Agricultural Challenges

January 13, 2005

January 13, 2005

The American fanners and ranchers just wrapped up the best year we have ever had if we rely on the net farm income figure of 73.7B dollars. That does not mean that we are on easy street. There are a lot of land mines out there that can bring us back to earth pretty fast.

Let's review some of the challenges that we face. Since we rely so heavily on exports, let's look there first. Another mad cow was found in Canada. That makes two in two weeks. I know that beef in U. S. and Canada is perfectly safe, buUhese reelections don't help to build consumer confidence. Our trade disputes with Canada just multiply. We have the beef embargo. We have imposed a dumping duty on Canadian hogs. This is not good, considering that Canada is our biggest Ag customer. Ifwe look south, the Mexican government tax on our corn sweetener has effectively killed that market for corn syrup. Japan and other Asian countries still will not accept our beef.

We are being challenged by Brazil in Ag production. In fact, in a year or two Brazil may pass us as the world' s largest Ag producer. Also, Brazil is intent on circumventing the 54 cent tariff on ethanol by shipping through the Caribbean. South America has sent us soybean rust. It wasn't intentional, but it just came in on the wind. Grain prices continue to struggle because we are projecting a big crop carryover increase. And let us not forget that our Congress and Administration are being reminded by the Eastern press everyday how expensive our farm program is -We don't know if they will use a meat ax or a pin knife to carve up the program.

Our Trade Ambassador, Robert Zollick, is leaving to work for our new Secretary of State, and we have a new Secretary of Ag confinned now. They do have their work cut out for them.

Now does that litany of problems make you feel good? I'll still put my money on

Until next week, I am John Block from Washington.