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Secretary Vilsack Talks Trade and the Economy in the Corn Belt

posted on February 10, 2012

When determining the outlook for investments, savvy analysts often point to the Greeks: technical indicators like Delta, Theta and Alpha that quantify factors influencing the markets.  This week though, the Greeks weighing on equity markets were 11 million people in Europe at risk of defaulting on their national debt. 

U.S. stocks rose Thursday after Greece announced plans to cut spending and avoid defaulting on its debt next month.  The news pushed the Dow Jones Industrial Average to within 75 points of 13,000 at one point -- a milestone it hasn't reached in nearly four years.  But the rally was brief. 

U.S. stocks pulled back Friday, after finance ministers from the 16 other euro nations insisted that Greece enact more rigorous austerity measures and guarantee their enforcement after planned elections in April.

Many economists are concerned the European debt debacle will weigh heavily on the U.S. economy this year.  But data released Friday revealed U.S. exports to Europe rose 7.2 percent in December in the wake of a 6 percent decline in the previous month.  Total U.S. exports increased 0.7 percent, but imports rose nearly twice as fast, as U.S. consumers bought more foreign autos, auto parts and industrial machinery.

Cumulatively, the numbers resulted in a U.S. trade deficit of nearly $50 billion reflecting the largest monthly trade gap since June. 

American agriculture, of course, enjoys an all-too-rare trade surplus.  And a key member of President Obama's cabinet traveled to Iowa Friday to outline rural America's role in an economy that's built to last.

Secretary Vilsack Talks Trade and the Economy in the Corn Belt

Secretary of Agriculture Tom Vilsack carried President Obama’s State of the Union message of economic recovery to the heart of theCorn Beltthis week.  

Vilsack met with local business leaders and producers inIowaat a roundtable event aimed at supporting rural communities and a growing agricultural sector.

 Sec. Tom Vilsack, Department of Agriculture: “Obviously we’re seeing record income levels for farm families, this was the best, 2011, was the best year we’ve ever seen in terms of net farm income, even when adjusted for inflation, best we’ve seen in 40 years.”

The secretary lauded the farm sector for its impact onAmerica’s slowly recovering employment rate which he added is buoyed by everything from commodities to biofuels.

Sec. Tom Vilsack: “All of those activities also have impact on job growth. If you’re basically exporting more, more is being shipped, more is being transported, those are jobs. If you’re involved in more conservation, that means local contractors are moving dirt creating buffer strips and things of that nature. If you’re engaged in bio-based economy, bio-refineries are being built small, manufacturing facilities are dotting the landscape that brings unemployment down, interestingly enough, the unemployment rate in rural America is coming down at a faster rate than anyplace else in the country. Good farm income, good jobs, good news.”

Vilsack’s visit to the Heartland coincides with a Commerce department report signaling strong agricultural trade figures in 2011.

Vislack: “Nothing but good news, $136 billion of exports, many reasons for it. Part of it is a strategic focus that we’ve created at USDA, in the last three years on exports. Virtually every commodity, grains, hogs, dairy, cattle, cotton are all at record highs. And obviously the importance of China, and the import/export opportunities to China, and grow tremendously, now our number one customer.”

In 2011, the multi-billion dollar Chinese market surpassedCanadato become the largest exports.  The bullish sign for domestic commodities has come on the heels of a Chinese corn buying spree.  Since September 1,Chinahas purchased 2.39 million metric tons of corn – up from only 313,000 the year before.

China’s exploding population and expanding middle class is creating a wealth of new demand forU.S.producers of grain and meat.  Increased agricultural exports toChinaare a welcome development in an otherwise dismal trade picture.  In 2011, the overall trade deficit withChinaclimbed to an all-time high of $295.5 billion, up 8.2% from the previous record set in 2010. The overall trade imbalance is the largest ever recorded with a single country.  Despite strong agriculture demand with our Asian partner, Vilsack cautioned that U.S. farmers and ranchers should not rely on one country for exports.

Sec. Tom Vilsack: “You still want to have diverse portfolio. You don’t want to be over-reliant on one customer, because that customer can pull the rug out from under you. It’s great to see that we have export opportunities with Canada and Mexico in own hemisphere, very good customers, beginning to see expanded opportunities in Japan.”

USDA’s Vilsack remains bullish on the ag sector and emphasizes the current trade climate is part of an Obama Administration plan to recover from the worst economic downturn since Great Depression.

Sec. Tom Vilsack: “We are making progress we still have more work to do, the president has challenged all of us to double exports in 5 years, he knows that is one of the key prescriptions to bring the country back and having an economy that’s built to last.”

Tags: agriculture beef biofuels China corn cotton dairy exports manufacturing news pork soybeans Tom Vilsack trade