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Schafer: Agriculture's Boom Spearheaded by Trade

Although pundits believe the overall U.S. economy is moving toward a recession, the U.S. farm economy is booming, according to Ed Schafer, Secretary fo the U.S. Department of Agriculture.

U.S. agriculture exports in 2007 were $101 billion — a record. That news came on the heels of record net farm income the same year, says Schafer, who spoke to farmers at the Commodity Classic in Nashville today. Free trade will be bolstered by new trade agreements with Peru, Colombia, Panama and Korea in the offing.

"Taken together, these countries represent an opportunity for $3 billion in farm exports," Schafer says. "And not only will these exports improve the American agricultural economy, they will improve the lives of people living in those countries."

Schafer says the dynamic for agriculture worldwide is dramatically different than at any time in history. A growing middle class population in developing countries is eating more meat, thus boosting feedgrain consumption. Meanwhile, weather challenges throughout the world have the U.S. agriculture machine poised for continued growth.

"Export growth is not only based on higher prices, but higher volumes. There is growing demand for fresh and processed fruits and vegetables, meat and poultry, and grocery items," he explains.

At the Commodity Classic, optimism abounds — except when it comes to discussion of the Farm Bill. To that, Schafer believes something will happen this year. In the event of a stalemate, Congress will likely add a year onto the 2002 Farm Bill. That's not a good option, he says.

"If we do this, we will lose non-trade distorting subsidies. We will lose conservation and energy and food assistance and nutrition provisions," he says. "This hurts us."

Schafer says the House and Senate have met for a month trying to resolve differences, which focus on money. President Bush has limited a baseline budget increase to $4.5 billion; the House version of the Farm Bill passed in 2006 calls for a $17 billion increase and the Senate's version, passed earlier this year, calls for a $25 billion increase.

"The House and Senate are moving closer. That represents good progress," he says. "But the President has said he will not sign a bill that raises taxes and increases the size of government. We have been offering Congress suggestions on how this can be done. We continue to look at funding resources that work."

Paramount to the new Farm Bill will be research in renewable fuels. Oil price is more than $100 per barrel and gasoline is headed toward $4 per gallon — and diesel is even higher.

"Our nation's need for alternative energy and renewable sources is greater than ever. The same energy bill passed by Congress boosts grain ethanol production and increases investment in cellulosic technology," he explains. "Bu the time the full mandate of 36 million gallons kicks in 15 years from now, 60% will come from cellulosic fuel and other advanced biofuels."