Consumers are worried. The country is in about the worst mood ever so anyone not suffering will soon be looked upon with a jaundiced eye.
Agriculture is not suffering. If food prices move higher at all, it will quickly become a focus point for a public looking for anyone to blame for what they see as other’s taking advantage of them. Agriculture will not be taking advantage of them but that won’t matter.
Agriculture is already out of favor in Washington. If there is a consensus over anything it is that ag subsidies will be slashed in the next farm bill. We will be lucky to get support for a safety net.
They have already cut crop insurance $6 billion, but part of that was Obama’s shifting spending from a constituency he doesn’t care about to one he does, which doesn’t benefit deficit reduction.
Agriculture is going to endure substantive budget cuts. If it were part of an overall across the board austerity plan where for the good of the country, federal spending was slashed and agriculture was just doing its part, it would be one thing, but it’s not that thing.
So far, all the Democrats have done is reward constituencies, giving them what they have taken from others. Fiscal responsibility is secondary. When Washington has spent hundreds of billions of dollars on economic stimulus and still not funded biofuels, you know you are purposely being left out.
Biofuels was the greatest economic growth engine that I have seen for U.S. agriculture in my lifetime, boosting farm income, reducing farm subsidies, creating jobs and reducing our trade deficit while bolstering our energy security and neither political party, not the one in power, nor the one who wants power in Washington appears to have cognizant understanding of what has benefited the Midwest economy so much.
They let the biodiesel plants shut down, laying off thousands and they look ready to allow a similar fate to unfold for the ethanol blender’s credit and tariff. The likelihood of Envionmental Protection Agency coming through with a full raise of the ethanol blend cap to 15 percent for all vehicles is low as well.
As a general statement, Washington doesn’t understand the ag or biofuel economies and really doesn’t appear to care, with almost anything else a higher priority on its agenda. Trade has benefited agriculture too and the union influence in the current administration has stopped forward movement on trade expansion.
There is some rhetoric espoused, shaped to sound like biofuel and trade are still okay, but when you look under the hood, two starving mice run away with no engine.
The first candidate for U.S. trade representative turned the offer down because he knew trade was not a priority of this administration. He was the smart one. They always ask the question in polls, “Is the country on the right track?”
Agriculture had its depression in the 1980s. We know what it took for us to dig out and direction taken putting us back on track. Government today is moving agriculture in a different direction. It is the one segment of the U.S. economy that is not screwed up and Washington has begun to pull the wheels out from under it.
That’s the sense that I have. I don’t feel like Washington is listening nor are there people in charge that know what you are talking about if they did listen. If food prices rise at a rate or to a level where inflation results in consumer angst, it won’t be the farmers fault, but if the farmer is doing well when others are not, the farmer will still be blamed.
Food companies and processors confronted with the opportunity to raise prices are always quick to throw the farmers under the bus despite using their pictures on their packaging.
Remember in the 1980s ag depression, and during the subsequent period of disinflation that followed in the 1990s, the U.S. consumer had no idea how good they had it as fuel, food and fiber were all priced below the cost of production.
That was before developing country economies caught hold and U.S. consumers began having to compete with global consumers for commodities. The promotion of organic farms and the lack of support for commercial agriculture will make food price inflation worse and when they do break agriculture we’ll be lucky if enough safety net has been retained to support us so that Washington doesn’t break the whole food system.
To date, the only sacrifice Washington appears to be willing to put on the alter of fiscal restraint is agriculture. Instead of fixing what’s wrong and lifting the rest of the economy up, I fear that they will pull us down.
David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.
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