Slow economy topic of Texas Commodity Symposium
By Jennifer M. Latzke
For the eighth year, the annual Texas Commodity Symposium drew producers from across the Panhandle and beyond to the Amarillo Civic Center, Dec. 3.
Held in conjunction with the Amarillo Farm Show, the Commodity Symposium brings legislators and farm agency officials together with producers to discuss the issues of the day. This year, the economic slowdown and a new Democratic Congress led the agenda.
The day began with brief remarks from former U.S. Rep. Larry Combest, who now leads the Southwest Council of Agribusiness. Combest spoke to producers about the current economic crisis and how it may translate into agriculture.
He said he thought that $1 trillion to bail out people who made loans they shouldn't have made, or borrowed money they couldn't afford, isn't smart in the long run.
"Most people who created this financial crisis did so by making dumb decisions," Combest said. He cited The Wall Street Journal, in its Nov. 26 issue, where it once again took a shot against agriculture and the farm bill, calling it "corporate welfare for ag." This amazed Combest.
"People get up in the morning, and they are worried about their Lexus payment and not worried about where they will eat," he said. "There are cries over food prices and energy prices, but look at the commodity markets. They go down, but the price of food at the store continues to rise. Where's the accountability? Everyday someone is taking a shot at you."
He said the irony of the WSJ taking a shot at agriculture on one page, while calling for bailouts of other industries on other pages didn't escape him.
"Hold your heads up. Do the right thing," Combest said. "And, don't apologize to anybody for doing what you are doing."
Sluggish economy may spill over
Rep. Mike Conway (R-TX) continued on the topic of the economy and how changes in one sector may spill over into others in West Texas.
"These are hard times and there may be more on the horizon in every industry," Conway said. "West Texas has been protected by our oil business. With the price increasing it's been protected from the slowing economy. But, when the price of oil dropped dramatically from $119 per barrel to $50 per barrel, the impact slows, jobs are lost and a segment of the Texas economy that has been strong will slow down."
Conway emphasized that there are no easy or painless solutions, whether from Congress or the new President-elect Barack Obama.
"These are hard times, but we will get through them," he said. "We are a tough, resolute people, and we will be better for having gone through this. We'll be leaner."
Bailouts and more
The auto industry bailout led Conway's agenda for the remaining days of the 110th Congress, and will hold the spot in the new 111th Congress. While many may argue against the logic of spending billions on one segment of the U.S. economy, Conway explained that the autoworker unions won't allow for the Big Three auto companies to file for Chapter 11 if they can help it.
"They hold sway in the Speaker's office, and with Obama and the Senate," he said. "I can't imagine them not allowing the federal government to intervene, even though the current business model is a failure. The only way to fix this is to have the companies go through Chapter 11, go through the pain and turmoil and emerge better. But, companies have legacy union costs that they can't fold into the price of a vehicle and make it work."
He added he thinks it isn't the role of the federal government to step in with a bailout to make good on private contracts between automakers and their employees.
"Yes, it hurts, but there are retirees who don't belong to the UAW and they aren't looking to the federal government for a bailout," he said. The power of the unions could demand that Democrats keep the Big Three afloat.
The goal, Conway told growers, is to have a bailout passed by the Senate and House, and add it to the omnibus spending bill that will extend spending for this fiscal year, and have it sitting on Obama's desk after his swearing in on Jan. 20.
Agriculture may be able to leverage the Colombian Free Trade Agreement in this process, Conway said. "If we attach it to the spending bill, then Pres. Obama may be forced to sign it," he said.
Conway wasn't too hopeful that a $300 billion stimulus package will have a large enough impact to turn around a $14 trillion base economy. "We are in this situation because we borrowed too much money," Conway said. "Expansion is wonderful, but the expansion was driven by debt we couldn't pay back."
He told producers de-leveraging makes sense for businesses. "If we pay off debt until we're back to a rational debt-to-income ratio, it's the only thing that makes sense for farming and businesses," Conway said. "It's hard work, but we have to get it done. A stimulus is not the way to go. Raising taxes is not the way, either."
Implementing the farm bill
The 2008 farm bill will be in the implementation phase in the new session. While there probably won't be major alterations to the structure, farm groups should expect some tinkering in the funding of programs, and Obama's selections for the top posts at the U.S. Department of Agriculture and the Environmental Protection Agency will determine the future of farming and ranching.
"Sen. Obama ran on a lot of things," Conway said. "It's easy if you aren't responsible for implementation. But the gravity of that is different than the cavalier attitude of the campaign."
One bright spot for agriculture under an Obama administration may be relaxed relations with Cuba.
"An Obama administration is less inclined to maintain the current relations, and more open to opening trade," he said. And, while Conway will be in the minority party in this new session, he has pledged to work with and to help the new president understand agriculture and agribusiness.
"With a Democrat in the White House, my role is to work with him, to move the country to the places that work best for us," Conway said. "We try to make policies as best as we can." As a member of the loyal opposition, it's his job, Conway said, to put better ideas on the president's desk, to communicate with him and make the country stronger.
"The whining from the 110th Congress is done," he said. "Our job is to help where we can and to put forth new ideas if we can't."
Despite the challenges ahead, Conway emphasized that Texas agribusiness is poised to withstand the storm, like it's done for generations.
"I'm convinced that we're just as tough and resolute and as strong as our ancestors," he said.
Jennifer M. Latzke can be reached by phone at 620-227-1807, or by e-mail at email@example.com.