- Will you have to go export,
- go organic, or go broke?
- By Matt McCallum
Publisher
- Everyone in the produce industry knows that the industry will be vastly different in the decades to come.
Just how different might it be? Dennis Avery, who is director of Global Food Issues for the Hudson Institute, a non-profit public policy think tank in Indianapolis, Ind., gave a perspective that many may not have thought about during the National Potato Council’s Seed Seminar in Phoenix, Ariz. in December.
Farmers have two options in the future, according to Avery. Either pursue increased farm exports to an increasingly rich and densely populated Asia - or to become organic farmers for regional markets with no organic price premium.
Avery believes environmental laws pushed by the green groups will force American agriculture to become “organic,” as new regulations will restrict the use of synthetic pesticides, non-organic fertilizer, irrigation water and the products of biotechnology.
Growers also won’t be getting as much help from Uncle Sam in the coming years either, Avery said. The House Farm Bill, that would have pushed U.S. agriculture back toward federal subsidies, probably won’t become law, because the federal surplus has evaporated.
These two factors will only put more pressure on farmers to “pursue affluence through increased exports to Asia, or watch urban America turn its farmers back to the 19th century with waves of new “environmental” regulations,” Avery said.
The good news is that Asia needs to feed a lot of people. Since 1996, U.S. potato exports to China have risen nearly eight-fold, from $2.3 million per year to $18 million per year, according to Avery. Currently, exports of frozen french fries to China are about one-tenth of the exports to Japan - even though Japan’s population is one-tenth of China’s. Avery sees China’s demand for french fries to continue and be followed by a major surge in demand from India.
“Together the two countries will offer new high-growth markets with 2.5 billion consumers, nearly 10 times as many people as are in the United States,” he said.
To be successful in the export market, the industry must also work to reform trade, Avery said. Most people doubted farm trade reform could ever be achieved against the opposition of the European Union (EU). That has also changed as they bring in new members to the EU and now need farm trade reform as much as the United States.
The American farmer must also join with its Canadian counterparts and other nations in joining the Cairns Group in seeking farm trade liberalization.
“Understand, we cannot forbid Canada to farm,” Avery said. “We will meet - and must compete with - their farm production either in the U.S. markets or overseas. They face the same inevitable competition from us. There is no way either country can avoid it.”
The time is right to push for new trade rules because the WTO will soon be convening its farm trade talks after a seven-year delay, Avery said.
“If American farmers miss this opportunity, it may well take another 10 years to get the other countries back to the negotiating table,” he said.
You may not agree with everything Avery says, but he does make very good points that we need to join with other nations as trading blocks to be the major player in the Asian market. As for the organic issue, Avery may not be too far off either. Look to the Netherlands. Their government is discouraging farming and is increasing the burdens of environmental regulations in hopes of sharply cutting back nitrogen and pesticide use. In fact, Avery thinks the reduced production in the Netherlands will offset Canada’s increase.
The world is getting more complex and the industry must keep all of these issues in mind as it plots a successful path to the future.
