The Face of Agriculture in Dodge, Fillmore, Goodhue, Houston, Mower, Olmsted, Steele, Wabasha, and Winona Counties
The SE MN Ag Alliance seeks to inform and network with its members through meetings, educational tours and speakers, a quarterly newsletter, and emails. We are a volunteer-run organization and appreciate the assistance of our members to carry out the visions of the organization.
Minnesotans have been buzzing with talk about the high gas prices, food and other goods. Many people have questions about what is happening, why, and what we can do about it.
The SE MN AG Alliance hosted MN Department of Agriculture Deputy Commissioner Jim Boerboom at their July 28 summer meeting to explore the real story – what is driving gas and food prices.
Commissioner Boerboom shared with the 40-plus attendees some important economic facts. Agriculture is second only to manufacturing in economic impact in the state of Minnesota. It is important to remember that agriculture begins at the farm.
The economic impact multiplier effect of agriculture is that 1 in 5 jobs in MN are related to the ag industry. In rural areas, this number increases to 1 in 4 jobs.
Minnesota is a leader in the Ag industry – ranked 7th in the nation. Ag represents $55 billion dollars in economic impact, and creates 367,000 jobs in Minnesota. So, what is happening out there that is driving fuel and food costs? The Commissioner cited several contributing facts, the “perfect storm” that has hit the American consumer. First, there is an unprecedented global demand for both oil and ag products, particularly from China and India. Contributing to this increase demand, there has been a worldwide decline in ag production due to severe weather in other countries. This has led to the US now exporting more meat and grain than at any other time in history. The value of the US dollar is another contributor to the prices that consumers are seeing at the pump and at the grocers. Real volatility is happening in the commodities market due to speculative investors. This has also occurred in the oil markets. For example, in 2003 there was $12 million in trading in US commodities. Today, the commodities market has seen $300 million in investor speculative purchasing. This level of trading creates volatility as investors move in and out of the market – driving food and fuel costs. The changes in prices on grocery store shelves are being driven by the large, global economic factors, not by local supply and demand. The consumer is largely misinformed about what is really causing the food and fuel costs. The US is showing signs of economic recovery, but that recovery is expected to be slow. For producers, challenges loom. Many producers struggle to budget for farm operations because of the volatility of fuel, feed and other costs. One farmer stated “It’s like chasing a moving target.” The good news for MN – we are leaders in the ag industry. We are leaders because of the professional ag experts, known as the local farm family, which we have in Minnesota. MN is also home to several large food suppliers such as Land O’ Lakes, Schwan’s, Davisco, Kraft, ADM, Cargill and CHS. How do we keep MN competitive in the future? According to Commissioner Boerboom; keep growing our capacity and expertise in renewable fuels, protect our livestock production and continue to be an exporter of Ag products.