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Regulation could stymie growth of U.S. agriculture

U.S. farmers are poised to participate in what political observer Jim Wiesemeyer describes as the beginning of a “golden era” in agriculture as China and other developing nations expand demand for food and fiber.

The one caveat that could stymie that growth, he said, is over-regulation.

“Farmers are saying to regulators, ‘get out of the way,’” Wiesemeyer said as keynote speaker at the 53rd annual meeting of Plains Cotton Growers, Inc., last week in Lubbock. “U.S. agriculture will be in a growth market,” he said, “if it is allowed to be.”

As the global recession begins to wane, Wiesemeyer, with Informa Economics in Washington, DC, sees a growing demand from developing and developed nations as a driving force for agriculture. He said a revival in the U. S. rural economy is likely over the next 40 years, particularly “in the Sunbelt but also in the Plains. The U.S. population will see significant growth.”

Issues on the radar that could limit U.S. agriculture’s participation in that growth include climate change legislation, financial reform and the economic recovery, he said. He expects no “controversial issues,” to be voted on in an election year but said climate change “will remain on the agenda.”

He said full financial regulatory reform “is still not done but I think we will see it in 2010.”

He said economic recovery “is on the horizon but will come with bubbles.” He said the deficit and debt remain crucial issues to the long term health of the U.S. economy. He also expressed a need for “sustained economic growth. A key will be action by the Federal Reserve. They walk a tightrope. When will they raise interest rates?”

Wiesemeyer said a round of budget cuts could come this year and will include agriculture. The fiscal year 2011 budget freezes non-discretionary, non-defense spending. “Agriculture will see cuts and then more after the election. But we can’t balance the budget on the back of agriculture,” he said.

As preliminary discussions begin on the 2012 farm bill Wiesemeyer said the debate will mirror the state of the economy. “We will not see a repeat of the 2008 farm bill,” he said. Some programs enacted in that bill may not make the cut for 2012 because they have no baseline budget. New pay/go requirements will insist that new programs have funding or can achieve offsets elsewhere.

He expects no budget reconciliation before the election. “But next year we will see further cuts.” He anticipates that more entities will seek larger pieces of the farm program pie. “We will see more demand for farm spending from nutrition, specialty crops, conservation, dairy and others.”

He said Representative Collin Peterson, D- Minn., Chairman of the House Ag committee, “wants further reform,” in the farm program, to “make it more efficient.”

Crop insurance could be cut and Wiesemeyer said crop insurance “is a program that works,” and encouraged producers to find ways “to make it work.”

He sees “low odds of a free trade agreement before fall elections,” while Asia is signing new trade agreements.

Wiesemeyer said some manner of estate tax reform should pass this year. “But shame on both parties for going more than seven years with no agreement. We will see reform to at least the 2009 level.”

He said the climate bill that passed the House last year “would not pass today. House members are backing off and they are taking a new approach in the Senate.”

He said the bill would encourage a switch from crop production to conservation and trees and could reduce acreage of key commodities. He said reduction in commodity production could mean “increased agricultural production abroad.”

In the near term for agriculture, he said U.S. crop acreage will shift to corn. “But cotton has good fundamentals for the next 18 months. And the United States is still near the top of nearly every global measure of economic competition.”

Wiesemeyer received vigorous applause for praising Senator Blanche Lincoln, D-Ark, as “one of the best political (minds) that both parties need more of. Don’t write her off yet.”

The PCG annual meeting is held in conjunction with the Texas Cotton Ginners Expo.

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TAGS: Legislative
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