BLOGS

Michael Swanson, the big cheese ag economist for Wells Fargo Bank, veered his Monday lecture on global economics straight into the realm of quantum mechanics with the true (but woo-woo) phrase:

“Everything is connected. We just can’t see how.” Whoa, brother, blow my mind.

Swanson (in photo) addressed a full house of growers, packers, shippers and ag scientists as the first guest speaker at the Washington State Horticultural Association’s 107th Annual Meeting, where more than 1,300 tree-fruit industry insiders have gathered this week. The convention runs through Wednesday at the Wenatchee Convention Center.

The big bank’s chief ag economist told growers that spending tons of time trying to forecast world-market performance may not be the best use of business resources. Instead, businesses should know for sure that there are both risks and opportunities in the growing global markets and that, well, “it’s OK to be surprised.”

For an economist, this guy seems to have his feet on solid ground — maybe orchard ground.

Swanson went on to deliver the sobering message that economic forecasts can’t always be trusted, that global statistics are often based on individual countries’ agendas and that U.S. agri-business should be hyper-alert to overseas government policies.

A few other of Swanson’s points to ponder:

• Over the last five years, the tree fruit industry hasn’t grabbed its share of the global markets, yet opportunities abound. “It’s a crying shame that other ag sectors have captured the worldwide markets and apples haven’t,” said he said. “Now you need to figure out why, because the prospects are there.”

• Don’t underestimate the effects of government policies on global ag markets. Policies can be volatile — whammo! Russian wheat embargoes, Chinese apple tariffs — and undercut years of effort to profit from an overseas market.

• Although hard to predict, other very real factors in global market expansion include: population growth, personal income growth, exchange rates, the ongoing U.S. economic turbulence and — this can’t be emphasized enough — biofuel production. Acreage converted to biofuel crops have far reaching effects on other sectors of the American economy. For instance: food prices, regular fuel prices and farm land values.

• Don’t forget: NAFTA has ensured that our biggest trading partners continue to be Mexico and Canada, with the peso and Canadian dollar continuing strong through 2011.

• China may continue to show growth, but it’s volatile growth with exchange rates fluctuating wildly (maybe even weirdly). Remember: Right now, 85 percent of U.S. ag exports to China are in soybeans and cotton. So there’s lots of growth potential in other market sectors.

• Growth in ag jobs has been fairly stagnant over the last decade. Why? Labor costs continue to rise while capital costs — think technology — decline each year. People can be expensive; technology isn’t.

• The U.S. ag economy doesn’t stand alone “as an island unto itself.” The forces of world markets affect America’s agri-business, whether we like it or not. “Everything is connected,” Swanson reiterated. “We just don’t see it.”

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