More, new and better markets
by Courtney Llewellyn
At the Commodity Classic’s General Session the morning of March 11, U.S. Ag Secretary Tom Vilsack focused on the positives – and what American farmers can do to remain positive.
He opened his speech by talking about a recent phone call he had with Roman Leshchenko, Ukraine’s Minister of Agrarian Policy and Food. He was in a bunker, surrounded by sandbags. “As I listened to him, it was impressed upon me the importance to never take our privilege for granted,” Vilsack said. Ukraine’s farmers, who grow a large portion of the world’s wheat, need fuel. Vilsack said we need to provide as much stability in the market as we can, and be careful about speculation. America needs to speak of things with certainty.
The U.S. had record agricultural exports in 2021 (beating the previous record by 14%), and Vilsack expects record exports this year as well. However, he noted that 25% of our ag exports went to China before the trade war began, and now the amount is 18%. “They have diversified, and that’s a lesson we need to take to heart … We need to diversify ourselves” through presence, people and promotions, he stated, and tell the story of American agriculture globally.
He noted the recent trip to Dubai was deemed a success, and in 2022 the Ag Department will participate in four additional trade missions to the UK, the Philippines, Kenya and Spain. “We need to build trust in trade,” he added.
He understands Americans are frustrated by the issues with the ports, especially on the West Coast, and especially on those barges leaving empty. We have tremendous export opportunities to take advantage of, he said, and noted the partnership with the Port of Oakland to not send out empty containers.
For a while, we’ve been dealing with the consolidation of markets, Vilsack said. “We need to look at developing more, new and better markets, that allow our producers – and rural America – to get more of the value in the wealth you all create.”
As the department travels the country and the world, becoming clear more and more consumers are concerned about where their food is coming from. “It’s a higher-value proposition, and at USDA we believe farmers should take full advantage of that higher-value opportunity,” Vilsack said. The USDA asked farmers how to create that opportunity, and they asked to start with pilot programs for all commodities; to aggregate resources to embrace climate-smart practices they may already be doing, and not penalize the early adopters; and to monitor, measure and verify results to establish a standard for what a climate-smart commodity is. “The goal here is to create additional revenue opportunities that complement existing revenue opportunities.”
The department put $1 billion behind this effort, and anticipate a lot of applications coming in – so much so that the application deadline was extended from April 8 to May 6 for the larger tranche of grants that will run from $5 million to potentially $100 million. (The deadline for smaller projects was also moved back to June 10.)
Vilsack added that the U.S. is also expanding availability for E15 (gasoline blended with 10.5% to 15% ethanol), and that consumers will see the price differential at the pumps.
As for the balance between climate-smart production and optimal production, Vilsack said they don’t have to be separate. He said from the interest we’re seeing across the board, producers are anxious to participate. And, much like the race to the moon in the 1960s, the world is a race now to see who can get to net-zero agriculture first.
The conflict between Russia and Ukraine, while affecting global availability of wheat, is also affecting fertilizer costs. The help fight skyrocketing costs, Vilsack urged fertilizer conservation, a focus on crop risk management and research for more efficient fertilizers – all while hoping no one selling the needed ag input is taking advantage of the situation.
In the long term, however, Americans need data to provide resources for precisely where fertilizer is needed. Vilsack said that as many as 30% of the acres in the Midwest don’t need any fertilizer.
“We need to recognize we may be too reliant on other resources for fertilizer,” he said, and that we need to adjust and shift where that resource comes from. In an effort to jump start independent fertilizer production, made in America, the USDA has set aside $250 million in grants to assist this effort. The first step in disbursing that money is a Request for Information (RFI) for fertilizer production and distribution.
“We can celebrate our freedom because of our hundreds of thousands of farmers. American agriculture helped create the expanding middle class, and we need to continue to find ways to strengthen that middle class,” Vilsack said. “We need to grow our economy from the bottom up and from the middle out.
“I hope there’s a genuine understanding of the incredible work American farmers and ranchers do,” he concluded. “I hope they see the incredible productivity increases you’ve made.” And since agriculture is 20% of the American economy, it deserves accolades.
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