Iowa Public Television

 

2011: The Year in Review

posted on December 30, 2011


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2011 began in much the same fashion as its immediate predecessors: as the global economy struggled to recover from the worst downturn since the Great Depression. 

State and federal budgets were swimming in red ink, the U.S. unemployment rate stood at 9.4 percent, and energy costs were on the rise.    

Reiterating concerns voiced by predecessors dating back to the Nixon Administration, President Obama called for America to end its addiction to oil. 

President Obama: "With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015.” 

In January, the EPA approved increased blends of ethanol for use in vehicles made in 2001 and beyond.  The blend of 15 percent ethanol and 85 percent gasoline, commonly known as E15, had previously been approved for newer vehicles built after 2007.  But the expiration of key government supports loomed on the horizon.  And once again, America's predominant alternative fuel was blamed for everything from rising food prices to wasteful government spending. 

Renewable energy proponents pointed out that prices at the pump would have been significantly higher were it not for domestically produced ethanol.

And at a Senate hearing, industry experts testified on how agriculture could help reduce dependence on foreign oil.

Bruce Dale, Michigan State University: "…we analyzed what would happen if we planted double crops on about 1/3 of our corn and soy land. We found that doing this one simple thing would allow us to produce about 100 billion gallons of ethanol, roughly the amount of gasoline we import, provide all the food and animal feed the land currently produces, improve soil quality and biodiversity …and reduce total US greenhouse gas emissions by 10%. A very pretty picture indeed, a "win-win-win" for national security, economic security and climate security."

America's fragile economic recovery garnered most of the headlines in 2011, but in farm country prospects were looking up.

In February, the Agriculture Department estimated U.S. farm exports would reach a record 135.5 billion dollars.  That beat the previous record set in 2008 by $20 billion and pushed the agricultural trade surplus to an all-time high of $47.5 billion.

Sec. Tom Vilsack, USDA: "Trade numbers just published show that for calendar year 2010, China was our number one export market, edging out Canada and accounting for a little over 15% of exports."

One of the Obama administration's chief trade priorities for 2011 focused on three unilateral trade agreements with South Korea, Columbia and Panama that could spur more than $2.3 billion in additional U.S. agricultural exports. The agreement with South Korea alone is the largest accord since the North American Free Trade Agreement, or NAFTA, in 1994.

When Congress finally ratified the languishing deal in October, the White House estimated the agreement would increase U.S. exports by $13 billion, create tens of thousands of jobs and make 95 percent of American goods duty-free in South Korea within five years.

President Barack Obama: "For our farmers and ranchers here in the United States, it will increase exports of agricultural products.  I'm very pleased that it will help level the playing field for American automakers." 

While new doors opened in some countries, the term “trade barrier” took on a whole new meaning in March when a massive earthquake unleashed a massive tsunami on the island nation of Japan, devastating everything in its path.

Japan is the largest importer of U.S. corn and pork and the third largest foreign market for American beef.  But, while U.S. manufacturers endured considerable supply chain delays, Japan quickly resumed corn and soybean purchases at a faster pace than in 2010. 

While most domestic weather issues in 2011 paled in comparison to the Tsunami in Japan, Mother Nature smashed the record for U.S. weather disasters, as losses in 12 calamities exceeded the $1 billion mark.   Losses from the "deadly dozen" alone piled up to a staggering $52 billion, matching the total for all of the 1980’s, even when adjusted for inflation.

Tornadoes accounted for half of the record-breaking disasters, as a steady stream of lethal twisters roared across dozens of states, claiming the lives of more than 1,000 people and inflicting nearly $28 billion in damages.

Other natural disasters also devastated large geographical areas, particularly in the southern plains where record-breaking drought decimated crops and livestock. Damages from the arid conditions are estimated at nearly $10 billion – not counting more than $1 billion in losses due to wildfires in Texas, New Mexico and Arizona.

Where it wasn't too dry in 2011, there's a good chance it was too wet. Flooding caused significant damage along the Mississippi and Missouri Rivers. Levees failed after being weakened by flooding along the Missouri which, in some cases, lasted for months.

And when combined with losses due to epic flooding along the Mouse River in Minot, North Dakota, America's swollen waterways racked up more than $6 billion dollars in damages.

Amidst Mother Nature’s fury, America’s farmers somehow managed to plant 92.3 million acres in corn.  That’s the second most corn plantings since World War II and is only 1 percent less than the all-time record set in 2007.

In June, tight supplies and strong demand pushed corn prices to record highs as the nearby July contract came within a whisker of $8 per bushel.  

In December, USDA officials estimated net farm income would rise 28 percent this year to nearly $101 billion.  And for the first time, U.S. crop sales were predicted to exceed $200 billion. Livestock producers also were expected to enjoy increased revenue with estimated sales of $165 billion. 

Citing low interest rates and a healthy farm economy, the Federal Reserve Bank of Kansas City estimated in November that average farmland values in the Midwest increased 25 percent over the past year, marking the largest single-year gain in three decades.

And in Iowa, an annual survey dating back to 1941 revealed year-over-year land values had soared to an all-time high. 

Mike Duffy, ISU Extension: “We saw a 32.5 percent increase in land values from last year.  This was the highest on record.  The last time we saw numbers near this was in 1973 when there was a 31 percent increase.”

While farmers enjoyed record -- or near record -- commodity prices, land values and net farm income at some point in 2011, the outlook for 2012 is anything but certain. 

Legislative negotiators had hoped to include farm bill reforms in a massive super committee plan to trim costs and overhaul the structure of federal farm programs. 

But the Not-So-Super" Committee failed to agree on a package of spending cuts and revenue increases cutting the deficit by $1.2 trillion over 10 years.  The collapse triggered automatic spending cuts beginning in 2013 and left farm programs in limbo. 

The proposed 2012 farm bill, ripe with already conceded budget cuts, could become an election-year vehicle for all kinds of agendas including unemployment benefit extensions, new tax cuts, and even fresh stimulus spending.

And with the battle over the next Farm Bill looming on the horizon, agriculture -- and rural America itself -- could be caught up in the political fray more than ever before. 

For Market to Market, I'm John Nichols. 


Tags: acres Congress corn cropland economy Environmental Protection Agency ethanol land values news Obama oil South Korea tornadoes trade USDA Washington D.C.