John Block: How Do We Raise Prices?

By former USDA Secretary John R. Block

I can report that I was on my Illinois farm last week.  Weather was beautiful and we planted 360 acres of corn.  Then it rained.  At least we got started.  It is always exciting when you first hit the field with hope and optimism of a good crop.  With grain prices scraping the bottom and farm income cut in half, we need a good year.

Farmers in this country are looking for ways to lift their prices.  Some think we should have more conservation reserve acres.  We have 24M acres of environmentally fragile land out of production now.  The government pays land owners to put it in grass.  With less acres growing grain, we can expect better prices and less soil erosion.  Senator John Thune (R-SD) wants to pass legislation to raise the conservation acres from 24M to 30M.  The first question is – how much would this cost?  I thought we were trying to reduce spending.

Another way to boost prices would be to increase exports.  You cannot have coffee with farmers at the Grand View Restaurant without the subject of more exports on the table.

When President Trump met with the Chinese President, exports were on his list.  China has blocked exports of our beef to their country since 2003 because we had a case of mad cow disease.  Fine – other countries did the same, but most have lifted the ban long ago.  That was 14 years ago.  China is the second largest beef importer in the world, but we don’t have any of that market.  Australia has most of it.

Most people don’t know this, but we have closed the door on Chinese chicken.  Now, if we open the chicken door, maybe they will open the beef door.  Let’s hope.

Of course, President Trump and Chinese President Xi Jinping had many important issues to discuss, but trade was not overlooked.  Secretary of State Tillerson, our Commerce Secretary Ross, and Treasury Secretary Mnuchin all pushed for more U.S. exports.  The U.S. and China agreed to put together a “100 day plan” to reduce our trade deficit with China.  You have to start somewhere.

Since we are not going to be a player in TPP (Trans-Pacific Partnership), we have to get individual countries to open their markets.

Go to any farm event anywhere in the country and the question is – “How are we going to increase demand and lift prices?”  That’s the challenge.

As we rush to plant this new crop, be careful.  Don’t take chances.  30,000 individuals are killed in farm accidents each year.

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.

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