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August 31, 2011

Never bet against the American farmer

Kevin E. Dayhoff

Greetings from Southern California. This week I had the opportunity to attend a nationwide agri-business economics conference in San Diego and what I found is somewhat a mixed bag – of sorts.


Remember when, on August 19, Vice President Joe Biden told China’s top leaders, “No one's ever made money betting against America.”


He may have been more to the point if he had said “Never bet against the American farmer.”


Agriculture is stronger today than it has ever been in history, said Dr. Lowell Catlett on Monday morning to kick-off three-days of presentations on the nuts and bolts of access to capital by American agriculture, attended by some of the brightest thinkers in the business of agriculture today.


Dr. Catlett is an economist from New Mexico State University's College of Agricultural, Consumer and Environmental Sciences. His pep talk was a ray of sunshine in the waves of dark storm clouds that persist in sweeping over the global economy as we teeter ever so closely to the precipice of a deeper economic malaise and continued volatility in the financial markets.


Although I remain bullish on American agriculture and the resilience of the American worker; Dr. Catlett’s remarks resonated as profoundly counterintuitive to what I have observed on Main Street America as the current economic downturn is morphing from a mere headache in economic history into a migraine – which belies a deeper systemic pathology of scary proportions.


In the context that agriculture remains Maryland’s number one industry, Dr. Catlett quickly captured my undivided attention. Not withstanding the artificial economy provided by business of government, Maryland’s economy would be somewhat analogous to a third-world country if it were not for agriculture – a fact of which the Maryland General Assembly seems oblivious – or contemptuous.


Nevertheless, Dr. Catlett backed his premise on the tensile strength of the American economy by colorfully unleashing an encyclopedic-stream of numbers and statistics off the top of his head for an hour, which reinforced the concept of a silver lining in today’s economic fog:


“The U.S economy surpassed $15 trillion in 2011 and it continues to grow and prosper in new and creative ways. Creativity, technology and wealth are driving new industries and business development opportunities unlike any period in American history. Get ready for the new U.S. economy that is borderless, un-tethered and the dominate force in world economic growth.”


His numbers made sense in a broader context of macro-economic history. We have certainly faced adversity before. Dr. Catlett reminded the audience that the United States economy has witnessed 15 recessions since the 1937-38 economic setback.


However, Dr. Catlett lamented that the good news is being drowned-out by the bad news spewing-forth from a hyper-competitive 24-hour news cycle.


A point made just recently by David Frum – a former speechwriter for President George W. Bush – in America Public Media’s “Marketplace” on July 20, who said: “There's a bright spot of economic growth. And it should be getting more attention.”


Mr. Frum notes the “strong corporate profits from the likes of Apple, IBM and Coca-Cola…”


A component of that observation was a remark by Dr. Catlett about the ginormous amounts of cash in the coffers of American corporations – that is waiting to stop hiding behind corporate risk managers who continue to search in vain for political and economic stability to erupt in the United States.


Mr. Frum says:


“Here's some good news amid the economic gloom: U.S. exports continue to surge. April set a record, $175 billion. May fell a little short, but the United States is well launched to increase exports in 2011 by 25 percent over 2009 – and to double exports by 2014.


“An economy as big as the U.S. cannot export its way out of recession. But the export surge does contain promising signals of the U.S. economy of tomorrow.


“The U.S. is increasing its exports to China faster than to any other country – despite China's manipulated currency. Computer technology and foodstuffs head the list of sales.


“U.S. grain exports have surged to their second best year since 1982, as the droughts in Russia and Ukraine impelled those governments to halt international sales.”


However, we certainly have our work cut out for us as strong headwinds continue to rage against the American economy and our best efforts to create jobs, and build long-term sustainable growth.


The political storm that persists in holding us back is the fractionalized economic policies of the current administration.


A portion of a speech delivered Thomas J. Donohue, the president of the U.S. Chamber of Commerce on October 6, 2010, bears repeating:


Public policy choices made by the administration of President Barack Obama “have made things worse, not better.


“A chief roadblock to our recovery is the tremendous uncertainty caused by a tsunami of new regulations, mandates, and taxes. The health care and financial reform bills alone will result in billions of dollars in new taxes and fees, hundreds of mandates, and thousands of complex regulations.


“Add to that a regulatory regime in overdrive. Federal agencies are proposing a stifling amount of new regulations dealing with everything from greenhouse gas emissions to workplace safety.”


Dr. Catlett’s remarks reminded me of Mr. Donohue’s speech, of which I had, candidly, lost sight of in the last year.


“America is hurting right now, but we know the path to long-term prosperity. We just need the courage to take it. We need to step up,” says Mr. Donohue.


“We’ve got a few things going for us. We’re the most competitive, hard working, and entrepreneurial people in the world. No matter what Washington throws at us, that will never change.


“We have a tremendous business community that knows more about innovation, adaptability, efficiency, and getting results than anyone in the world. What a powerful resource that is!”


In other words, never bet against the American farmer.


. . . . .I’m just saying…


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