Southwest Minnesota farmer Harold Tilstra knows farming can be fickle.
And at a time when troubled Asian economies raise concerns throughout the agricultural industry, the University’s Extension Service provides just what he and his neighbors need.
“They try to get past the emotions and deal with the situation on a reality basis,” said Tilstra, a 1975 graduate of the College of Veterinary Medicine.
The extension service holds meetings and seminars to advise farmers on how to deal with the Asian economic situation and its impact on crop and livestock sales.
Overzealous investing left Asian countries such as Korea and Thailand with enormous foreign debts, seriously hindering their purchasing power.
With Asia becoming an increasingly important export market to the United States, Minnesota feels the effects of Asian struggles, too.
“We can accept a little pause, but we can’t have a long-term downturn,” said Mike Martin, dean of the University’s College of Agricultural, Food, and Environmental Sciences.
Minnesota’s agricultural and manufactured exports to Asia are consistently above the national average. Data compiled for 1996 by the Economic Resource Center showed Minnesota ranked seventh in the nation in agricultural exports.
But the recent economic dip could change that.
The Department of Agriculture reported that 1998 export projections are $2.5 billion below 1997 figures. Despite this drop, farmers and producers are not panicking, said David Stallings, an economist for the Agricultural Department.
“Farmers are used to ups and downs in the market,” Stallings said. “Good farmers will be able to do good planning and get through the situation.”
Tilstra is not as optimistic.
“They’re in a world of hurt,” he said of producers whose incomes depend on the sale of pigs and beef cattle.
Although the agricultural sector is carefully tracking the situation, farmers aren’t the only ones with their eyes on the Far East.
In 1996, the state’s manufactured exports represented 5.3 percent of total U.S. exports to Thailand — a figure substantially higher than the 2 percent average.
Minneapolis-based Cargill, an international processor and distributor of industrial, food and agricultural products, does a brisk export business with Asia and values its ties there.
“We are beginning to see a small impact on our export operations,” said Wendy Tai, Cargill spokeswoman. “That impact is likely to get worse before it gets better.”
Recent earning figures echo this. Cargill’s earnings for the first half of 1997 were $124 million compared to $486 million the year before. Volatile markets and the slumping Asian economies played a large role in the company’s downturn.
To help protect Minnesota’s strong export standing, the state is taking steps to ensure the economy pulls through relatively unscathed.
Last month, Gov. Arne Carlson recommended using $400 million of the state’s $1.9 billion surplus to help ease uncertainties surrounding Asia’s situation.
“This $400 million is an insurance policy,” said Tom Stinson, the state economist and assistant professor of applied economics at the Carlson School of Management. “It’s the governor’s decision about how much risk he thinks is appropriate for the state.”
As exporters wait to see if the funds will be enough, Cargill is remaining optimistic. The company is confident its long-term relationships with Asia will remain sound, Tai said.
“The numbers are there, and the people are there,” Tai said. “In the long run it looks good.”
Most analysts agree, but it is the short term that is the immediate concern. The remainder of 1998 will show how extensive the impacts will be.
For now, financial backing from the U.S. government and the International Monetary Fund, and a slow market restructuring could help change Asia’s economic course.
Tilstra hopes the efforts are successful, but acknowledges outside help alone will not be enough.
“Our hope is that those things they are trying to do will put some corks in the leaks,” he said. “But an artificially stabilized economy is not the answer.”