Kicking the Can Down the Road Jim Wiesemeyer

Senior VP, Farm & Trade Policy Informa Economics

European crisis: Greece – Spain – Others

China and India: Slower growth

U.S.: Fed weighing action

U.S. debt/ceiling: Tomorrow is another day

Ag economy has been doing very well/okay

Rest of economy struggling

Federal budget situation not sustainable

75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11

0

20

40

60

80

100

120

Billion dollars

Net Farm Cash Income

Direct government payments*

* emergency payments are striped area of government payments)

Net cash income in agriculture reached nearly $110 billion in 2011. However a more normal harvest and weak global

economy signal declines in 2012. Are we transitioning back to a new plateau?

Farm Income: Agriculture Continues Strong Performance

Crop Prices Easing as Prices Paid by Farmers Reach Record Levels

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

2010

2011

2012 75

100

125

150

175

200

225

Index (1990-92=100)

Prices received: crops

Prices paid*

*Prices paid commodities & services, interest, taxes and wage rates

Prices received: livestock

Senate begins: Big week ahead…

House Ag: Watching Senate; ready to go

Conference: Lame-duck? Lucas to lead

Focus: ARC, crop insurance, food stamps

Conflict: Push for target/reference prices

Key: Move from base to planted acres

Estimated total spending: $965 billion over 10 years

CBO scores ‘savings’ at $23.6 bil., but…

Whoops: No cotton safety net for 2013 crop

Pay cap changes won by Sen. Grassley

Amendments: Number and scope

Germane Issues: Food stamps | Crop insurance | Pay caps | MAP | Checkoffs

Non-germane issues: Regulations, N. Korea, Sequestration report

Different approach than Senate

Farmer choice: ARC – Price protection

Food stamps: More cuts than Senate

FY 2013 spending

Highway bill | Farm bill?

Debt ceiling hike?

Alternative to sequestration/ATB cuts

Tax extenders 2001 and 2003 tax cuts

Payroll tax holiday

Estate tax

AMT fix

Doc fix

U.S. and Russia’s WTO accession

TPP

New farm bill WTO challenges?

New USDA Undersecretary for trade?

COOL changes?

New USDA GIPSA administrator

LFTB

Renewable energy…

Source: National Journal Member Research, 2012.

Elections:

The Factors That Matter Most Watch with a Critical Eye – Not Every Campaign

Twist and Turn Is Important

Which Is It?:

• Retrospective

referendum?

(or)

• Prospective choice?

Campaign Story

Swing-State Analysis:

• Swing-state economic

fortunes

• Swing-state demographics

Swing States

Economic Trajectory:

• Historical growth rate

• Future economic

expectations

Economic Outlook

I II III

Key states… Obama immigration change key Nevada (Hispanics 17% of voters)

Iowa

Ohio

Virginia

Colorado (Hispanics 13% of voters)

New Hampshire

North Carolina

Pennsylvania

Florida (Hispanics 19% of voters)

Biggest of battleground states Fla. | Ohio | Va. | N.H. | Iowa | Colo.

Romney must win Fla. | Ohio | Va.

Obama can win with victory in one of those states and one of the other three

Caveat: Major economic or other surprise

Bottom Line: Who Will Win?

Predictions

President Obama Wins

Re-Election

Republicans Retain Control

of the House

Republicans Win Control

of the Senate

55% 75% 50%