Removing roadblocks to ag markets

Historic controversy between the U.S. and Cuba has limited the potential for American agriculture to experience optimum economic trade opportunities.

Proposed legislation currently residing in the Senate would remove crucial U.S.-imposed restrictions on trade with Cuba to provide an increased market outlet for significant trade with the island country that is only 100 miles from the Florida keys.

The Travel Reform and Export Enhancement Act (H.R. 4645) would:

• End impeding trade requirements, such as the requirement that payment processes from Cuba to U.S. farmers must use a third-country bank and abide by its policies
• End the requirement that transactions be cash only
• Require that exports meet the same payment requirements as exports to other countries (payment required when the title of the shipment changes hands, not in advance)
• Permit U.S. citizens to travel to Cuba (allows for ag-sale facilitation)

In his State of the Union Address, President Obama announced his plans to double America’s exports throughout the next five years to strengthen the economy. H.R. 4645’s passage would help the country meet the administration’s goal.

“Cuba used to be one of our big markets,” said Collin Peterson, chairman of the House Agriculture Committee and the bill’s sponsor. “The bill “would help us get those markets back.”

According to a Bloomberg article that cites The U.S. International Trade Commission, the U.S. has the potential to supply two-thirds of Cuba’s agricultural imports if legislation is passed. This number increases its current 30-percent import volume to the country.

The U.S. exported $528.5 million in food and agricultural products to Cuba in 2009, according to the U.S.-Cuba Trade and Economic Council. The U.S. has exported almost $52 million in food and agricultural products so far this year. The U.S. supplied 27 percent of the Republic of Cuba’s food and agricultural product imports in 2008.

The American Soybean Association, the U.S.A. Rice Federation, the National Corn Growers Association and other agricultural groups are referring to the legislation as “renewing normalized trade.”

However, not everyone promotes H.R. 4645. In a letter published at Forbes.com, Roger Noriega, a visiting fellow at the American Enterprise Institute, said:

“So what do agriculture sales and tourism to Cuba have in common, anyway? Not much. But hard-left Castro apologists are offering a quid pro quo to well-meaning farm state legislators, hoping that they will ignore the brutality of the Cuban regime and vote to loosen sanctions in exchange for meager sales to a bankrupt economy. The argument they make is that the 50-year-old embargo is only hurting U.S. farmers.”

AgriMedia Publications offered its stance about the legislation in an editorial posted at the Web sites of its numerous publications, “Restrictions and stipulations have made trade with Cuba very difficult, practically pushing Cuba to look for products elsewhere. If we're not the supplier, there are many who would like to step in, like the European Union, Canada, Brazil or Argentina.”

The bill has significant bi-partisan support (more than 30 co-sponsors) and farm-organization support, which promises to help its transition to the Senate for further deliberation.

Activating direct banking, the elimination of the cash-in-advance rule and unrestricted travel will improve access to this foreign market; creating an opportunity that benefits ag-industry members and the national economy.

*Photo obtained from The Center for International Policy’s Cuba Program










Carbon – An Agricultural Commodity?

Much of America’s farm community is opposed to proposed cap-and-trade legislation that could have severe repercussions for the agriculture sector.

The American Clean Energy and Security Act (HR 2454), aimed to address global warming, was recently approved by the U.S. House of Representatives and is currently being considered by the Senate. It places greenhouse-gas (GHG) emissions limits on and offers a cap-and-trade system for affected businesses.

“This is not a vision for American agriculture, it's a death sentence,” said U.S. Sen. Mike Johanns, R – Neb.

The agriculture industry, responsible for 8 percent of the nation’s GHG emissions, is feeling pressure to be on-board with Congress’ attempts to limit industries’ carbon footprint.

Increased energy prices will result from the legislation’s potential passage as industries raise prices to maintain production costs, in turn, elevating farm-production costs at all levels.
In a Corn & Soybean Digest article, Johanns states:

“USDA testified that the costs of fuel, oil and electricity will increase by about 22 percent. And here's a staggering estimate: The bill drives 59 million acres of cropland and pasture out of production by 2050. With millions of acres coming out of production and energy prices going through the roof, it’s not surprising that USDA also predicts significant declines in farm production. USDA’s testimony shows that corn production will decrease by 22 percent, soybean production will drop by 29 percent, beef production will decline by 10 percent and pork production will sink by 23 percent. This decline in production will threaten our nation’s food supply and is estimated to drive up food prices by as much as 5 percent.”

A blog posted at The Heritage Foundation’s Center for Data Analysis calls farmers “victims” of the proposed legislation. Foundation analysts found that it would adversely affect farmers:

• Farm income is expected to drop $8 billion in 2012, $25 billion in 2024, and more than $50 billion in 2035.
• The average net income lost throughout the 2010-2035 timeline is $23 billion – a 57-percent decrease from the baseline.
• Construction costs of farm buildings will increase 5.5 percent in 2025 and increase 10 percent by 2034 (from the baseline).
• By 2035, gasoline and diesel costs are expected to be 58 percent more and electric rates 90 percent more.

But not everyone in agriculture is aggressively opposed to cap-and-trade legislation. For example, some groups have remained neutral about the issue, claiming it’s better to have a spot at the table when negotiating legislation rather than to be outright opposed.

USDA Sec. Tom Vilsack believes farmers should view the legislation as an opportunity rather than as economically damaging. Farmers would receive credits (payment) for using farming techniques that don’t emit carbon dioxide.

Production agriculture is not included in the current legislation as one of the industries that is required to cap their GHG emissions, but it can provide emission-reduction offsets to companies in industries that are required to cap their emissions.

According to ecomii, an environment resource, “The government issues credits, which allow companies to pollute a certain amount, as long as the aggregate pollution equals less than the set cap.” Regulated industries, such as fuel refineries and energy suppliers, either take it upon themselves to develop cleaner facilities to maintain compliance, or they can purchase emissions credits from other businesses that have credits available when they need to exceed their allotted emissions.

Farmers can limit their carbon footprint by practicing no-till and reduced-till techniques and can also convert cropland to grass.

In a Rapid City Journal article, Vilsack is reported as saying that conservation measures such as carbon credits contain the potential for billions of dollars in income for farm families. He said he is convinced that climate change is a fact and that changes in farming practices can help.

But with legislation stalled in Congress, “there's an almost-complete collapse of the market for carbon credits,” states Sarah McCammon of Iowa Public Radio. “That means profits are drying up for people who are paid to create those carbon credits — like farmers who manage their land in ways that capture carbon dioxide in the soil.”

In a segment titled, “Farmers Hurt By Collapse Of Carbon Credits Market” available at WBUR Radio online, the reporter talks about the economics of carbon offsets bought and sold via contracts, a scenario of paying someone to reduce emissions for you. For example, farmers that engage in no-till farming receive monetary payback for their “green” efforts. The reporter states that the global carbon market is valued at $125 million.

“It is important to set up an offset system to reward American farmers for doing the right thing, whether they’re raising crops or raising livestock,” Vilsack said. “Various studies show it’s (cap and trade) a net plus for agriculture.”

The failure to pass climate-change legislation could lead to regulation of emissions by the Environmental Protection Agency (EPA). If legislation dies in the Senate, the EPA has publicly declared its intentions to regulate carbon. Many believe that the EPA would include more industries for regulation and impose stricter policies.

Several ag-industry figureheads have voiced their discontent for EPA oversight.

“We believe the EPA’s greenhouse gas requirements will lead to costly and ineffective regulations on America’s farmers and ranchers,” said American Farm Bureau Federation President Bob Stallman. “We vehemently oppose regulating carbon dioxide and other greenhouse gases under the Clean Air Act because we believe it will require livestock producers and other agricultural operations to obtain costly and time-consuming permits as conditions to continue farming.”

Do you feel farmers are unfairly regulated or not regulated enough? In what other ways can farmers contribute to an improved environment? Are other industry sectors being ignored that should be mandated?

*Photo from The Journal of the American Enterprise Institute

Farm Journal Legacy Project

Succession planning can be very difficult for family farmers because it works to identify and develop family members to fill key roles within the family farm. In short, it ensures that the successors are experienced and capable of taking over the business (family farm).

Families are faced with numerous changes. The old methods of farm business transfers are no longer appropriate. Agriculture today demands a new way of thinking and planning. Just as farmers have adapted to new technology and ideas in the way that they farm, they must also be open to new practical and creative ideas in the way that they plan for and transfer their farms.

“The need for succession education and tools cannot be overstated in its importance to individual farm families of this country and to the long-term viability of the U.S. agricultural system as a whole,” said Andy Webber, president and CEO of Farm Journal Media. “There is nothing more core to sustainability in agriculture than the ability to provide succession to the next generation.”

In May 2008, Farm Journal Media introduced the Farm Journal Legacy Project (The Legacy Project), a concerted, long-term effort to address the succession-planning needs of America's farm families. The Legacy Project, in collaboration with Legacy by Design, uses the strength of 13 media properties to provide succession planning information and services to the agricultural community. The Legacy Project is the single-largest education initiative of its kind in agriculture today.

The overall mission is to cultivate multigenerational success in the agricultural community. The project is to serve as a catalyst for families, helping them to begin the process of succession planning.

The Legacy Project includes an interactive Web site (www.agweb.com/legacyproject/) to help guide farm families through the process of preparing their farm for the future. Some of the features of the Web site include:

• “Leave a Legacy” Blog
• Q&A with Kevin Spafford, the author of Legacy By Design: Succession Planning for Agribusiness Owners
• Events
• Media coverage
• Background information
• Video testimonials
• Case studies by farm families

Thanks to the multimillion-dollar contribution from Pioneer Hi-Bred International, Farm Journal Media is able to expand upon its original editorial commitment to raise awareness surrounding legacy planning.

“Through Farm Journal Media, we will help to highlight opportunities, provide structure and give growers resources to help them succeed in their succession planning,” said Frank Ross, Pioneer’s vice president and regional director, North America. “More than 80 percent of our customers who are active farmers today want to pass on their operations to the next generation. It is absolutely critical that our customers have good succession planning for American agriculture to succeed and prosper.”

To raise awareness about this significant campaign, coordinators of The Legacy Project have developed several program initiatives, including:

• Hands-on training workshops with Farm Journal columnist and succession planning expert Kevin Spafford
• Extensive editorial coverage in Farm Journal, Top Producer and Dairy Today magazines, broadcast coverage on the “AgDay” and “U.S. Farm Report” TV shows and online at AgWeb.com, with case studies and comprehensive coverage
• An annual special issue of Farm Journal magazine dedicated exclusively to the topic
• Specific training and tools for farmers at www.FarmJournalLegacyProject.com
• A monthly Legacy television show
• A weekly eNewsletter
  

Farm Journal Media is strongly committed to this project and has offered its expertise, reach and trust in farm country to help farmers take decisive action and to secure the legacy of this generation.

There are also future plans for the project. In the next decade, The Legacy Project will generate full awareness and tirelessly provide inspiration, practical tools and sound advice to underpin the steps to establish and formalize effective succession plans.

Do you have your farm’s future planned? Do you know someone that could use assistance in planning for the future of his/her farm? Will this project help you and your family with succession planning?