Agribusiness

Commentary from Beth Bechdol, Director of Agribusiness Strategies, Attending USDA's 85th Annual Agricultural Outlook Forum

The attitudes of attendees at this year's agricultural outlook conference are concerned, cautiously optimistic, curious, hopeful and even discouraged.  In other words....extremely mixed!
 
The annual event which provides industry leaders with market and commodity outlooks, but also insight to emerging policy developments, was a must-attend this year because new leaders stepped out further onto the public stage...  Director of the National Economic Council and Assistant to the President for Economic Policy Lawrence Summers and Secretary of Agriculture Tom Vilsack.
 
Summers opened the conference with a description of the Obama  administration's two economic policy thrusts - a direct strengthening of the economy through job creation and the stimulus package and ensuring renewed financial stability in the credit, housing and banking systems.  He described today's recession as one of those "vicious cycles" that occurs just a few times in a hundred year period when the market's self-equilibrating fuction breaks down.  It is the  president's view, Summers noted, that the "profoundly important investments" being made in the stimulus package will help "restore the US economy's potential to produce and earn."
 
Secretary Tom Vilsack was next with a message obviously more tailored to agriculture.  Without prepared remarks, he eloquently outlined priorities for the Department and also key strategies he intends to pursue.   He told us that President Obama personally directed the Secretary to focus on three areas:  1.  ensure that children have more access to nutritious foods; 2.  expand alternative energy opportunites; and 3.  support research that allows agriculture to transition away from its own fossil fuel dependence.
 
Then, recent events added two more priorities for the Secretary...the salmonella find in peanut butter elevated food safety and the economic recession and stimulus package provisions will require USDA to quickly deliver $28 billion in nutrition and rural development programs especially.
 
The recently released 2007 Ag Census also clearly had an impact on the Secretary's thinking and strategic focus for agriculture.  He highlighted several findings from the "snapshot" of U.S. agriculture including the dramatic increase in small income farms (108,000 new small farms in the last five years); an increase in the very large farms such that today the 125,000 largest farms produce 75 percent of all our food; and finally the decline by 80,000 farms in the mid-size range.
 
It was no surprise, then, that the strategies defined by the Secretary were specifically referenced as "helping small to mid-sized farms."  They included: 

1. Helping small farms (many of which are specialty crop producers) become mid-sized farms by encouraging more consumption of fruits, vegetables, and nuts
2. Improve the safety and security of the food system
3. Rebuild and revitalize rural communities
4. Develop more renewable and alternative energy opportunities for agriculture
5. Enhance conservation stewardship programs

Large farms were not completely excluded from the plan, however.  Vilsack referenced the benefits that would accrue to this segment from science and research investments, trade promotion and also climate change profit opportunities.
 
He closed by noting that this "complicated agenda" was "complicated further by the financial situation," and that the "ag budget has to be a part of making hard choices" to attack the federal budget debt.   At the same he was delivering these comments, across town at another press event, the Obama budget proposal was released.  It should have been no surprise to industry observers who have listened closely to President Obama that the budget proposes a phase out of direct payments to large farms - payments that have for decades been a part of the farm "safety net".  In fact, it was just days ago in his address to Congress that the  president said he would look for wasteful items in the budget to cut including "large payments to agribusinesses."

Agricultural policy has long been viewed as a massive ship which required much strength and time to even begin steering on a new course.  We should all watch closely the new captains at the decision-making helm - the new direction may come more quickly than many in agriculture had planned or hoped for.