Focus on Debt, Rising China

Ag economics expert gives quick rundown on key issues to watch in the next year.

Published on: Mar 3, 2010

The laundry list of issues from the Obama Administration and that facing Congress got a quick review for agricultural media during the Bayer Ag Issues Form ahead of the 2010 Commodity Classic in Anaheim, Calif.

 

James Wiesemeyer, senior vice president, Informa Economics, offered up his take on a range of issues. He says the challenge facing Congress is "turning politics to policy." He adds that this is a challenge for both Democrats and Republicans in Congress.

 

While Wiesemeyer gave a long list of issues, he focused on the national debt as a key issue that will have to be addressed in the next year. Of course, a lot may go on hold before the November elections where he notes significant changes in the makeup of the House could take place as well.

The red bar shows debt as a percentage of gross domestic product. This year the U.S. reached a new record. Source: Informa Economics.
The red bar shows debt as a percentage of gross domestic product. This year the U.S. reached a new record. Source: Informa Economics.

 

"The challenge the Obama Administration faces is how long the bond market will be patient with those debt levels," Wiesemeyer says. "If they lose confidence, interest rates could rise much faster than many expect."

 

The potential remix of the House in November gets a lot of attention. Wiesemeyer notes that some policy experts say as many as 40 house seats could switch to Republican in the election, which would tip the majority away from the Dems. The Senate majority won't change in 2010, but Wiesemeyer notes that eventually the shift could happen based on seats up for re-election in 2012 too.

 

The debt is a concern for ag markets because the farm bill will need a complete overhaul in part due to coming limits on total spending. Ag programs fall under that "discretionary spending" area Obama wants cap. How that plays out remains to be seen, but Wiesemeyer notes this issue is the driving force behind House Ag Committee Chair Collin Peterson's move to open the farm bill debate ahead of the 2010 elections.

 

Looking ahead, he notes that the rise of China, India and Indonesia will be significant in the next decade. In fact between 2000 and 2030 he notes that 70% of new middleclass people will come from China and India alone.

 

There are some issues Wiesemeyer flagged in his presentation. The March 12 Ankeny, Iowa competitive workshop is the first in a series of meetings to look at the industry. Wiesemeyer says there's an agenda to the meeting series as USDA and the U.S. Department of Justice look at the seed, livestock and dairy industries.

 

As for USDA's direction? Wiesemeyer says Ag Secretary Tom Vilsack's focus on sustainable agriculture, organic agriculture and local farmer's markets makes him the "most unusual ag secretary." He said no more on the topic.