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May 2013 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.

Food for Peace

May 23, 2013

How many of you out there know anything about the U.S. Food for Peace Program? The reason it is getting some attention is because there is an effort to make a dramatic change in the Program.
We have hungry people in the world. And, because of weather or other problems over the last 50 years, the U.S. has been there to help – delivering food for the starving.

The Food Aid Program was started in 1954 under President Eisenhower. We transport in U.S. ships food from the U.S. to the hungry. This has been a popular Program because we are generous and want to help those suffering. We are providing our own food and transporting it in our own ships. That means more jobs. Over the years, we have delivered at least some of the food to non-governmental organizations – which sell the food to the people and the proceeds are used for development projects.

I have been in Moldova, met with their farm families that have a dairy collection station where they collect milk from hundreds of small farms with 1 or 2 cows each. The milk is made into cheese, yogurt, etc. That station was a by-product of our Food Aid Program. Our food aid can be more than food aid. It can result in business development. I have been in Ukraine and seen the farm service businesses that have been started because of the "monetization" of our food aid.

We are not talking about an expensive aid program. It is not a huge amount of money – less than 2 billion dollars per year. The question before us is, do we continue the Food for Peace program as it has operated over the years or do we just give the hungry countries money so they can buy their own food? – probably not from the U.S. Such a change would be easier and less expensive. In the U.S., we don’t have food surpluses like we did in years past. Why not just give the hungry countries money?

I respond with two points. With direct cash, I’m not sure that we would be able to sustain the very successful development projects. Secondly, if we give cash, how certain are we that money will be used to buy food? Given the corruption in many of the needy countries, we might guess that our food aid money could end up on someone’s pocket.

Maybe it is time for a change, but I’m just not convinced.


Tales of a Wet Spring

May 16, 2013

Last week, I was down on the farm in Illinois. I had hoped to watch the corn planter crossing the field – back and forth, back and forth. But, it didn’t happen. It just didn’t get dry enough. This week, the planter is rolling. We could be half done with corn planting, but rain is again in the air. And we haven’t even thought about the soy beans.

The struggle to get the seed in the ground is pretty universal in the Midwest. It makes us worry. The markets don’t know what to do. They are all over the place. Weren’t we worried about drought just yesterday? I think we can still raise a reasonably good crop. Maybe not a record crop. Every year is different. Spoon River, which runs through some of our land, was flooding all over the fields just three weeks ago. It’s down now. We are going to plant those fields.

We have been reading all spring that, with record planting intentions, we will be buried in grain and prices will collapse. Well, maybe now they won’t go down quite as far. We don’t have to have $8 corn, but $3 corn would be hard on the cash flow. The farming business is as volatile and unpredictable as any business. Hold on tight. It’s going to be a bumpy ride. At least we are producing a product that is absolutely essential. Is there anything more vital than food?

When I was on the farm, the weather and planting delay was all I could think about. However, we did have baby pigs born each day. Our mother sows were really shelling them out – three or four litters every day with 12 or more pigs each. The hog market has shown some strength, and that’s encouraging.

The farm economy across the country is strong. We’re going to get a farm bill passed this year. Our exports, although a little slow now, will pick up this fall.

This week, the Farm Broadcasters Association brought a group to Washington to meet with Secretary Vilsack. One evening, we had a reception at the Capitol, and Congressman Collin Peterson, with his band, was playing and singing country songs. That will lift your spirits. I loved it. Maybe that’s why I’m optimistic.

Let’s have a great year.

Let’s Talk Big Issues

May 08, 2013

Last week, I talked about the farm bill and prospects for passage. This week, I want to focus on a series of current issues. These are my thoughts:

Immigration Reform

We desperately need to get it done. If we don’t, who’s going to milk the cows? Who’s going to butcher the hogs? Agriculture is pushing to pass the legislation. Even president Obama is behind a bill. It’s certainly not done yet, but I am still optimistic.

Spending and Budgets

We don’t have any consensus here. The House budget, according to Paul Ryan, if it passed, would bring us into balance in 10 years. The Senate budget relies much more on new taxes. Unfortunately, it doesn’t do anything to deal with the run-away entitlement programs of Social Security, Medicare, and Medicaid. President Obama’s budget takes a small step toward reducing the entitlement programs, but still projects deficits as far as the eye can see.

There is one item in the President’s plan that has gone almost unnoticed. In order to raise more money, he wants to take away the relief that small businesses and farmers got with estate tax changes passed at the end of last year. He wants to raise the tax rate from 40% to 45% and lower the exemption from $5 million to $3.5 million – also eliminate the inflation index. After the improvement in the law that we just got, he wants to take it away.

I don’t expect that will happen. I don’t think any of the three budgets will be enacted. Will we get a compromise bill? Even that is doubtful. A side note is that Senator Max Baucus (D-MT), Chairman of the powerful Senate Finance Committee, has announced his plan to retire at the end of this term. He has been a champion for ag interest – a supporter of immigration reform and a defender of reducing the burden of the death tax. I worked with Max Baucus when I was Secretary of Agriculture. He will be missed.


There is no easy solution. Do we arm the opposition? Do we establish a "no fly" zone? President Obama is being criticized for not doing enough. I think he is right to hold back. The thing we don’t need is another war. Let the Middle East boil in their own oil. They don’t want us to help them anyway.

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.

Next week, I will be down on the farm. Let’s get that planter in the field.

Farm Bill Fiasco

May 03, 2013

For more than a year now, the Congress has worked on a new farm bill, in fits and starts, but has never been able to get it together. We are farming now under an extension of the old bill. I think that, at long last, we are positioned to get a new 5-year bill by this fall. Both the House and Senate Ag Committees plan to start mark-up this month.

The process is still going to be messy. A lot of compromises will be necessary. I would expect that direct payments that have been a main stay of recent farm bills will be gone. Direct payments, in these days with a booming farm economy, are hard to defend. You don’t have to do anything to earn the money.

Look for crop insurance to take center stage, filling the role of risk management. Crop insurance last year served as a life preserver for many farmers caught in the severe drought. So, in that regard, crop insurance did the job. But on the other hand, it cost a lot of money. Insurance paid out 17 billion dollars in indemnities.

Of course, farmers must pay for crop insurance, but it is heavily subsidized. There will be some pressure to require farmers to pay more for the insurance. There may be requirements tying conservation compliance to crop insurance. After last year’s drought, I expect more farmers to sign up for insurance this year.

Besides costing too much, there are other criticisms of crop insurance. It can be argued that it encourages some farmers to plant certain crops – not because of market incentives, but because of the crop insurance guarantee. Still, at the end of the day, crop insurance will be the primary safety net for farmers.

The House will be looking for ways to save 38 billion dollars over the next 10 years. A significant part of that savings will come out of the Food Stamp Program. I cannot imagine how we got to where we are today, spending more than 80 billion dollars on food stamps. The Senate will not be willing to cut the nutrition programs as much as the House. They will have to find middle ground.

When all the dust clears, I think we will get a farm bill. Considering how difficult it is to pass this bill – makes me wonder if there will ever be another.

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.


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