June 2017
Ag Insight

Ag Insight

Perdue Takes Reins at USDA

Sonny Perdue has become the nation’s 31st U.S. Secretary of Agriculture.

After being confirmed by the U.S. Senate on an 87-11 vote, Perdue was sworn in by fellow Georgian and Associate Justice of the U.S. Supreme Court Clarence Thomas during a brief ceremony in late April at the Supreme Court building.

After Perdue took the oath of office, he addressed employees at the U.S. Department of Agriculture before getting to work on his first day. He also has launched his official Twitter handle, @SecretarySonny.

"The only legacy I seek is the one any grandparent or parent seeks – to be good stewards and to hand off our nation, our home, our fields, our forests and our farms to the next generation in better shape than we found it," Perdue said.

"Making sure that Americans who make their livelihoods in the agriculture industry have the ability to thrive will be one of my top priorities. I am committed to serving the customers of USDA, and I will be an unapologetic advocate for American agriculture," he added.

Perdue grew up on a dairy and diversified-row-crop farm in rural Georgia. As a younger man, he served his country in the U.S. Air Force, rising to the rank of captain.

After earning a Doctor of Veterinary Medicine degree from the University of Georgia, he put that training to use in private practice in North Carolina. As a member of the Georgia State Senate for 11 years, he eventually ascended to the position of president pro tempore, a post elected by his senate colleagues.

As a two-term governor of Georgia, he is credited with transforming a budget deficit into a surplus, increasing student performance in public schools and fostering an economic environment that allowed employers to flourish and manufacturers and agricultural producers to achieve record levels of exports.

He followed these accomplishments with a career in agribusiness, where he focused on commodities and transportation in enterprises spanning the southeastern United States.

Perdue has been married to Mary Ruff Perdue for 44 years and has four adult children and 14 grandchildren. He and his wife have served as foster parents for eight children awaiting adoption.

Perdue remains a licensed airplane and helicopter pilot, and an avid outdoor sportsman.

Two days after taking office, the agriculture secretary hosted a bipartisan breakfast with key agricultural policy leaders from the U.S. House of Representatives.

"A proud tradition of bipartisanship is the only way to get things done, and I am confident we will accomplish great things for American agriculture," Perdue said.

 

U.S. Ethanol Exports Rising

 

U.S. fuel ethanol exports are up significantly for the 2016/17 marketing year, primarily driven by increased exports to Brazil.

The change is related to an increase in Brazil’s sugar prices, due to strong international demand for the country’s sugar exports. As a result, the country’s sugarcane refiners have shifted processing capacity from ethanol to sugar.

Because Brazil has a 27 percent ethanol inclusion mandate for gasoline, the decline in output has left fuel refiners short of supplies. This has caused an increase in ethanol shipments from the United States, where corn supply is abundant, making up for Brazil’s shortfall.

U.S. ethanol shipments to Brazil began rising in October 2016, jumping 138 percent that month. The pace has continued at an elevated level through February 2017, the latest month for which trade data are available.

From October 2016 through February 2017, fuel ethanol shipments to Brazil surged 547 percent, compared to the same period a year earlier. In addition, U.S. shipments to the world rose 65 percent and exports to Canada, also a major buyer, rose by 57 percent.

 

Five Markets are Key to U.S. Agricultural Exports

 

The United States exported $135 billion worth of agricultural goods in 2016. This is down from a record of $150 billion in 2014.

While the nation exports agricultural goods to most countries worldwide, a significant share goes to major trading partners. In 2016, 61 percent of the value of agricultural exports went to Canada, China, Mexico, the European Union (EU-28) and Japan.

The dominance of key markets is not a new phenomenon. In fact, these five destinations have accounted for close to 60 percent of agricultural export value since at least 2000.

In the case of Canada and Mexico, proximity plays a large role in its trade relationship with the United States. Additionally, regional trade agreements increased trade between the country and its nearest neighbors.

The large share of trade going to China, Japan and the EU-28 is influenced by the sheer size of the economies involved. The EU-28, China and Japan are the three leading economies after the United States in terms of gross domestic product, and each country accounts for a significant share of global imports of agricultural goods.

 

Rural Schools Less Likely to Serve Local Food

According to USDA’s Farm to School Census, 35 percent of all U.S. school districts reported serving local food in school meals during a recent school year.

However, rural school districts were 11.2 percentage points less likely to serve local food daily than school districts in cities, after accounting for other school district characteristics such as region, enrollment level, per capita income of the surrounding county’s residents and county-level density of farmers’ markets.

School districts in suburbs and towns were also significantly less likely to serve local food daily compared to districts in cities.

 

Switchgrass Has Potential for Energy Production

Crops such as switchgrass dedicated for use in energy production are potential renewable sources for liquid fuels or bioelectricity.

Switchgrass is a perennial grass native to most of North America that grows well on rain-fed marginal land. However, markets do not presently exist for large-scale use of this energy resource.

A study by USDA’s Economic Research Service simulated the agricultural-land use impacts of growing enough switchgrass to generate 250 billion kilowatt-hours of electricity annually by 2030 - approximately the amount generated by U.S. hydropower today.

The introduction of dedicated energy crops on a large scale could affect other agricultural land uses, the prices of other crops and trade in agricultural products.

For example, the simulation predicted that land converted to switchgrass would come mostly from land used for crops such as hay and corn. Pastureland and forestland use would be affected at about the same level.

An increase in U.S. land area for switchgrass would also lead to smaller changes in land use abroad due to agricultural product trade.

 

Blueberry Use Growing Rapidly

 
   
   

Per capita use of blueberries in the nation has nearly tripled since 2006, largely attributable to growing demand based on the potential health benefits of berries in the diet.

In recent years, farmers have expanded production to help meet this demand. As a result, net domestic production doubled and imports increased by almost four times.

In addition to increased demand, consumer preference for year-round availability of popular fresh fruits and vegetables necessitates a greater reliance on imported goods. Domestic blueberry production primarily occurs in the spring and summer seasons. In the fall and winter, Southern Hemisphere countries such as Chile are in their growing season and supply the United States with a significant share of its blueberry imports.

In 2016, net domestic production fell slightly, while imports increased. This resulted from lower-than-expected production in states that normally supply the fresh market, including Georgia, Florida, New Jersey, North Carolina and California.

 

New Product Introductions in Food Stores Rebound in 2016

Introducing new products, as well as new package sizes, flavors and packaging, is one way food and beverage companies try to woo consumers and increase sales.

After two years of declining numbers of product introductions, 21,435 new foods and beverages made their debut on U.S. retail shelves in 2016, the largest annual number of product introductions since 2007.

The number of new, nonfood grocery items (beauty and personal care, health and hygiene, pet food and merchandise, and paper and cleaning products) also increased in 2016.

During the Great Recession of 2008-09, consumers sought familiar products and avoided impulse buying. To appeal to bargain-seeking customers who wanted to simplify their shopping trips and purchase familiar products, retailers devoted less shelf space to new products.

Accordingly, the number of new food and beverage products in U.S. retail outlets, as tracked by Mintel’s Global New Product Database, fell from 22,142 in 2007 to 15,637 in 2009. The number of new foods and beverages rose again in 2010, while new, nonfood grocery items continued their downward trend until 2016.