With an increasing number of grain elevators across South Dakota building rail facilities to handle unit trains, the state seems poised to export more grain.
But because of the expiration of the 2008 Farm Bill on Sept. 30, some in the state’s agriculture industry worry that the loss of its export programs will hurt the lucrative export market. Others doubt it will make much of a difference.
Agriculture exports for fiscal 2012 reached $138.5 billion, with a trade surplus of $32.4 billion, according to the U.S. Department of Agriculture. This is the second-highest year on record, just 1 percent below 2011.
China, the top export market for the U.S., imported substantially more corn, dairy and poultry this year, in addition to the usual exports of soybeans and cotton.
Paul Casper, president of the South Dakota Soybean Association, said the Pacific Rim is a huge market for local farmers, with two-thirds of the soybeans grown in the state making their way to Asian countries.
Casper said the soybean industry has invested $35 million a year into exporting, with matching funds provided by Farm Bill programs. If that funding is pulled, farmers may watch their beachhead in Asian markets fall by the wayside, he said.
The industry was just starting to make headway into certain countries such as Vietnam, he said. Offices had been built, headway made into selling soy animal feed and relationships established – this in a culture that is all about personal relationships, Casper said.
“It’s a pretty bad day for South Dakota farmers if this gets pulled,” he said.
Keith Alverson, vice president of the South Dakota Corn Growers Association, said the loss of the Farm Bill programs is an obvious issue this year, coupled with domestic supply concerns because of drought conditions.
America was marketed overseas as a secure place to obtain food, but now those foreign buyers might be concerned and look elsewhere, he said.
“In a time like this, when we need to maintain that connection, we’re losing it,” Alverson said.
South Dakota is projected to export 130 million bushels, or 25 percent, of its corn out of the state this year, with much of that presumably heading to Southeast Asia, he said.
Alverson said, the bigger, long-term concern is that American farmers will need those cultivated foreign markets for the expected larger harvests this coming year and may not have them.
In a written statement, Darrell Davis, president of U.S. Wheat Associates, said the Farm Bill’s programs both helped defray costs to promote and market American agriculture overseas and saw to long-term development of trade.
“Loss of this funding will seriously compromise critical day-to-day export market development and promotion activities, thereby putting American farmers and workers at a substantial competitive disadvantage in the international marketplace,” Davis’s statement said.
Rick Vallery, the executive director for the South Dakota Oilseed Council, said his organization is waiting to see exactly how large an impact a lack of Farm Bill programs will have on the industry.
“There will be some, but the $24,000 question is how much,” he said.
The oilseed industry may be less affected than others, Vallery said, because domestic demand has already cut down on exporting.
Others, however, say the lack of the Farm Bill will not impact American produce making its way to foreign shores.
Doug Sombke, president of the South Dakota Farmers Union, said the agriculture market is booming, and the greater threat is that countries receiving American exports, such as China, manipulate their monetary systems so trade is more favorable to them.
The expiration of the Farm Bill doesn’t matter in that equation, he said.
“It may be good for other portions of the country, but not for any farmer I know,” he said.
Scott VanderWal, president of the South Dakota Farmers Bureau, also felt that – when it comes to exportation– the Farm Bill is not important.
“Exportation is more governed by trade agreements than from the Farm Bill,” he said.
VanderWal did say exportation is rightly held as one of the highest priorities for American farmers, and his organization was pleased with recent trade agreements signed with Panama, Columbia and South Korea.