Hello, I'm Mark Pearson.
For much of the nation's financial community it is has been an anxious week. Retail sales were down in January, due mostly to sharply lower auto sales. Concerns over terrorism in world financial capitals like New York and London have muffled market activity. Some of the investment in recent weeks has moved into commodities like oil and gold. Indeed over the last 2 years more money has shifted from weak equity markets to more grounded "stores of value", notably farm land. Compared to stock indices, farmland these days is practically a sure thing for investors.
This is not say farmland always cash flows, ask farmers. Crops still need to be produced, and sold at profitable levels. Production and marketing can be challenging in the best of circumstances.
This week reports showed there is movement on three policy fronts important to American agriculture, trade, the development of alternate fuels and most imminently disaster aid.
After much congressional wrangling it appears drought relief will soon be flowing to those who were afflicted by last year's disaster. Three point one billion dollars of aid was tucked into a 397 billion dollar spending package that will finance a spectrum of government programs. The aid measure is expected to better target dollars to those who were actually hurt. Early versions of the legislation would have sent money to any county that suffered from disaster, even those farmers who may have endured no lose. Even-so, farm state lawmakers are not happy with the plan. They complain the aid is not new funding, but rather money that has been diverted from other sectors of the agricultural budget – especially conservation programs. On another front a coalition of farm state senators is developing a plan to encourage the use of renewable fuels like ethanol and bio-diesel. The measure, called the Fuels Security Act of 2003, is identical to language contained in a failed energy proposal last year.
The proposal is to create a nationwide standard that would more than double use of renewable fuels over the next ten years. It would also ban the MTBE fuel additive in four years and provide funds to clean up MTBE contamination.
While renewable fuels might buttress domestic markets for grain and oilseed, the World Trade Organization, as part of the next round of trade liberalization wants to end export subsidies. According to a confidential document obtained by the Associated Press the WTO recommends that export subsidies be phased out over a nine year period The U.S. along with other major exporters like Brazil, Australia has long been critical of the European Union's massive export subsidies.