iowa underground blog

We didn’t comment much about the Secretary of Agriculture races leading into the primary, but there is an interesting contrast in the approaches to developing a strong agricultural economy between Denise O’Brien (D) and Bill Northey®.

In particluar, Bill Northey during the primary discussed growing Iowa’s agricultural sector through greater exports:

World promoter of Iowa products

Realizing that Iowa’s future depends on its exports, Bill has traveled with the WTO and the U.S. Grains Council promoting corn & specialty soybeans. His travels have taken him to 16 countries including Japan five times, and the UK six times.

The idea that we’ll be able to export more and more is… well… a bit of orthodoxy that has been consistently overstated. Alan Guebert writes:

Former Secretary of Agriculture Ann Veneman couldn’t stop for a cup of coffee in farm and ranch country without waxing romantically on how “1 in 4 acres of American farm production is exported.”

Her replacement, Secretary Mike Johanns, a trained technocrat, often makes the same point with more precision. “Twenty–seven percent of U.S. farm receipts come from trade,” Johanns told a May 8 Chicago luncheon crowd.

The trouble with Veneman’s oversimplified number and Johanns’ overcooked number is that both are wrong, wrote Ed Maixner in the April 28 issue of the Kiplinger Agricultural Letter.

The actual “value” of ag exports to farmers and ranchers, noted Maixner, Kiplinger’s editor, is neither 27 percent nor 25 percent. “Analysis shows the portion is 8 percent,” he explained, when “measured by value …”

The difference, he went on to explain in the Letter, is “the government doesn’t account for extra value that gets added to goods after they leave the farm … shipping, processing, packaging and more. Ignoring such markups greatly overstates the exported share.”

For example, Maixner told Keith Good in a May 13 interview (which can be heard at http://agpolicysoup.blogspot.com/), steaks exported to Japan might carry a $15 per lb. price tag at the export terminal, but the rancher gets less than a $1 per pound from the packer when the animal is sold.

Likewise, $3 North Dakota wheat may fetch $5.50 when it leaves Washington State for Shanghai, but the grower still only received $3 when he sold it in Jamestown.

As such, counting the steak’s $14 markup or the wheat’s $1.50 price boost as “farm value” is “logically ridiculous,” Maixner continued. What USDA actually is tabulating, he added, is “added export value, not farm value.”

Ed Maxiner sums up how 30-odd years of policy geared around ag exports should change:

“When developing farm policy,” Maixner told Good, “it’s probably good to start somewhere near the truth. We don’t export everything … Maybe the first thing we need to take care of is our domestic agriculture economy.”

• Sousy

This entry was posted on Wednesday, June 21st, 2006 at 5:41 am and is filed under Politics, Iowa, Elections. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.