Wednesday, February 1, 2012

President's Editorial

Looking Ahead to 2012
by Frank Priestley, Idaho Farm Bureau President

Although many sectors of our economy continue to struggle, agriculture has bucked the trend and is looking forward to expanding opportunities both domestic and abroad.

During a recent American Farm Bureau Federation convention, several experts discussed some of the upcoming challenges and opportunities that await. Agriculture Secretary Tom Vilsack said agriculture is responsible for one in every 12 jobs in the U.S.

Last year, American agricultural exports amounted to $137.4 billion, which led to a $42 billion farm trade surplus, and direct support for more than 1 million American jobs. Global demand for U.S. products continues to grow and experts predict continued growth especially in China and other Asian markets.

William Westman, Vice President for International Trade at the Meat Institute said China has four times the population of the U.S. on two-thirds the size of the land and 225 cities anticipated to have populations of at least 1 million people by 2025. “And just like us, they want what is best for their families. They want safe food and, with their emerging middle class, they now want more proteins and higher quality food,” he said.

China also has more than $3 trillion in foreign exchange reserves and is starting to use it. The country’s agricultural production isn’t adequately keeping pace with its rapidly growing population, even in areas where farmers are producing multiple crops per year on intensively utilized land.

Secretary Vilsack pledged to Farm Bureau members that USDA would continue to listen to their concerns and would work with other federal departments and agencies on regulatory issues with potential impacts on rural America, including dust and youth labor rules.

To help keep agriculture robust, Vilsack outlined several essential points that he considers vital to the next farm bill, including:
· Providing an adequate safety net when it is needed most, with a combination of provisions including crop insurance and some form of revenue protection program.
· A continued focus on stewardship and conservation programs, with added flexibility and the ability to leverage federal funds to the fullest extent possible.
· Provisions to continue promoting and expanding international trade for agriculture.
· A well-funded research effort to continue a trend that saw agriculture rank second in productivity gains among all economic sectors since 1980.
· Better support programs for beginning farmers, including programs to expand local and regional food systems.

AFBF Farm Policy Specialist Mary Kay Thatcher added that passing a new farm bill this year is pertinent, although it’s expected to be difficult due to the current election year political climate. Thatcher said with shrinking budgets and growing support for not only limiting farm support payments but also to increase funds that flow into food and nutrition programs, there is no upside to waiting until next year.

She fears more budget cuts will take funds away from farm programs if farm bill negotiations are pushed to 2013. “The economy will be a tremendous issue going forward,” said Thatcher, “and one of the reasons it will be difficult to finish a farm bill in 2012.”

Nutrition programs already account for about $700 billion—76 percent—of the farm bill’s total $911 billion in spending over 10 years. In addition, the growing cost of crop insurance premium subsidies, which grew from $4.7 billion in 2010 to $7 billion in 2011, could make them more of a target for cuts.

Thatcher also provided an analysis of how other farm groups’ “shallow-loss” proposals could leave a lot of farmers in dire straits in years of catastrophic farm revenue losses. Most of those proposals would provide support more often but only cover 5 percent to 10 percent of a farmer’s losses.

AFBF economist John Anderson provided an explanation of Farm Bureau’s Systemic Risk Reduction Program farm bill proposal, which is designed to protect farmers from catastrophic revenue losses. Proposed SRRP coverage levels would be in the 70 percent to 80 percent range. It would be administered by the Agriculture Department’s Risk Management Agency and operate as a core program with farmers buying crop insurance as “wrap-around” revenue risk protection.

One of the most attractive features of the SRRP proposal, according to Anderson, is the impact it would have on lowering farmers’ crop insurance premiums.

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