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August 2011 Archive for John Block Reports from Washington

RSS By: John Block, AgWeb.com

John Block has dedicated his professional career to the fields of agriculture, food and health.

My Escape: The Farm

Aug 25, 2011

 

The political conflicts here in this town have made Washington, D.C., hard to live with. So last week, I headed to the farm in Illinois. My escape. I couldn’t believe it -– the minute I arrived, I was told that President Obama would be in my county the next day. Is he following me? I just wanted to get away from the political wars. There just isn’t any place to hide.
 
On a serious note, here is what I found on the farm.
 
The corn is better than I expected, but it has suffered considerable wind damage and that will make the harvest difficult. With the intense heat in early August and July, it has been hard to keep the mother sows cool in the barns, but we did. These porkers are worth a lot of money.
 
Speaking of money -– farm prices are unbelievable almost across the board, and that lifts our spirits.
 
That isn’t to suggest there isn’t anxiety and worry. Will the good prices hold or will they collapse? How much damage have the drought and heat done? We’ll know soon as the combines hit the field.
 
Looking ahead to the 2012 crop, our input costs are going up again. What kind of new costly regulations will Washington enforce on us? Farmers are worried about dust regulations. Drive on a country road. Can’t see for the dust. Watch that combine come through the field. Can’t hardly see it for the dust. Will we be stopped from tilling a wet field?
 
How many new permits and papers will we have to sign just to operate our farms?
 
On a positive note, I want to thank Transportation Secretary Ray LaHood for announcing, "We are not imposing any new regulations." That closes the door on the Federal Motor Carrier Safety Administration. They had been considering requiring farmers to get a commercial drivers license just to haul their grain to the local elevator.
 
In spite of all our concerns in the farming world, times are good. We’re looking at record exports and record net farm income this year. I know the bounty will not be shared equally. It never is in this roller-coaster business of agriculture. The uncertainty of weather and prices are always with us. But we are resilient. If we don’t hit it big this year, we will next year.
 
In closing, I would encourage you to access my website, which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

Don’t Count Ethanol Out

Aug 19, 2011

For more than a year now, the big city press has had ethanol in their cross hairs. They blame the increase in food prices on the fact that part of our corn crop is processed into fuel. The hot, dry summer has hurt our corn crop and that has helped to lift the corn prices to $7 per bushel, giving the ethanol critics even more ammunition.

 

Let’s put some facts on the table.

 
1. It’s not just corn land that is being diverted to fuel. Biofuel production uses 20 percent of the sugar cane crop, 9 percent of sugar beets. Ethanol uses 23 percent of the corn crop. I must add that the percent is 23 percent of our corn crop – not the 40 percent that many reporters inaccurately report. If we are so concerned about crop land that is not producing food, what about the millions of acres growing cotton – shouldn’t those acres be growing food?
 
2. An Iowa State study tells us that producing ethanol as fuel reduced the cost of gas by 89 cents per gallon in 2010. That’s huge. When you fill up your gas tank, 10 percent of the gas is ethanol. There are studies that project that if that ethanol were taken away overnight, your gas bill could jump maybe to $7 per gallon.
 
3. Let’s not forget that one of our national priorities is to reduce our dependence on Middle East oil. Already, ethanol is supplying more fuel than we import from Saudi Arabia. That’s a good start.
 
4. Now, let’s consider how much impact corn could have on the cost of food in the U.S. To begin, we need to be aware that less than 12 cents of every food dollar is spent on food. Let me explain. If you buy a box of corn meal for $2, only 24 cents is for the corn. The rest ($1.76) is for processing, transportation, labor, marketing, etc. The thing to remember is that when it comes to food, the real cost is not in the raw grain, but everything else.
 
5. The criticism of ethanol is probably going to eventually result in the elimination of the federal ethanol tax credit and imported ethanol tariff.
 
But don’t count ethanol out. Our first automobile ran on alcohol fuel (ethanol). And I expect even without federal subsidy, ethanol will continue to be a valuable source of fuel.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

 

President Reagan’s Philosophy

Aug 11, 2011

Last week, my family and I visited the Ronald Reagan Presidential Library in California. A lot of memories came flowing back about my days serving as his Secretary of Agriculture. We lifted the Soviet grain embargo. The President was shot. He told Soviet President Mikhail Gorbachev to “tear down this wall.” I presented my vision for the 1985 Farm Bill to the President and the Cabinet only to have David Stockman attack the Conservation Reserve Program. Those were challenging times too.

President Regan’s belief in smaller government with lower taxes, less regulation, and more personal responsibility seem to be a philosophy of government that we lost along the way.
 
Here we are today with more than 14 trillion dollars in debt without a plan to fix the problem. Standard & Poors has downgraded our credit rating. That has spooked the stock market. Our economy was already struggling to get back on track anyway. Politicians of both parties pointing fingers at each other to fix the blame on the other guy. Other countries are also speaking up.
 
China (our banker) issued a blistering attack in their state newspaper telling us to “cure our addition to debt.”
 
Our problem is not the downgrade. We deserved it. Our problem is the debt. When our government spends a dollar, we have to borrow 40 cents of that dollar because we really don’t have a dollar of our own money to spend. We can’t keep doing this.
 
The only solution is to spend less or tax more. It’s that simple. No more phony government games.
 
We definitely need tax reform. Close some loopholes. Our Tax Code is so complicated no one can understand it. We can pick up some money there. It will not be nearly enough.
 
We need to get control of our runaway government spending. Pork barrel spending and bloated budgets are what put is in this situation. Our entitlement programs eat up 60 percent of our budget. They have to be cut. Military spending has to be on the chopping block.
 
Some government spending programs should be entirely done away with. President Reagan once said, “The nearest thing to eternal life that we will ever see on this earth is a government program.”
 
Unfortunately, our government has made more promises than we can afford. We can’t afford to be a welfare state. Neither can Europe. They’re in trouble too.
 
We know that President Reagan cannot lead us now, but his philosophy can.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

 

Farm Program Prospects

Aug 04, 2011

 

Congress is scheduled to write a new farm bill next year. It’s not going to be a carbon copy of the one we operate under today. Secretary of Agriculture Vilsack said, “The old days are through.” I have to agree.
 
In the “old days” back in the 60’s and 70’s, we had land retirement programs to reduce production which was designed to short the market and raise the prices. Still, the prices were low and to help keep farmers in business, to keep them producing “cheap food,” the subsidies were just part of farmers’ income. In the 80’s and 90’s, we saw evolutionary farm program reform, but the subsidies continued to flow, encouraging production. Stable food prices and abundance was the objective. It was a “cheap food” policy and it worked.
 
All of a sudden, we have seen an explosion in farm prices. A price explosion that we never imagined could happen. Not just $7 corn, but almost everything has shot up.
 
With farmers getting all of this money out of the marketplace, they don’t need any government help anymore. That is the climate in which the next farm bill will be written. And with the debt burden that the country shoulders, the pressure to cut will be powerful. That is the reality that we must accept.
 
However, some kind of safety net such as crop insurance would help farmers deal with destructive weather which we cannot control. Some support for farmers would also benefit the consumer. Subsidies to farmers over the years have helped to keep farmers in business.
 
I am delighted that we are now taking our marching orders from the market and not the government. However, to those that want to take away all farm program support for farmers, I repeat, what Pro Farmer Publication had to say – “Be careful what you ask for.”
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.
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