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Corn+Soybean Digest

Thiesse's Thoughts

Saturday, March 20 was “National Ag Day.” It is a good time to reflect on United States Agriculture and the important role that it plays in everyone’s life in this Country. Americans enjoy the safest, most abundant, and most affordable food supply in the World, thanks in large part to the efficiency and productivity of this Country’s farmers and ranchers.

According to USDA figures, there are still over 2 million farms and ranches in the United States. Approximately 99% are operated by individuals, family partnerships and family corporations. More than 24 million American workers, or about 17% of the nation’s total workforce, are employed to produce, process and sell our country’s food and fiber. Farmers and ranchers receive approximately 19¢ of every dollar spent on food in the United States. The balance of the food dollar goes the cost of processing, wholesaling, distributing and retailing various food products. As recently as 1980, farmers received approximately 31¢ of every dollar spent on food in the U.S. The amount a farmer receives varies according to the food product. For example, a beef farmer receives about 85¢ for a pound of sirloin steak that retails for $7.99/lb., a dairy farmer receives about $1.15/gal. for milk that is selling in the grocery store for about $3.40/ gal., and a wheat farmer receives about 8¢ per loaf from bread that sells for $1.70/loaf at the retail level.

Today, one farmer in the U.S. produces enough food for about 130 people. This number has continued to increase at a steady rate throughout the past several decades. Research has shown that most Americans have to work an average of 40 working days per year to pay for their entire annual average food cost. It takes more than triple that amount of time to generate enough income to cover average annual expenditures for federal, state and local taxes. Today, U.S. consumers spend slightly over seven percent of their disposable income on food consumed at home, much of which is purchased at grocery stores and markets. This number has been steadily declining in the past few decades. By comparison, here is the percent of annual income that consumers in some other countries spend for their food needs: United Kingdom-10.2 %; Japan-15.9%; Germany-17.1%; Mexico-24%; and India-48.4%.

The soil erosion rate on U.S. farms has been reduced by approximately 32 percent in the past twenty years. This is primarily due to the efforts of farm operators that are using conservation tillage practices. Even with the recent strong winds, we do not see the big black clouds of dirt blowing across the countryside that we did a couple decades ago. Farm families have become technology savvy in recent years. More than half of all farm operators today utilize a computer for management decisions, and over 80% of younger farmers and ranchers are utilizing computer technology and the internet in their farming business.

In 2002, U.S. Government Farm Programs cost an estimated $23.5 billion, which is about 30% of the total USDA budget of $76.6 billion. The Farm program payments to farm families accounted for less than one-half of one percent of the total Federal Budget. These farm program payments to farm operators cost each American about 4.4¢ per meal last year. Not too bad a price to pay to guarantee the safest, highest quality, and most affordable food supply in the World !

Northstar Ethanol Update
Progress continues in the development process for the Northstar Ethanol Plant, which will be located two and one-half miles west of Lake Crystal, Minnesota. Management officials from the Broin Company, which is developing and managing Northstar Ethanol, gave presentations at two public information meetings in Lake Crystal regarding the proposed project. They addressed concerns related to odors, management of excess water from the ethanol process and other local issues. Currently, the Minnesota Pollution Control Agency and other State Agencies are reviewing permit applications and other environmental considerations. The Broin management officials have also been meeting with Blue Earth County and City of Lake Crystal officials to work out other infrastructure and logistical details. If everything stays on the current timetable, we could see “groundbreaking” for the Northstar Ethanol project by early summer.

Some people have also questioned the figures that have been quoted regarding the economic benefit from the proposed ethanol plant near Lake Crystal. Northstar Ethanol will be a 50 million gallon/year ethanol plant that will use about 17.5 million bushels of corn each year, and employ 38-40 people/year with an estimated payroll of over $1.5 million. Many times the indirect economic benefits from a project such as Northstar Ethanol are not totally realized immediately, but are transitioned into the economic base of a community over time. I guess the “bottom-line” on the Northstar Ethanol project for Lake Crystal is that the economic benefit over the next several years of having the ethanol plant in our local community will likely be far greater than allowing the Northstar Ethanol project to be moved to another community in Minnesota or to another state !

Editors 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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