News from the Kiplinger Agriculture Letter
Future Outlook:
The fastest-growing market for U.S. ag goods? The Pacific Rim….China, Hong Kong, Vietnam, South Korea, the Philippines, Australia, and Indonesia.
Farm exports to the region will hit $62 billion next year, more than tripling in value over a decade. The Trans-Pacific Partnership will help to boost U.S. foreign sales to Pacific Rim countries. Expect the trade agreement to take effect in 2013.
Southeast Asia alone will buy $12 billion worth of farm goods from the U.S., nearly doubling its buying since 2009 and exceeding the value of European Union purchases for the first time.
Other solid growth prospects for U.S. ag exports:
The Middle East and northern Africa. U.S. sales there have tripled since 2001, and will reach $12 billion in 2012, about half of which will go to Turkey and Egypt.
Latin America will continue its run as a top growth market for years. Latin America’s close proximity to the U.S. allows for easy flows of fresh fruit, veggies, flowers, and more as seasons alternate between the U.S. and its southern neighbors. Farm exports to them have almost tripled by value in the past decade, to $12 billion this year, and will soon be 10% of U.S. farm exports.
Livestock and Meat:
U.S. poultry producers will take on India in the World Trade Org. in order to open up an enormous expanding market. Even though New Delhi has banned poultry product imports since 2006, when avian flu appeared in some U.S. poultry operations, U.S. producers are challenging the prohibition on grounds that global animal health standards don’t see the flu as sufficient cause. A victory will take years but can mean $300 million a year in sales to India.
Crops:
Organic wheat proves to be more profitable than conventionally grown wheat, says a USDA study of 2009 wheat production in four U.S regions. Organic farmers pay less for fertilizers because they use animal and plant wastes and fewer purchased fertilizers to enhance productivity of the soil. But their costs of seed and overhead, including typically priced cropland, are higher. And organic wheat fetches higher prices: In 2009, $8-$9/bu vs. $4.60-$6.00/bu for conventional.
Coming soon, crop insurance for camelina, an oilseed. It’ll available on a pilot basis next year in N.D. and Mont., according to USDA.
Up North:
Canadian Wheat Board (CWD) control of all Canadian wheat exports end in August, as ordered by Canada’s parliament. For U.S. producers, the result will include more competition in the border areas whenever Canadian growers find price advantages in trucking grain into the U.S. when conditions favor exports of low-quality wheat to feed livestock, for example. The CWD sell 40-50 times as much wheat to the U.S. as the U.S. exports to Canada.
Canadians will often get higher prices than the CWB offers. But, the CWB will have less power to derail U.S. export prices, a boost to U.S. farmers.
Farm Labor:
With more than 20 states having passed laws to block undocumented workers, who are the majority of U.S. farm laborers, the shortage is expected to grow even more acute for the coming growing season.
Worker scarcities cost farmers millions of dollars, stemming from crops that go bad in the field because there aren’t enough workers to harvest them. To minimize crop losses in 2012, many farmers will plant fewer acres, and turn to more mechanization where possible to make up for lack of help.
Farm Kids:
The Labor Department will ease pending rules pertaining to some kids under 16 who work on farms. The agency caught an earful from farm advocates who feel that the rules erode farm families’ statutory exemption from workplace safety rules. The law leaves the safety of kids in farm families up to the parents. Meanwhile, these parents want to make sure that coming federal requirements for kids to work only on tractors equipped with roll bars and seat belts continue to exclude their children.
Taxes:
Governments of all stripes are stepping up tax audits of businesses. Look for random line-by-line IRS audits of small corporations to start soon. Examiners will check 2010 returns of 2,500 or so firms with assets of under $250,000, searching for noncompliance.
Fuel and Energy:
U.S. ethanol refineries are going to squeeze a lot more fuel out of their corn. Besides ethanol, more refineries are starting to extract corn oil, which is used to make biodiesel and feed products. Poet, the top U.S. ethanol maker, is already extracting the oil at six of its plants and will eventually expand the process to all 27 of its facilities. Other producers are sure to follow Poet’s lead.
Natural Resources:
President Obama’s long-term response to the oil spill in the Gulf of Mexico: he’ll dole out $50 million to farmers in watersheds along the Gulf Coast, helping them to improve water quality in the region’s rivers and estuaries. At USDA, the Natural Resources Conservation Service will direct funds to projects done jointly with local groups of farmers as a way to maximize water quality and fishery benefits.
Farm Credit:
USDA is offering beginning farmers a new choice in credit when buying land: contract for deed, a mortgage alternative that lets them make payments, with interest, to the seller. After January 1, farmers in business for fewer than 10 years can ask USDA to guarantee 90% of their contract payments or, as another option, ask USDA to make up to three years’ payments plus cover the real estate taxes and insurance on the land if the buyer can’t.
Wildlife:
Farms and ranches are hard on wildlife habitat, right? Not necessarily, says a study of 30 species of birds and other wildlife by British scientists. Research shows that many threatened species depend on farms to survive and that many whose populations are under pressure are thriving because of feed, cover and other resources found on traditional farms all around the globe.
Source: The Kiplinger Washington Editors
Contact:
Karyn Page, Kansas World Trade Center
T: 1-316-264-5982
125 N. Market, Ste 1260
Wichita, KS 67202 USA
The Kansas World Trade Center (KWTC) is a member of the World Trade Centers Association. Since 1994, KWTC’s education, communication and research services have helped customers generate more than $165 million in international sales, with projected sales of over $13 billion. www.kansaswtc.org
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