here addressing one of the meetings. NCGA is one of the founding members of the U.S. Grains Council.
Rick, who worked for USGC for many years, says that NCGA considers the Grains Council their international trade partner. The two organizations have a very strong working relationship. He says one of the things he’s really happy to hear discussed here at this meeting is how well exports of DDGS have been due to the efforts of the Grains Council. That’s good news for corn growers for whom the production of ethanol is so important right now. He says that the Grains Council is looking at other value added products they can promote for export too.
I spoke with Rick in between meetings and you can listen to the interview here:
There may still be corn left standing in the snow, but USDA says the 2009 corn crop was a record setter.
In today’s crop production summary report, USDA projects U.S. corn production at a record 13.2 billion bushels, up from 12.9 billion bushels projected in USDA’s December forecast and 1 percent above the previous record of 13.0 billion bushels set in 2007. The corn yield is estimated at a record 165.2 bushels per acre in 2009, 2.3 bushels higher than the December forecast and 4.9 bushels above the previous record of 160.3 bushels per acre set in 2004.
Rebecca Fecitt, U.S. Grains Council director of biotechnology programs, said the continued utilization of scientifically proven biotechnology applications provided by life science companies will help to increase corn yields, solidifying the need to continue developing markets for U.S. coarse grains.
“We hope to see this upward trend in yields for U.S. corn continue. As science becomes even more sophisticated, it will help increase and maintain our yields. This will be instrumental in feeding the world’s forecasted 9.1 billion people by 2050,” said Fecitt. “The growing population, especially in developing countries, will demand more meat, milk and eggs as incomes continue to increase. We have to maintain our biotechnology education efforts in order to ensure that grain derived from biotechnology is accepted around the world.”
The Renewable Fuels Association (RFA) says this proves the amazing productivity of the American farmer. “The unparalleled productivity of America’s farmers continues to amaze even the most skeptical of critics,” said RFA president Bob Dinneen. “Despite unfavorable weather conditions from start to finish, farmers produced considerably more corn than the food, feed, and fuel markets are demanding. Such gains in productivity undermine any claims that U.S. biofuel production will require new lands in other nations to come into production. There can be no question that American farmers have both the capability and the can-do attitude to feed the world while simultaneously helping reduce our nation’s reliance on imported oil.”
American farmers should be commended for this accomplishment.
U.S. Grains Council Corn Mission to Morocco, Egypt and Jordan has been immortalized in a 17 minute slide presentation by Chuck Zimmerman of ZimmComm New Media who documented the mission in photos and audio:
A consistent theme was the growth potential in these markets. That’s why the USGC has people on the ground working to develop new business opportunities for American farmers. After our team’s final dinner I spoke with them as a group to get their final thoughts on what they’d like farmers back home to know about their experience. We just went around the table starting with the corn grower members. Here are some of their final thoughts:
The main thing is the relationship the USGC staff has with people in all these countries. They appreciate what the USGC does.
I got to see what the USGC does on a personal level. These ddgs programs are working well. I hope they’ll buy more.
I sure learned a lot about the legwork that goes on on the ground here for these guys. There’s still some work to be done.
We spent our time well and did something that will benefit everyone back home. The USGC work has been an important part of keeping our exports going.
I think the potential for increased sales is there. The network is in place and working well.
Demand looks strong and will continue for a long time to come.
Shannon Schaffer, the USGC staff representative on our trip added these thoughts:
These guys worked really hard on this trip. Lots of time spent on the road and with the customers we service. They served as ambassadors for the USGC and corn growers specifically.
You can listen to Chuck’s final interview with the Corn Mission Team below:
Read all about the trip and see all the photos on Agwired and/or USGC’s The Grain Board.
But the agricultural sector is showing a significant increase in both farm income and exports. It’s all up about 23-24 percent compared to last year. Granted, last year was down 20 percent from the year before, which was a record for exports and near record for farm income. But, it definitely spells R-E-C-O-V-E-R-Y, unlike the rest of the economy, despite the best of efforts to make that happen. 
The event will focus on increasing exports of both coarse grains and the emerging growth market of the ethanol co-product dried distillers grains with solubles (DDGS), and features an array of international leaders in ag commerce, including Dr. Bob Thompson with the National Center for Food and Agricultural Policy and Gary Blumenthal, president and CEO of 
The day after USDA forecast a three percent increase in corn exports this coming year, China gave that prediction a boost by purchasing 14.5 million bushels, with the promise of more. The 369,000 tons, bought by China’s state-owned Cofco Limited, was the country’s second major purchase in less than a month, according to USDA. 
The U.S. Grains Council is holding its 
There may still be corn left standing in the snow, but USDA says the 2009 corn crop was a record setter. 
A consistent theme was the growth potential in these markets. That’s why the USGC has people on the ground working to develop new business opportunities for American farmers. After our team’s final dinner I spoke with them as a group to get their final thoughts on what they’d like farmers back home to know about their experience. We just went around the table starting with the corn grower members. Here are some of their final thoughts: