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November 2009 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.

Global Economy

Nov 30, 2009

I hope you had a happy Thanksgiving. I know these aren’t the best of times here in the good ole USA, but everything is relative and compared to many other places in the world – I guess I’ll stay right here.
 
My message today is that we are in a world economy, and we can not escape that fact.
 
The Washington Post today has a big picture on the front page in color. Farm workers in Ethiopia are moving a big pile of golden corn. It makes me think of our farm and the corn that we are still trying to harvest. The story behind the picture is that India is buying and leasing huge tracts of land in Ethiopia. It is cheap, fertile, with water to irrigate. Saudi Arabia is shifting wheat production to Africa.
 
The Bill Gates Foundation is focusing attention on Arica to increase food production. There are millions of hungry people in the world. I have been in Brazil on a huge farm operated by a Midwest U.S. farmer.
 
The global marketplace is calling out to investors looking to profit by exploiting new opportunities. We already import billions of dollars worth of product from China. Try buying clothes for Christmas made in the U.S. – good luck.
 
If other countries have fertile land, cheap labor, raw materials, global investors will find it.
 
A final note – we can’t sit back and ignore the expansive increase in trade agreements from Asia, to Europe, to the Middle East. We will be left in the dust.
 
My purpose here today is not to alarm you, but we must be realistic. Ignoring reality can be costly. If we over-regulate our livestock industry, our pigs and chickens will be raised in another country. If we over-tax our energy, other countries will take our business away from us. The developing nations want to live the “good life” as we do. Don’t think for one minute that they will be willing to put their industry in a cap and trade straightjacket.
 
The world becomes more integrated every year. We need to be mindful of this fact when our government sets policy.
 
Until next week, I am John Block from Washington, D.C.

Heartland Attitude

Nov 19, 2009

Last week, I attended the annual convention of the National Association of Farm Broadcasters. I have been attending these meetings for more than 20 years. Some years, the big issue is the farm bill or trade, but not this year. This year, I was surprised to witness the almost universal anger and disenchantment with the leadership in Washington, D.C.
 
I don’t care if you talk about healthcare legislation, cap and trade or regulations, heartland America is not happy with what is going on. They think the government is spending way too much money. This doesn’t sit well with citizens that know they can’t spend so much money because they don’t have it now. They have cut their spending which makes sense when times are tough. However, their elected government officials either print more money or borrow it from China and spend it. American taxpayers believe that Washington squanders half of every tax dollar. They are convinced that the healthcare overhaul will cost a ton of money that we don’t have. Cap and trade legislation will result in more taxes and do nothing to help our planet.
 
Government regulators can’t wait to promulgate new regulations. I quote this from the Washington Post: “Regulators display a passion for rules and a belief that government must protect the public from dangers lurking at home and on the job.”
 
Now, the EPA claims to have the power to regulate what we grow and where we grow it on our farms. That scares farmers to death. Everywhere you look, this government is reaching to regulate something else. The FDA wanted to ban the sale of raw oysters from the gulf during warm weather. Critics were able to force FDA to back off. Just today, I see in the paper that the U.S. Department of Transportation wants to take over the regulation of subways and light rail systems.
 
The level of government activism brings true meaning to a statement made by President Reagan. He said, “Big government has a plan – if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
 
We need to reverse the Nanny State power grab.
 
Until next week, I am John Block from Washington, D.C.

Estate Tax

Nov 12, 2009

How many years have small businesses and farms been trying to get the federal government to provide “death tax” relief?
 
We made some progress under the Bush Administration when the individual exemption which had been 1 million dollars per individual was raised to 3.5 million. That’s where we are now. Next year, the death tax is scheduled to disappear. Terrific! Only to reappear in 2011 when the exemption goes back to where it was in 2001 at 1 million dollars. Isn’t that crazy? The only way to beat it is to die next year in 2010. That’s a bad option.
 
In addition to the federal estate tax, you should check what kind of tax your state has on the books. The states are all over the place. Although some state relief would be welcome, don’t hold your breath. States that don’t have an estate tax wish they did, and those that do, aren’t going to cut the rate. They need the money.
 
That’s where the federal government is also. They aren’t going to stand by and watch the tax disappear next year. There is legislation introduced in the House to increase the individual exemption to 5 million dollars and reduce the top estate tax rate to 35 percent. That would provide a lot of relief.
 
But this government has such a full plate now, and so much debt that I’m afraid they won’t do that. I think they will simply extend the current 3.5 million exemption per individual through 2010 and deal with 2011 next year. That’s the easy way out.
 
I know this issue first-hand. My father died 12 years ago and I’m still paying off his federal estate tax. Let’s not forget that he paid taxes on that money when he earned it. Now the government wants to tax it again.
 
The obligation for family farms only gets worse as land prices escalate. If there is any support for family businesses, something must be done or big corporations will own everything.
 
Until next week, I am John Block from Washington, D.C.

Down On The Farm

Nov 05, 2009

I was on the farm last week. It is so exciting to drive that combine and watch that big machine, like magic, sort out the kernels of corn from the trash. That golden grain flowing out of the auger into the truck is a beautiful sight.
 
Before starting to harvest, we sent a load of hogs to market. It’s hard to imagine those lean, hard 250-pound animals could be ready for market. Just 6 months ago, they were born weighing about 2 pounds.
 
Anyhow, about the time we got really rolling in the corn field, the rains came. Like they have all fall. Rained out again.
 
After that, I found myself sitting at my farm desk in our machinery repair building, looking out the window at the sheets of water coming from a dark sky. I began to reflect on this business of farming. You work for months to bring your grain and livestock to market. You have to do that. You need the money to pay your operating loan at the bank. You are also going to need enough money to buy nitrogen and seed for next year. Maybe a little more to live on or buy a piece of machinery you need. When you are finished with one crop, you start all over again.
 
I don’t need to tell you this has been a tough year for many farmers. The volatility in prices has been a challenge – wet spring, wet fall. It has never been an easy business. That’s one reason we’ve lost so many farmers. There are so many variables that we can’t control – floods, droughts, price, mad cow, swine flu, trade embargoes.
 
To survive in this business, you must persevere and don’t make too many mistakes. If you can succeed, the reward is not just measured in money. Although you need the money to survive. The reward is an exhilarating sense of satisfaction when you see what you have produced – mature market hogs, golden grain. And it all started early in the year when you turned the boar in with the sows, when you planted those little seeds in the soil.
 
Halleluiah, the sun is shining this week. We’ll get this crop out and be there for another year.
 
Until next week, I am John Block from Washington, D.C.
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