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July 2008 Archive for John Block Reports from Washington

RSS By: John Block,

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

Free Trade

Jul 31, 2008

Free trade agreements have become a hard sell in recent years. We have three right now that have been negotiated and are ready to be voted on by the Congress – Colombia, South Korea, and Panama. President Bush wants them passed, but Speaker Nancy Pelosi and the Democratic Congress are not going to let it happen.

Although not perfect, over all, our trade agreements have been a big net plus. Look at the USA as an example. USA is a huge free trade zone – free trade between all 50 states guaranteed in our Constitution. It has worked providing all kinds of benefits. Pineapple from Hawaii; oranges form Florida – duty free. We can’t grow those fruits in Illinois. The Midwest is shipping corn and wheat to states that aren’t very good at growing those crops. Every region is allowed to do what it does best. That is comparative advantage.

Europe used to have duties and trade restrictions between their countries. Not anymore. The huge advantage of free and unrestricted trade was clear. And today, the European Union is a huge free trade zone.

In 1994, President Clinton and the Congress created the North American Free Trade Zone. Millions of new jobs have been created by allowing U.S., Canada, and Mexico to trade freely based on comparative advantage.

Countries all over the world are writing bilateral free trade agreements with each other.

All the while, we are sitting on our hands doing nothing.

In addition to providing economic value to the citizens from countries that are trading freely, trade strengthens security. Countries usually find a way to solve their differences peacefully if they are important trading partners.

It is time the trade critics in Congress quit playing politics and cozying up to the labor unions and passed the trade agreements that have been negotiated.

The Colombian agreement should be first on the list. 90% of Colombian products already enter the U.S. duty-free. Our products going into Colombia are subject to a 35% tariff. You don’t have to be a math major to see that a trade agreement would be in our favor. In addition, Colombia is a good friend of the U.S. and we need to build on that relationship.

Until next week, I am John Block from Washington.

Listen to the radio broadcast here.

Don't Blame Us

Jul 26, 2008
John Block's radio broadcast July 24, 2008

Time To Drill

Jul 17, 2008
For months now, we have been hearing constant complaints about the cost of energy – gas prices over $4.00 per gallon, anhydrous ammonia prices have skyrocketed because of the cost of natural gas, the cost of food is up and not coming down because of the explosion in energy prices.

Under these circumstances, you would think the Congress would come forward with a comprehensive plan to deal with the crisis, but NO. They want to tax the oil companies for profiteering. They want to blame the speculators. That will not solve anything. They are just grandstanding.

This is not complicated. We need oil. We need gas. Let’s drill for it.

President Bush authorized drilling off the coast this week. It has been off limits for 30 years. Even now, unless the Congress agrees, the President’s green light means nothing. Polls show that 57% of our citizens want us to drill.

We have no one to blame but ourselves for the energy problems that we face today. For decades, we have refused exploitation of our own oil reserves – off the continental shelf, in Alaska, in Western States. You can’t drill here. You can’t build a refinery there. No nuclear plant here. Not in my back yard.

Our energy policy is held hostage by fanatical environmentalists. They aren’t the majority. They are a tiny minority – anti-science, embracing a radical ideology. They argue that if we drill now it will take years before new energy will come on line. Are we to assume that in 7 or 8 years we just won’t need oil or gas? That’s absurd.

The longer we wait, the more of our wealth is transferred to the Middle East and other countries. The jobs that we could keep here at home go to countries halfway around the globe. Where is our brain?

In addition to conservation, we need to pursue every possible reasonable source of energy – oil, gas, coal, nuclear, wind, solar, and yes, ethanol. It would be nice if the Congress would listen to the people.

Until next week, I am John Block from Washington.

Listen to the broadcast here.

Ag Investment

Jul 10, 2008
This week, I stood in one of my corn fields barely able to see over the rich green leaves reaching for the sky. We are fortunate. Our crops look good. I drove 50 miles west to the Iowa border to view the depressing sight of 1,000’s of acres destroyed by the raging Mississippi River waters.

It brings to mind the uncertainty and enormous risk in this business of farming.

I have seen the Spoon River flood part of our own corn crop many times over the years.

There is always risk – floods, hail, disease, price collapse.

I think about the changes that I have witnessed – hard to believe. As a little boy, my dad planted corn with two old horses – Burt and Bill – pulling a 2-row corn planter. Corn wasn’t worth $1.00 per bushel. We picked it on the ear and fed it to cattle, hogs, and the chickens.

The price of corn didn’t go up until Secretary Earl Butz sold grain to the Soviet Union in the 70’s. After that, it traded around $2.00 per bushel plus or minus for 30 years. Suddenly, a host of things have happened and corn has rocketed to $7.00 per bushel. Unbelievable!

Now, we hear the voices complaining and whining about the high prices of food. Blame ethanol!

But that’s not the problem. The problem is global demand is growing but the world has not invested in agriculture for decades. Developing countries didn’t try to help their agriculture. Irrigation projects dried up. We enjoyed cheap food – abundance, surplus. No need to invest. But now, the market is screaming for investment. The Middle East countries with loads of oil money are starting to invest in African farms. So is China. The World Bank that had neglected agriculture for 25 years finally woke up and will increase ag investment. Some of the countries that have been fighting against genetic engineering will have no choice but to embrace new technologies if we are to meet the growing global demand for food.

Where do we go from here? The ups and downs and uncertainty will always be with us, but we’re going to make some money for a year or two. Cattle and hog farmers will also make some money after prices adjust to their new reality. Consumers will pay a little more. Still – 10% of family income on food is the best deal in the world.

Until next week, I am John Block from Washington.

Listen to the broadcast here.
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