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Corn+Soybean Digest

The New Administration

Tom Vilsack, former governor of Iowa, has begun his tenure as the new secretary of agriculture. Vilsack was a big supporter of ethanol and renewable energy during his two terms as Iowa governor (1998-2006), and continues to promote growth and development of renewable fuels. However, he would like to see major emphasis toward the development of cellulosic ethanol production and other new-generation renewable energy sources, including wind and solar. Vilsack has also written about the importance of global warming and utilizing a program with carbon creditsfor farm operators that voluntarily reduce greenhouse gases in their farming practices. Vilsack has also been a supporter of research and development in agriculture, including biotechnology to enhance production and food safety.

As secretary of agriculture, Vilsack will oversee USDA, which is one of the largest and most diverse departments in the federal government. Most farmers are familiar with the Farm Service Agency (FSA) and the Natural Resource Conservation Service (NRCS), which oversee many of the commodity and conservation programs used by many Midwest farm owners and operators. However, the largest segment of USDA in budget and personnel is in food and nutrition programs, which includes food assistance programs (food stamps), child nutrition programs (WIC), school lunch programs and many other programs. USDA is also responsible for food safety and inspection, regulation enforcement, rural development and managing forestland.

In addition to USDA, there are many other federal departments with new leadership under the new administration of President Barack Obama, which could have a major impact on the U.S. agriculture industry in the next few years. The Department of Energy will likely help guide policies and regulations affecting energy security, renewable energy and global warming. The Environmental Protection Agency (EPA) will also address issues related to global warming and renewable energy, as well air, water and soil regulations that may affect farmers. The Department of Commerce and U.S. Trade Representative (USTR) will oversee implementation of NAFTA and other U.S. trade agreements, and may be a key in possible expanded trade relations with Cuba and other countries. The Department of Labor may play a key role for some segments of the U.S. agriculture industry as immigration issues are addressed. The Department of Transportation is also important to agriculture in overseeing transportation infrastructure improvements to roads and bridges, railroads and waterways.

Key agriculture issues
The Obama Administration, under Ag Secretary Vilsack, is now giving leadership to implementation of the new farm bill that was passed by Congress in 2008. It is possible that the new administration may push for some revisions in the bill. There are also many other issues and proposed legislation that could be introduced by Congress, or the Obama Administration, in the next couple of years that could impact the agriculture industry. Some of the likely key issues include:

  • The federal stimulus package. While there are not many provisions in the stimulus package that relate directly to production agriculture, there are several pieces of the legislation that could impact the agriculture industry. A major impact from the stimulus package could be funding targeted toward more rapid development of renewable energy resources. Another big impact could be extra funding to fix up transportation infrastructure for roads, bridges, railroads, etc. Another benefit could be greater employment opportunities in rural areas for off-farm income. One concern that bears watching are any provisions in the legislation that could impact U.S. trade policies with other countries, which may in turn affect future agriculture exports.
  • Farm program cuts. Many members of Congress were disappointed that there were not more reductions and adjustments made in farm program payments made as part of the 2008 Farm Bill. Given the large level of the federal budget deficit, and the need to reallocate funding for strengthening the U.S. economy, there may be proposals from both congress and the administration to reduce or reallocate farm program payments.
  • Tighter Payment Limits. Some measures to tighten payment limits and to restrict farm program payments based on adjusted gross income (AGI) were included in the 2008 Farm Bill. Some members of congress want to go further on making payment limits stricter, would like to see a $250,000 maximum AGI in order to be eligible for farm program payments, and want stricter actively engaged rules for individuals to qualify for farm programs.
  • Livestock regulations. The ban on the meatpacking industry owning livestock received considerable debate before being excluded from the 2008 Farm Bill; however, this issue is likely to resurface in congress. Other livestock issues include feedlot registration efforts, pollution regulation and implementation of country-of-origin labeling (COOL). Livestock producers also fear increased efforts by PETA and other anti-livestock activist groups.
  • Trade agreements. The Doha Round of the WTO was not completed in 2008, and efforts may surface to revive those trade talks. Some members of Congress would also like to make changes to NAFTA and other trade agreements, while others would like to consider normalizing trade relations with Cuba and some other countries.
  • Environmental programs. The Clean Water Act, air pollution, global warming mitigation and use of carbon credits are likely to be common environmental themes in the coming years. Farm operators hope that environmental and pollution regulations do not become so strict that it hampers their ability to produce crops and livestock efficiently. The agriculture industry also worries about restrictions on future biotechnology research and development.
  • Regulation of futures trading. Congress has already started holding hearings on the need for more regulation and oversight in the trading of commodity futures. This issue reached a highpoint in 2008, after considerable speculation and wide market swings in futures markets for oil, grains and other commodities. The key to this issue is not only to identify the problem, but also to find workable solutions that do not negatively impact certain industries or segments of industries that may already be under severe economic stress.
  • Food safety. These issues have again been brought to the forefront with concern over tainted peanut butter and other peanut products. Food safety is a high priority with many members of congress and the new administration, and is likely to receive considerable attention in the coming months. Some members of congress have even proposed taking food safety responsibilities out of USDA and creating a separate federal food safety and inspection agency.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected].

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