By former USDA Secretary John R. Block
I want to review a few issues today as we plan our farming operation and look over the horizon at next year’s opportunities and challenges. U.S. farm income this year is expected to be down again, hitting an 8-year low of $71 billion. In 2013, we climbed to a peak of $120 billion. That was off the charts. A positive statistic is that our debt is still manageable – not like in the 1980s when a lot of farms and country banks went belly up.
Next issue – Donald Trump will be working with a number of countries to boost our trade export numbers. We all know that U.S. agriculture runs an impressive trade surplus of about $16 billion. Since the North American Free Trade Agreement (NAFTA) was signed in 1993, our exports to Canada and Mexico have jumped from $8.9 billion to $38.6 billion. That’s impressive.
But, let’s look at the EU. Europe is exporting twice as much ag product to us as we export to them. How can that be? We are certainly as good at producing food as they are. We are in the process of negotiating a trade agreement with Europe but it is not even close to being done. They use their tariffs to protect their beef, pork and poultry, and GMO rules to close the door on grains. I think Donald Trump can get a better deal.
My last issue is Cuba. I was there last year. We were trying to find a way to open the trade door, which has been closed for 50 years. Suddenly, Fidel Castro dies. Maybe some things will change; maybe not. Certainly, President Obama has made some serious progress. President Obama has named an Ambassador in Havana with full diplomatic relations, but he is yet to be confirmed by the Senate. But that doesn’t fix everything, because we still have legislation which requires that Cuba pay cash in advance for their imports. That restriction needs to be lifted. Let our exporters deal with the Cuban importers. Get the government out of it.
What will President-Elect Trump do now? Will he trash the progress that President Obama has made? I don’t have a crystal ball to read, but I am hopeful. Fidel is gone. Raul, his brother, knows that Cuba is under a lot of pressure. Russia used to subsidize Cuba for years. They can’t afford it anymore. Venezuela provided free oil to Cuba. Venezuela is all but broke – they can’t help. Cuba needs to do something. Their citizens live on less than $1 per day. They can talk about how educated they are, and how good their healthcare is, but that island country is broke. Young people are fleeing the island in droves – 60,000 over the last year. Maybe Donald and Raul can patch things up. We shall see.
John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill. If you would like to review his radio shows going back more than 20 years, visit johnblockreports.com.