Va. Farmers Hunker Down at Home, Check Global Trends

12/8/2012 7:00 AM
By Shannon Sollinger Virginia Correspondent

CHANTILLY, Va. — Moderate lawmakers have retired or lost re-election bids, and more partisan members of both parties hold those seats. The numbers are a little different, but all three branches of U.S. government remain in the same hands after the Nov 6 election.

"We're a roughly evenly divided country here and it's going to be a long slog. Just get used to it," said Stuart Rothenberg in his keynote address to 500 or more Virginia farmers and their guests at the annual Virginia Farm Bureau Federation annual meeting, Nov. 27 in Chantilly, Va.

Rothenberg is editor and publisher of The Rothenberg Political Report, a semi-monthly analysis of American elections and their ramifications.

"I won't tell you what to think," he said. “I just do the straight politics. I'm at the bottom of the public affairs food chain — I'm a handicapper."

What's going on at home?

What he saw in the 2012 election, Rothenberg said, was that the public voted not to go back to the George Bush era and that the Republican party — as the percentage of white voters continues to drop and the number of Asians and Hispanic voters continues to rise — is going to have to "figure out what to do. The electorate is changing, and the country is not going to get whiter, I am sure."

The crowd in front of him, predominantly older white men, was most likely Republican, he surmised.

First on that rethinking agenda, Rothenberg said, will be immigration. He quoted Florida Sen. Marco Rubio, a rising star in the Republican party: The nation in general and conservatives specifically, Rubio said at a gathering of Republican businessmen prior to the election, "have to stop talking about illegal immigration and start talking about legal immigration."

He shared a story of a young girl brought to this country as a child, facing deportation. She's worked hard, gone to school, succeeded and doesn't know any other home.

"If this young lady was a 6-foot-10 basketball player, we would find a way to keep her," Rubio said in a speech that mentioned neither Mitt Romney nor Barack Obama.

"Republicans now understand this is a potentially fatal issue for them," Rothenberg said.

Business and agriculture both need people to work in positions that Americans don't fill, he said. The country — both parties — needs to "stop illegals but figure out a way to keep the ones who are here. And Republicans are still saying, 'throw them all out.' "

And Republicans are still having trouble with their base. Case in point: Hours after Shelley Moore Capito, an experienced and popular West Virginia lawmaker, announced her plan to run for Democrat Jay Rockefeller's Senate seat, the anti-tax Club For Growth (which helped defeat Ind. Sen. Richard Lugar in the Republican primary and then see a Democrat win seat in the general election) announced she is "too establishment" and not conservative enough.

Obama, Rothenberg predicted, will have six to nine months to accomplish anything on immigration reform and the federal budget. After that, attention turns to the mid-term elections coming up.

Who will win the 2013 gubernatorial race in Virginia? "I don't know,” he said. (Not long after Rothenberg spoke to the farmers, Virginia's Republican Lt. Gov. Bill Bolling announced he will not compete for the nomination, leaving Virginia Attorney General Ken Cuccinelli the likely nominee.)

The race will pit "two aggressive, personable guys (Cuccinelli and Democrat Terry McAuliffe)” Rothenberg said. "In past elections, the governor's post tends to stay in the same party in pairs, or threes. And (Republican) Bob McDonnell has done a good job."

Global Economics Hit Home

In one of two educational seminars during the convention, David Kohl, Virginia Tech professor emeritus of agricultural economics and small business management, asked his audience to take a look at "The Wild World of Global Economics."

The U.S. farmer might not even have China or Brazil on his radar, Kohl said, but what happens there and in Europe and the Far East is going to have a lot to do with success and failure in American agriculture.

What's driving agriculture now, Kohl said, is emerging nations, including Brazil, Russia, India, China and South Africa (the BRICS alignment), and South Korea, Indonesia, Turkey and Mexico (KIT-M).

Right now, the U.S. (23.6 percent), the Euro sector (26 percent) and Japan (8.3 percent) account for just a little less than 60 percnet of the world GDP

Kohl is a prolific source of numerical rules: the 8-5-3 rule of emerging nations. The 60-30-10 rule of management. The 50-100-70 rule of global economics.

In his paper, "Capitalizing on Megatrends," Kohl explained the 50-100-70 rule: "This rule was drawn from a futuristic paper written by one of my former students at Cornell University, Jeff Simmons, president of Elanco. In the year 2050, the world's population will require 100 percent more food, and 70 percent of this food must come from efficiency-enhancing technologies."

Kohl, self-described "Road Warrior of Agriculture," says his 8-5-3 rule will predict which way commodity prices are going by examining the economies in emerging nations.

"If you see these emerging nations growing at about 8 percent or greater GDP there is going to be strong demand for commodities: that'd be wheat, corn, soybeans, oil, minerals, etc. If they drop down to a 5 percent growth rate it will take 20 percent right off of commodity prices. And if they go to less than 3 percent, that means that these emerging nations are in a recession and that could be the precursor to a collapse of commodity prices."

And for the producer who is a "cut above"? The 60-30-10 rule, which could be paraphrased, "bigger isn't better — smarter is better." Devote 60 percent of the profits to growing the operation — slowly, incrementally — or better yet, to efficiency.

He offered his own Homestead Creamery as an example. He put a local veterinarian on retainer to develop a herd management plan. Cows got healthier, milk production increased, mortality dropped and profits went up.

Then use 30 percent of the profits to develop working capital. Homestead did that and when some surplus trucks came on the market, he had the cash on hand to buy them for 28 cents on the dollar.

And the last 10 percent? "Do what you want with it." Giving valued employees a bonus might be a good idea.

Does milk have a lot of untapped potential in today’s competitive beverage market?

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