Everyone’s saying the recession is over. In fact, it was officially declared over several months ago.
Everyone’s saying the recession is over. In fact, it was officially declared over several months ago. While the economy seems to be fine in the bubble of Washington, D.C., even from our bubble we can see that it’s not fine elsewhere.
“What’s up?” people ask. Usually housing, jobs and the economy start rebounding as we come out of a recession. But not this time.
The Wall Street Journal reported that a staggering 8 million home loans are in some state of delinquency, default or foreclosure. About 11 million residential properties have mortgage balances that exceed the home’s value – and that number is predicted to go higher, possibly leaving as many as 40% of American homeowners under water on their mortgages.
Unemployment remains at or over 10% in many areas of our country, and new regulations on everything from health care to financial services leave everyone uncertain about the future.
I attended an event in Washington last month where the current economic state of our union was described as “the new normal.” Get used to it, they said. The growth, prosperity and optimism that returned after every other recession isn’t coming back anytime soon.
The “new normal” of exploding budget deficits and a struggling economy is going to require a different approach. Yes, that was before the midterm elections, and elections may help get changes rolling, but change won’t come overnight.
As we move into 2011 with a new Congress, it will be time to start discussion and debate on Capitol Hill about right-sizing our dairy policies for farmers, for consumers, for our industry and for taxpayers. A new Farm Bill must be completed by September 2012 (or hopefully before, since that will be another election year). This creates challenges, but also opportunities.
Federal spending must be reduced. We need an effective dairy farm safety net that spends less money yet helps farmers when margins are squeezed. We don’t need the outdated price supports and payment programs that have been on the books for years.
New policies and programs must allow every opportunity to foster innovation and growth. They need to recognize that our dairy industry is poised to become a major player in our world markets.
With tens of millions of Americans unemployed, our support programs need to encourage greater use of price-risk management tools that keep the additional impact on our taxpayers and consumers to a minimum. We must all take more responsibility for our own future and not keep relying on the government.
In the U.S. dairy industry, we are fortunate to have come out of the recession with steady growth in exports that allow our industry to have a larger share of the growing global market. We saw declines in export volume and dollar sales of U.S. dairy products in 2009, but they rebounded strongly in the first eight months of 2010, and that growth looks like it will continue.
I think of it as a bigger pie that we’re sharing, allowing everyone to have a little bigger slice. That’s far better than taking measures to restrict the size of our market pie and asking the government to decide who gets what share of that smaller pie.
The new Farm Bill also will provide an opportunity to revise our policies so that we have a safety net for our farmers that keeps them from experiencing another disaster like 2009.
National Milk Producers Federation has come up with a plan they call Foundation for the Future. It’s a great start, but more progress needs to be made on streamlining our federal order pricing system. And we simply can’t support a program that gives government the authority to control dairy production. Yes, they’ve tried to make the plan more acceptable by calling the controls “marketings,” not quotas, but the controls still will impose a penalty on farmers when the government decides they are producing too much milk. We need less government interference in our businesses, not more.
There’s an old saying in Washington about government programs – they all have a beginning, a middle, but no end – and unfortunately, that rings pretty true. Informa Economics recently issued a report that reviews the impacts of supply-control programs in other countries, and a key finding shows that, once created, such programs are difficult to dismantle.
Our “new normal” can bring a brighter future for the U.S. dairy industry, but we need new ideas and policies that will allow us to take advantage of opportunities for growth. We don’t need the same old programs that have been tried and are being rejected by our competitors.
We have two years to work on the next Farm Bill. Let’s be sure we get the policies right for our producers and processors, as well as for consumers and taxpayers.
The "New Normal" Calls for a New Approach
November 1, 2010