Tom Vilsack didn’t look the part of a casino greeter.

Seeing the farm boom on display at USDA

Bruce Blythe
Business Editor

But I couldn’t help but make the analogy after listening to the U.S. Agriculture Secretary kick off the U.S. Department of Agriculture’s annual Outlook Forum on Feb. 24-25.

The “safest bet in America” is on the country’s farmers, ranchers and growers, Vilsack told a packed ballroom at a Marriott hotel just outside Washington, D.C.

“These are extraordinarily hard-working people who have done an incredible job.”

Vilsack used the term “safest bet” five times during his 35-minute speech, according to a transcript posted on the USDA’s website.

Whether he intended any subtle references to commodity market speculation, I’m not sure. Whatever the case, it’s been clear for many months that once again, agriculture is a hot news story and a fashionable investment vehicle.

Whether we’re talking about record-large bullish speculator bets in corn and cattle futures, or Deere & Co.’s soaring stock price, or booming cropland values, everybody, it seems, wants a piece of the farm.

Agriculture’s heightened sex appeal was underscored at the forum, which drew more than 2,000, an all-time high since the USDA started the event in 1923.

The crowd included consultants, bureaucrats, Wall Street analysts, journalists, and even a few farmers. Most were on hand during an address by Bill Clinton, the first appearance by a current or former U.S. president at the forum.

“There’s going to be plenty for American farmers to do” to feed a growing world population, Clinton said.

The rest of the conference largely focused on grain, livestock and dairy industries. But there was still something for fruit and vegetable folks to chew on, said Cathleen Enright, vice president of federal government affairs for Western Growers, Irvine, Calif.

Enright, who spoke during a panel discussion on USDA nutrition programs, would like to see a bigger role for fresh produce at future forums. Nonetheless, she was encouraged by another forum speaker, Debbie Stabenow, chairwoman of the Senate’s agriculture committee.

In a Feb. 24 speech, Stabenow, a Democrat from Michigan, listed research and innovation among the critical principles for the 2012 farm bill. Enright hopes that’s a favorable sign for growers fearing the loss of funds for extension services and pest and disease control research.

Overall, the forum “shines a really positive spotlight on the ag industry,” Enright said March 2. “The focus on increased consumption of fruits and vegetables appears to be here to stay.”

Despite Vilsack’s cheerleading, this isn’t entirely a feel-good story. Corn futures have nearly doubled since the middle of last year. Beef, dairy and pork producers are being increasingly squeezed by soaring feed costs, and their reluctance to expand herds is contributing to escalating meat prices.

Produce is also playing a role in accelerating food inflation after recent freezes destroyed vegetable crops in Arizona and Florida. Additionally, oil’s push above $100 a barrel raises questions over the sustainability of the country’s fragile economic recovery. If consumers are paying $4 a gallon for gasoline, many no doubt will look for ways to trim their grocery lists.

This brings us back to the recent commodity price run-up. Aside from orange juice futures or Chiquita shares, there are few traditional means for hedge funds and other speculators to bet directly on fruit and vegetable markets.

But this doesn’t mean fresh produce is entirely immune from the same boom-bust dynamics that whipsawed grain and livestock markets in recent years.

I’m not making a “speculation is bad” argument. The world is demanding more and more from U.S. growers, and money is flowing into the sector accordingly.

Rather, this is more about the law of gravity. At the Chicago Board of Trade, where I spend many workdays, a long-standing axiom is “the best cure for high prices is high prices.”

A previous commodity price surge — in mid-2008, when oil neared $150 — didn’t stick. Prices plunged during the second half of 2008, and, as we learned later, the U.S. was already in a severe recession that didn’t officially end until mid-2009.

I’ve long thought that being involved with farming is a lot like rooting for the Chicago Cubs, and I happen to fall into both categories. There are occasionally good times and moments of glory. But you’re always looking over your shoulder for the next disaster.

Vilsack is right about the hard-working qualities of America’s agricultural producers. But he might have included one other small point: As any smart gambler knows, enjoy your winnings but be prepared for the days when the chips don’t fall your way.

Bruce Blythe covers the commodity markets and the agricultural economy for Vance Publishing Corp., owner of The Packer, from the CME Group trading floor in Chicago.

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