ARLINGTON, Va., Feb. 21, 2013 – The agriculture sector is facing a number of “man-made” problems this year as it continues to contend with the damage from the ongoing drought, Agriculture Secretary Tom Vilsack said today.
Speaking at the USDA’s annual Agricultural Outlook Forum, “Managing Risk in the 21st Century,” Vilsack said the looming across-the-board cuts from the scheduled March 1 sequestration has created great uncertainty among farmers who rely on the department’s programs.
USDA will need to cut about five percent from all its programs if Congress fails to act to avoid sequestration. Vilsack said the department would have to make “line-by-line” reductions to each of its programs.
He said he has asked Congress to “give us some flexibility” when deciding what cuts to make. Vilsack stressed that while the SNAP program, formally known as food stamps, will not be subject to cuts, some food safety inspections may “stop for a day or so” each week.
Vilsack said furloughs would begin at the USDA anywhere from 30 to 120 days after March 1.
“It’s complicated because we have lots of different labor agreements,” he said.
Another issue facing farmers this year, Vilsack said, is the possibility of an immigration reform package becoming law. He said “a good portion” of the nation’s farm workers “are not legal” and that more workers are needed.
“We had crops that were grown, but not harvested, because there were not enough hands,” Vilsack said.
Also, Vilsack said farmers continue to wait for Congress to act on a five-year farm bill, which would give them and the bankers who provide loans to farmers some long-term certainty.
Despite the issues facing farmers, Vilsack said the farm sector remains strong, which he said “is pretty amazing.”
For his part, USDA chief economist Joseph Glauber told forum participants that he expects the agricultural economy to remain strong with farm incomes nearing record highs.
“U.S. agricultural exports are expected to break records again this fiscal year and the financial outlook for the sector remains solid, with debt measures low relative to assets and equity, and asset values at record levels,” Glauber said.
Glauber said the outlook for 2013 calls for a rebound in crop yields with record production for corn and soybeans. Later in the year, he said, USDA expects lower prices for most grains and oilseeds.
“Lower crop prices should lead to lower feed costs and improved profitability for the livestock, dairy and poultry sectors,” he said.
Glauber noted that exports to China are projected to be $22 billion, which would be down $1.4 billion from last year’s record high. Still, China should edge out Canada, projected at $21 billion, for the second straight year as the top U.S. market.
Brazil is expected to overtake the United States as the world’s largest corn exporter, he said.
“While the United States will likely regain its position as largest corn exporter in FY 2014, the low levels of exports projected for FY 2013 reflect the magnitude of this year’s drought on the U.S. corn balance sheet,” he said.
Corn use for ethanol is projected at 4.675 billion bushels for 2013-2014, which would be up 175 million bushels from last year, but below 2011-2012 levels.
Glauber said the key uncertainty to the USDA projections is whether the drought continues.
“Another year of drought would likely result in large liquidation and hardship for livestock producers,” he said.
Also speaking at the forum, former Sen. Tom Daschle, D-S.D., who now serves as senior policy advisor for DLA Piper, said global warming is causing less land to be suitable for agriculture.
“So we need to do more with the land we have,” Daschle said.
Daschle said the seven billion people on earth already use the “equivalent of a planet-and-a-half” of resources.
“Yet 870 million people worldwide still go to bed hungry,” Daschle said. “And by the year 2050, there will be over two billion more mouths to feed, many of them in the developing world.”
Daschle noted that between 30 percent and 50 percent of the food produced in the world rots or goes uneaten.
“That’s not sustainable,” Daschle said.
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Updated 5:23 p.m., Feb. 21, 2013