Vilsack Optimistic About Present, Future U.S. Farm Economy

Agriculture Secretary Tom Vilsack has painted an optimistic picture about the future of the agriculture economy, which is not surprising inasmuch as the industry continues to see record profits.

Agriculture Secretary Tom Vilsack has painted an optimistic picture about the future of the agriculture economy, which is not surprising inasmuch as the industry continues to see record profits. In recent testimony before both the House and Senate Agriculture committees, Vilsack noted that "As we enter 2011, the U.S. farm economy is coming off unprecedented increases in U.S. agriculture exports, farm cash receipts, farm income, and asset values the past few years." And, he added, "Prospects for the coming year generally look bright."

Both the House and the Senate recently held hearings about the industry's economy and Vilsack appeared before both committees to report the record numbers.

Cash receipts for producers are expected to reach $341 billion in 2011, a $28 billion jump from 2010, according to Vilsack's statement. "The balance sheet of U.S. agriculture is expected to strengthen again in 2011," he said. "Increases in debt are forecast to be offset by larger increases in farm asset values."

Exports of U.S. farm products have been especially robust and have been setting all-time record highs, said Vilsack. U.S. exports are expected to exceed $126 billion in fiscal 2011, up from $108.7 billion in fiscal year 2010, according to Vilsack's statement. Strong export demand for U.S. crops has continued to support above average farm income in recent years, he said.

Turning to problems in the sector, Vilsack expressed concern over the dairy industry and rising energy costs for all farmers. He noted that USDA's dairy industry advisory committee currently is preparing a report on the overall strength of the industry, and is expected to issue that report next month.

In his prepared remarks, Vilsack said that while all of agriculture experienced a robust recovery in 2010 and 2011, "expenses are increasing –– especially prices of farm origin inputs like livestock and feed, the price of energy, and operating costs. The livestock and dairy industries could face some financial pressures in 2011 and bear watching."

In the House, committee Chairman Frank Lucas (R-Okla.) was unimpressed by Vilsack's largely upbeat presentation. "The agriculture economy is highly cyclical and it changes like the weather in western Oklahoma — fast, sharp and without notice," said Lucas.

The chairman added that "increasing production costs, lost equity, and fast rising farm debt may be manageable for producers with strong prices and production — but they spell big trouble for those without.

"These facts, along with experience, offer a cautionary note to anyone who might be tempted to cite current economic conditions on the farm as the predicate for setting long term farm policies," Lucas warned, referring to the upcoming task of drafting the 2012 farm bill.

During the Senate hearing, panel member Mike Johanns (R-Neb.) raised concerns that feed prices could go even higher if there are weather-related crop failures. "There is virtually no" grain in reserve, "probably not even enough to keep the pipeline going," Johanns told Vilsack. Vilsack said USDA predicts that farmers will plant 3 to 5 percent more acres to corn, which could help stabilize grain supplies.

Vilsack also said it is too early to be concerned about the effects of a bad corn crop. "We had huge problems last year in a lot of areas of the country and we still had reasonable yields. We'll deal with that if it comes," Vilsack said, without mentioning what actions USDA could and would take. 

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