AGRICULTURE: COMPETITIVE ANYWHERE IN THE WORLD

We are in a global economy whether we like it or not. As such, we can either bemoan those factors (i.e., prices) over which we have no control - or we can work together to make our farm families the most competitive we can by lowering the cost of production or adding value to the raw products before they leave the state. With this in mind we need to give attention to taxation policy, overly burdensome environmental regulations and land-use laws, access to capital, financing and organizational structuring options, and adequate transportation infrastructure. We also must support research and technology transfer, as well as encourage continuing educational opportunities. We need to work to "level the playing field" in both international trade and national farm policies so that our farmers and agri-businesses can compete in a fair, competitive arena. In addition, we need to improve and increase marketing opportunities, both domestic and foreign, not only for our major commodities, but also for unique and specialty crops and products. Farm families that utilize risk management techniques will have increased their potential to succeed - we must help them develop these skills.

Minnesota is in the worldwide spotlight. We need to take advantage of this opportunity. Our farms and agri-businesses are some of the most productive anywhere. Our goal is to help them create new opportunities and showcase them throughout the world.

Lead Departments: Agriculture

The Big Accounting Initiative Score

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Increase the level of Minnesota's agricultural exports.

Increase Minnesota's cash receipts from livestock and crop products.

Increase annual net farm income per farm in Minnesota.

Increase the number of Minnesota farmers using the Dairy Options Pilot Program and other risk management tools.

Increase annual sales of agricultural-based renewable fuels.

Increase annual sales of Identity Preserved and Minnesota Certified products.

Number of small meat processors inspected by the State and operating under sanitation standards that meet or exceed USDA standards.

Fiscal year compliance with mad cow disease regulations (BSE Rule, 21 CFR 589.200)

Increase the level of Minnesota's agricultural exports.

Why is the indicator important? Since Minnesota farmers produce far more than our citizens can consume, our farmers’ fate is tied to their ability to sell their goods to people outside America’s borders.  Each year, Minnesota exports a third of its corn, half of its soybeans, and a third of its wheat. 

At the beginning of the 21^st century, Minnesota agriculture has a special opportunity - and challenge - to boost trade.  As developing nations continue to increase their demand for high-quality food products, Minnesota finds itself in heated competition with other states and countries to fill that demand.  It is very important for the state to aggressively promote its agricultural products and “get our foot in the door” in places such as Latin America and southeast Asia.

What is MDA doing? Trade development missions are among the most effective tools the state uses to expand export opportunities.  Over the years, Governor Ventura and MDA Commissioner Gene Hugoson have traveled to key developing markets such as Japan, Mexico and southeast Asia.  Beyond these trade missions, the MDA’s Marketing Services Division conducts a number of activities to develop international markets for Minnesota agriculture products.  The MDA regularly hosts trade delegations from foreign countries, showing off the state’s superb agricultural production and processing sectors.  Marketing staff also have developed targeted programs promoting specific Minnesota products to specific foreign markets.

Is MDA meeting the indicator target? Numbers for 2001 will be available in October 2002

Learn more about:
To learn more about MDA’s marketing efforts, visit
http://www.mda.state.mn.us/ams/default.htm

To learn more about MDA’s trade development missions, visit
http://www.mda.state.mn.us/commissioner/quarterly/2002summer.pdf

Increase Minnesota's cash receipts from livestock and crop products.

Why is the indicator important? Agriculture and its related industries employ one of every five Minnesotans and our agriculture sector supports many other industries such as construction, manufacturing, transportation and retail trade.  Crop and livestock production is the foundation of all this economic activity.  When farm-level production declines, there is a trickle-down effect that threatens the rest of the economy.
 

What is MDA doing? The reasons for declining farm production are varied, so the MDA has a wide variety of initiatives designed to boost that production.  Some initiatives are designed to make Minnesota a more attractive place to farm.  For example, the MDA has developed the Livestock-Friendly Counties program to encourage local communities to develop a more supportive environment for livestock production.  Other MDA initiatives focus on helping farmers maximize profitability with their existing production.  For example, the MDA offers a dairy diagnostic program that helps farmers boost their profitability by bringing in a team of industry experts to help review a farmer’s operation and suggest changes that may boost profitability. 

Is MDA meeting the indicator target? Numbers for 2001 will be available in October 2002

 Learn more about:
For more on the Livestock Friendly County program, visit http://www.mda.state.mn.us/newsreleases/2002news/jul01_01.htm

For more on the Dairy diagnostic program, visit http://www.mda.state.mn.us/dairyfood/diagnostics.html

Increase annual net farm income per farm in Minnesota.

Why is this indicator important? Production agriculture jobs serve as engines for Minnesota’s economy. Each on-farm agricultural production job helps create an additional three jobs in all economic sectors. In rural Minnesota, agriculture accounts for 30% of all employment. Two-thirds of all agricultural jobs are off-farm, in processing, distribution, supply and service sectors.

In 1999, U.S. total net farm income, including government payments, was $43.4 billion or a national average of $19,798 per farm. In comparison, Minnesota net farm income was $17,065 in 1999. Young people looking to enter the farming sector naturally look to operate where they have the best opportunity to generate income sufficient to support their family needs. If Minnesota cannot provide that opportunity, they will look elsewhere and our agricultural sector will decline along with many of the rural communities with local economies dependent on agriculture.

By 2005 the annual net farm income per farm in Minnesota is expected to be greater than the national average.

What is MDA doing? The agency seeks to create revenue-enhancing business opportunities for Minnesota farmers in local and international markets. In addition to promoting value-added products such as ethanol, the MDA continues a number of specific trade development activities. For example, it is developing an identity-preserved customer profile and is facilitating the formation of a cooperative shippers association.

In January 2002, the Minnesota Department of Agriculture executed a $100,000 grant with the Minnesota Grain and Feed Association for the purpose of developing a Minnesota Shippers Association. The development of a shippers’ association will facilitate sales of agricultural commodities by acting as a conduit to trade mission participants.

Is MDA meeting the indicator target? Numbers for 2001 will be available in November 2002.

For more information about farm income in Minnesota, visit: http://www.mgt.org/fbm/reports/index.htm

Increase the number of Minnesota farmers using the Dairy Options Pilot Program and other risk management tools.

Why is the indicator important? Prices for many farm commodities fluctuate greatly from month to month or even week to week. It can be very difficult for farm families to set a budget for their business and living expenses when their revenue from commodity sales can vary so greatly over time. Given this fluctuation, it behooves farmers to look for marketing tools that can remove some of the peaks and valley from commodity prices. To do that, farmers have at their disposal an expanding array of risk management tools, such as revenue insurance, hybrid contracts, futures and options. As farmers’ use of these tools increases, so can their financial security and peace of mind.

What is MDA doing? In addition to helping farmers organize local risk-management educational groups, the agency has partnered with the U.S. Department of Agriculture to offer the Dairy Options Pilot Program (DOPP) to help dairy farmers manage their risk. The DOPP program includes an informational workshop as well as a more in-depth program for farmers interested in putting their new skills into practice. The number of producers enrolling in the DOPP workshops in 1999, 2000 and 2001 was 499, 56 and 347 respectively. The number of producers participating in the DOPP program in 1999 through 2001 was 124, 15 and 188 respectively, or 24% to 54% percent participation. As one might imagine, farmers’ interest level varies year-to-year depending on current milk prices.

Is MDA meeting the indicator target? Eighty eight dairy farmers enrolled in the DOPP workshops in 2002. Thirteen farmers or 13% of the producers participated in the program. The futures market for milk in 2002 has traded around $11 per Cwt. compared to $15 per Cwt last year. The current price is less than the cost of production for most dairy farmers.

By 2003, more than one-third of Dairy Options Pilot participants are expected be in dairy marketing clubs and consequently, their annual gross farm income will increase by more than 5 percent, with a goal of 10 percent increase.
 

For more information about MDA’s risk management programs for farmers, visit: http://www.mda.state.mn.us/riskmgmt/default.htm

For more information about the DOPP program, visit: http://www.rma.usda.gov/training/programs/dopp/

Increase annual sales of agricultural-based renewable fuels.

Why is this indicator important? Biofuels such as ethanol and biodiesel make sense in Minnesota for several reasons. First, they add value to major Minnesota crops such as corn and soybeans, both of which are priced lower in Minnesota than in most other states due to our distance from export markets. Second, the processing of these Minnesota crops into biofuels creates new business opportunities and jobs in greater Minnesota. Third, growing our own fuels within the United States lessens our reliance on foreign energy. Finally, the use of biofuels in Minnesota’s cars, trucks and other vehicles can lead to cleaner air since these fuels burn cleaner than traditional fuels.

What is MDA doing? A decade ago, Minnesota lawmakers agreed to require ethanol-blended gasoline in the state. The idea was to boost corn prices by processing more of the crop in-state, and it worked. Today we have a thriving ethanol industry, and more than 17 percent of Minnesota’s corn crop is used for industrial processing up from zero percent in 1986. More than $200 million in annual value is added to raw agricultural commodities. The plants also provide 750 jobs, with a total payroll of more than $25 million.

Thanks in part to the hard work of MDA staff, Minnesota has led the nation in development of renewable fuels. The state has successfully replaced 10 percent of its 2.5 billion gallons of annual gasoline usage. Fiscal Year 2001 Minnesota sales of ethanol was 252 million gallons, valued at $347 million.

In addition to ethanol, another promising biofuel is biodiesel, which can be made from vegetable oils, animal fat, or even recycled fats and oil. Diesel from soy is the most common source, and under the terms of a bill passed by the 2002 Minnesota Legislature and supported by the MDA, most diesel fuel sold in the state must contain a 2 percent blend of biodiesel by 2005. Thanks to this bill laying the groundwork, Minnesota will have established a major biodiesel initiative by 2003.

Is MDA meeting the indicator target? Ethanol sales in Fiscal Year 2002 were 300 million gallons valued at $347.4 million.

For more on ethanol, visit: http://www.ethanol-gec.org/

For more on biodiesel, visit: http://www.biodiesel.org/

Increase annual sales of Identity Preserved and Minnesota Certified products.

Why is the indicator important? Globalization of agricultural marketplace is forcing a transition from the traditional production to market oriented production. Identity preservation is an important part of this transition. Identity Preserved (IP) crops are traced back to their origin, segregated from similar products, and not-co-mingled into a commodity flow at any point prior to delivery.

The idea behind IP is that by preserving the identity of these higher value crops, processors can have their specific needs met and users are assured that they are getting the quality and characteristics they demand. Farmers who grow these specialty crops can also expect to sell them for a premium price.
In 2000, Minnesota produced 1.4 billion bushels of corn, soybeans, wheat, sunflower seeds, dry edible beans, barley oats and flaxseed. Eight percent or 112 million bushels of these crops were clearly identified as being grown in Minnesota.

What is MDA doing? The agency contracted a firm to develop agricultural IP products and their traits that are important to Minnesota agriculture. The study surveyed the major players in these markets in an attempt to understand the current market conditions as well as future trends.

After identifying promising IP crops and international markets, the study developed a list of prospective buyers. The customer database was compiled through various world-wide sources. After being contacted, almost 300 people have shown an interest in purchasing Minnesota IP crops direct from Minnesota growers and local suppliers through the MDA’s Buyer Assistance Program.

Through careful examination of the export market, the selected base IP crops were soybeans, corn and wheat. Those commodities will be promoted in four countries including:

• China, which holds the most potential for future IP crop marketing.
• Japan, which is the largest IP crop export market.
• Mexico, which is an expanding IP market.
• The United States, which is the largest IP crop market in the world.

Is MDA meeting the indicator target? By 2003 the state expects that at least five businesses will sell Minnesota Certified products. More than eight percent or 112 million bushels of these crops were clearly identified as being grown in Minnesota.

The agency is working with agricultural producers to sell identity preserved distillers dried grain, bison, aged beef, and apples.

Number of small meat processors inspected by the State and operating under sanitation standards that meet or exceed USDA standards.

Why is this indicator important? Farmers typically get less than 30 cents of every dollar an American consumer spends on food.  To capture more of the consumer dollar, Minnesota farmers need tools that will help them expand their marketing options and improve food safety to maintain a high level of consumer confidence. 

What is the MDA doing? The MDA created the State Meat Inspection Program in 1998 to help develop and expand marketing opportunities for small meat processing establishments and for farmers who want to market top quality meat and poultry products directly to consumers.  The MDA’s State Meat Inspection Program has performance targets for: 

• Effective inspection programs that enhance food safety and quality.  This effort is supported by daily inspections of plants operating under the guidelines set forth by Minnesota’s State Meat Inspection Program.
• Providing training opportunities for the meat industry and working in collaboration with the University of Minnesota (U of M) and the Agriculture Utilization Research Institute (AURI) to develop educational programs that increase food safety and help farmers find ways to expand their markets. 

Is the MDA meeting the indicator target? Since the inception of the State Meat Inspection Program, the numbers of plants operating under this system has grown steadily, opening and expanding new markets for the plants and the farmers that supply them.  

In 2002, the MDA and the U of M provided training to the meat industry on Listeria monocytogenes, allergens and other food safety issues at the Minnesota Association of Meat Processors annual convention.  The MDA will continue to develop training opportunities each year for this association.  The MDA will also team up with the Food and Drug Administration (FDA) in 2002, to provide a seminar for egg producers and producer packers on egg safety relating to the reduction and prevention of Salmonella Enteritidis in shell eggs.

The partnerships that the Meat Inspection program has developed with the FDA, United States Department of Agriculture, U of M, AURI and others has increased awareness of food safety issues and assisted the industry in producing safe meat and poultry products for Minnesota consumers and expanded the volume of meat and poultry products produced in the state each year.

To learn more about:

• the MDA’s food safety programs, visit the MDA website at www.mda.state.mn.us
• the FDA’s meat inspection programs visit www.fda.gov
• meat safety and marketing research, visit the AURI website at www.auri.org or the University of Minnesota Center for Animal Health & Food Safety website at www.cvm.umn.edu.

Fiscal year compliance with mad cow disease regulations (BSE Rule, 21 CFR 589.200)

Why is this indicator important? In 1997, the Food and Drug Administration established regulations prohibiting the feeding of most mammalian proteins to cattle and other ruminant animals.  This was done in response to evidence that suggested Bovine Spongiform Encephalopathy (BSE or Mad Cow Disease) might have developed in Great Britain as a result of the use of animal feed containing contaminated meat and bone meal as a protein source. 

What is the MDA doing? To ensure this federal rule is being followed locally, the MDA has contracted and partnered with the FDA in its enforcement efforts.  The MDA has performance targets for: 

• Routine inspections of feed manufacturers, feed distributors, renderers, pet food manufacturers, and salvage operations to determine compliance with the BSE regulation 21 CFR 589.2000.  The MDA conducts these inspections to assure that ruminants grown for food purposes are produced without being fed prohibited proteins.

• BSE education.  This is supported by the MDA’s commercial feed inspection staff who provide educational material to the 362 feed manufacturers and rendering establishments in Minnesota.  The most valuable pieces of information passed along to the establishments are Guidance Documents developed by FDA for each type of feed establishment.
• Participation in national BSE-prevention efforts.  Minnesota participates in a national effort with all states, the Association of American Feed Control Officials, the FDA, the National Grain and Feed Association, American Feed Industry Association and the National Renderers Association to reach a goal of 100 percent compliance with the BSE regulation.  The MDA has partnered and contracted with FDA to accomplish these inspections and educational efforts.

Is the MDA meeting the indicator target? Based on the efforts of the MDA, the rate of compliance with the BSE rule has increased from nearly 61 percent during the program’s inception in fiscal year 1998 to 98 percent in fiscal year 2002.  

To learn more:
Visit the MDA’s Mad Cow Disease web page at www.mda.state.mn.us