Support for Arkansas Week provided by the Arkansas Democrat Gazette, The Arkansas Times and KUARFM 89.

And hello again everyone, and thanks very much for joining us.

An uneven year it's been for a major segment of the Arkansas economy.

And in a moment, we'll as the year ends, we'll assess the state of agriculture in Arkansas with the man who has served as Governor Hutchinson's farm secretary, the man the governor elect has chosen to reappoint.

But first.

Hardly anything seems to most Arkansans quite as cryptic as cryptocurrency.

Most of us don't really have our arms around the concept.

In fact, we don't even have our fingers around it.

But a major arrest elsewhere involving an allegedly fraudulent cryptocurrency enterprise has an awful lot of Arkansans wondering what's at stake.

And what's their stake, if there is one and for that couple of.

Other economic stories our friends Wes Brown and independent journalist and doctor Michael Paco, chief economist and state economic forecaster from UALR gents.

Thanks for coming in.

Michael, let's start with you.

What do we don't know?

What we don't know?

Most of us.

And apparently the experts don't know what they thought they did either about crypto.

Well it's it's always amazing to look back on incidents like this and and think what were they thinking that that the people who got involved in this and and perhaps the the mysterious aspect of cryptocurrency helped kind of cloud the the real underlying issues here.

But it's it's really a story of of fraud and greed that's as old as finance itself and it's just repeating itself here in this new venue but Michael yeah you know.

With this Sam Bankman fry, he you know when people ask that question that you asked what is cryptocurrency.

You know I just kind of started out with with hey it's a an online attempt at a currency but it has no central right bank and and basically what Sam tried to do was create a central bank and an exchange for cryptocurrency so that every all the players whether you're going to go out and buy cryptocurrency.

Which is for me it's kind of a A that that's even strange.

You know if it's currency you're buying currency.

But to he wanted to create an exchange where he could bring all the regulation and players into one platform kind of like the New York Stock Exchange or the NASDAQ Stock Exchange.

So but it was a House of Cards as it's C said in their indictment 3-3 days ago and and basically to me.

And and like Michael said you know what were what were they thinking it was basically a Ponzi scheme that's all it was where where these they recruited these investors to bring the money in and then there was funding some of it may go out to the investors or the the investors in the cryptocurrency but most of it was going into the to fund their lifestyle.

All that said Michael we we would appear to be on the verge on there and maybe it already in practice the edge of eight of new forms of of exchange.

That, that really don't have that much to do or anything to do with what just happened on the crypto exchange.

Well there, yeah, there's a wide range of activities going on in the cryptocurrency world and there's some really promising technologies there, but they're still kind of finding their way into how into the mainstream.

And so that probably opened the window here for what what ordinarily might be seen through as a fraudulent situation, but caught people in the in the midst of it.

Well, we have.

Some other news that we need to get into for Arkansas certainly and the rest of the country, we as we tape at midmorning Friday, the state reports that unemployment, the jobless rate in Arkansas moved up by 1/10 of a Click to 3.7%.

Also elsewhere across the nation that the retail report was retail spending report was not terribly encouraging.

Yeah, it was kind of kind of a lukewarm Christmas sales going into the holidays and that, you know, it is kind of the the year end report people look for just to say, hey, how.

How are we doing as an as an economy if you get a loop 1 Christmas sales and then that could foretell something else into two 2023 that that eight that consumers are putting money are are are kind of.

They're they're nervous about the economy right now and they are saving their money hoping that the economy will turn better in 2003.

And some of the signs out there, especially seeing the interest rates go up, I think the prime rate is now 7.5%.

So if people who are you, you, your money is not going as far as it was in 2022, in 2021.

Well, here's a quote from just a couple of days ago from Chairman Powell of the Fed.

We still have work to do Michael.

We know what that means.

Well certainly I but you know I think in in some sense though financial market response to the retail sales report was a little bit overblown because it it shows that yes there is some weakness in consumer spending areas but that just really means that Christmas sales in November weren't as strong as they otherwise might have been.

It's not a huge downfall or anything and that really is showing that the Fed's policies of raising interest rates.

Our reigning in consumer spending a little bit, that should be reducing the price pressures and make it more likely that the Fed will succeed sooner rather than later in bringing bringing inflation down.

And we saw the inflation report, it's slightly coming down about a point every month.

In the last two months it's dropped, I think it was at 9% and now it's down in the 7th.

So it's starting to and you're starting to see certain sectors of the economy, the world price.

Questions, but I guess the big telltale sign is where our housing price is gonna go, will those and I think Godzilla report also came out yesterday or this morning saying there are stars starting to see some some movement in in that market where some affordability in some markets where where where housing buyers are are looking to get back into the market.

Yeah, I would add one other key indicator and that's fuel prices and I will in a moment we'll talk with Secretary W Ward.

The Agriculture Department about the enormous impact that diesel prices can have on the farm economy, but everybody burns distillates of one kind or another and you're seeing that at the pump.

It's under well under 3 bucks now Michael come down significantly from really the the fears that surrounded the initial Ukrainian situation.

But you know that that's again that's that's a part of the inflationary pressures that we're seeing a little bit being relieved at this point and.

You know, I'm.

I'm I'm not terribly optimistic about inflation coming down right away, but I think it's moving in the right direction and the Fed certainly seems to be determined to accomplish that mission.

We might note also that this isn't just Washington's doing one way or the other this but this is global.

I mean central bankers across around the world, certainly the developed world are kicking, interest, itching, they're all facing the same issue.

Well, in some sense that's really the hangover from the largesse of fiscal policy during the COVID pandemic.

So I work that now.

Things are coming.

The chickens are coming home to roost when it comes to all that stimulus that was put into the economy.

And the inflation we like like Michael said inflation was a global issue, prices that the supply train, fix, trade everywhere and we're the largest economy.

So.

So people look to the US economy to to see where interest rates are going or where other points of the economy are going and and some of those companies, other countries mimic what we are doing and we're starting to see that now and it's no strain at all to say that what's going on in China.

Right.

A halfway around the world could have a significant impact on Arkansas because the officials there have their own set of economic problems.

It's a big chunk of the of the world economy and and so certainly anything that slows down China's economy is going to affect us as well.

And that's that's really the situation that's we're in from now on.

It used to be if something happened in China it was basically annoyed, but over the last decade you see where where China is pretty almost equal to the United States in terms of pressures on on the world economy.

The R word dare we use it?

Michael recession.

It's not a naughty word.

It's it's a part of the business cycle.

I, I'm, I'm exactly we didn't want, Paco said.

I'm expecting that that the first part of 2023 will be a period that we will call a recession.

In hindsight, I don't think it's going to be a serious protracted or deep recession.

For one thing, we're starting off with very strong labor markets and employment rates ticked up to 3.7%.

That's still below 4%.

That's still very strong and and I just don't foresee a huge increase in unemployment.

Which is usually the, the, the most painful part of any recessionary period is how it affects households and employment.

So we're starting from a good position there.

Yeah.

A few seconds left W we got a lot of wage pressure too.

Yeah.

And and I'll just quote.

Michael Paco it it's gonna be it's gonna be a week are you know so we will see I think in the first quarter and throughout the 2003 we'll see a slowing of the economy but not a not a crash that we've seen with other with 10 decade ago but just a slowing of the economy hoping that that consumers will rescue us at the end of the year had a headache not a heart attack jets thanks for coming in as always.

Come back soon, we'll be right back.

We are back and for this month's good root segment, we are coming in from the fields in the past years, the pens and the corrals and we're joined by Arkansas Secretary of Agriculture westward.

Mr Secretary, as always, thanks for coming aboard, absolutely good to be here.

It was kind of a problematic here for Arkansas agriculture in every aspect.

It's been challenging really, really across the board.

You know agricultures are states largest industry.

We've got a very diverse.

The broad agriculture industry and we face challenges across the across the spectrum for our industry and it's had an impact on individual producers.

But the the whole statewide impact as well for our agriculture industry well at the end of a year now I mean on a scale of 10 what sort of year was it for the producer?

You know I think we ended up coming out OK in the end and in the large respect but but through the course of it, it was challenging.

So if I had to put it on a scale of 1 to 10, I'd probably say A6 or 7, so could have been worse.

It definitely could have been better but a little bit better than average but but a challenging year nonetheless.

Well, I I guess at the top of the list of challenges would be a lot more what to put first whether it's whether or inflation meaning particularly fuel price, diesel, yeah, you know it, it started really you know about this time last year you know we started seeing the supply chain issues, started seeing prices increase and so, so there was already those sort of disruptions and so for the row crop industry we got into the spring, I had a wet spring, so that delayed planning and so we had some.

Renton plant, we had some losses there that that had an impact Fast forward to the summer it was hot and dry.

So we kind of went from one challenge to the next.

And you know if you look at the cattle and hay portion of our of our agriculture industry some some estimates were 90 to $120 million worth of losses there.

So that was a challenge and then then Fast forward we had a had a decent harvest time where it was dry enough where a lot of producers could get in their fields and harvest and and get a little field work done for the year.

But overall we we've had.

More challenges than, than, than steady successes.

And so probably again at out of a scale of 1 to 10, I'm probably 6 or 7 probably where I would put it.

Well, it and it's inevitable that we have to talk at one point or another about climate and what impact how how the farm establishment particularly your department is going to assess now how you assess climate change and how you're going to do how how we ought to deal with it.

I mean it's at one point you couldn't even get crops on the river.

Yeah, no, that's you're absolutely right and you know we, we see these sort of natural disasters.

Sort of events that take place almost every year now you see hot and dry summers, you see those sort of impacts you know the the Mississippi River Lois it's probably been in history and this the the impact that that has on the agriculture is but really on everybody.

And so you know certainly water is incredibly important and so you know we we've had some large scale irrigation projects that Governor Hutchinson has really really pushed for on shifting our our dependency from from from groundwater to surface water to make sure that's more resilient and and there for future generations.

And you know, I think we'll continue to look for areas where we can do that where it's flood mitigation, changing from groundwater to surface water, looking for more climate smart sort of commodities that we can grow within the state.

Well, is there a message though?

Obviously the Arkansas Department of Agriculture can't do much in and of itself in terms of affecting policy visa V climate change, but is there a message that you would send to?

Hey, the presidential administration, the congressional delegation or the General Assembly.

Yeah, you know, we, we work very closely with our congressional delegation.

You know, Senator Bozeman, you know, ranking member of the Senate AG committee or got Congressman Crawford on the House AG Committee and Congressman Westerman Natural Resources Committee.

So we, we have some very influential policymakers on our congressional delegation and we say in pretty close contact with them, they're out and about, they're talking to producers and so.

So certainly they're seeing things first hand and we're supportive of their efforts and will continue to be engaged with.

With what?

They're doing and helping them as as much as we can.

Who took it, who had the rougher time, the, the row crop farmers this past year, rowcrop or protein producers, I would say protein producers.

And you know one thing I didn't mention earlier was avian influenza and that's a little bit different from kind of weather related.

But you know if you look at cattle and hay producers, you know 90 to $120 million in loss because of this summer and the drought conditions, even influenza, you know we've seen that across the nation less less so in Arkansas but we had a case in October so.

You are a lot of the the row crop industry it was able to make up for the early early difficulties.

You know they we've got irrigation we can water our crops so we can overcome a lot of those challenges but I would say the animal agriculture the protein side probably took the harder hit this year even as we record this program the Fed has Federal Reserve has has raised interest rates again there is some indication though of slowing inflation particularly as involves fuel prices diesel.

What, what, what's, what does the department see in the near term here say for the next two quarters?

Sure.

Yeah so so we're we're optimistic that that hopefully things will be a little bit better next year especially getting into spring.

So.

So at this time of year a lot of especially on the road crop they're making decisions for next year they're they're forecasting, they're deciding what crops are going to plant you know they're they're they're ordering whether it's seed or fertilizer in bulk in advance and so they're making those decisions now.

So they're looking you know one or two quarters ahead and so I think they're I think they're looking at.

Next year to be a little bit better than what this year has been for 2022 but probably still a lot of the same but slightly better is what I I think that most people are talking about right now but particularly well with the international petroleum market because fertilizer, not just diesel, but fertilizer.

That's right.

Yeah no you're absolutely right whether it's the cost of fertilizer, cost of fuel, there's there's all these different variables that impact their producers ability to to make a living and to grow a crop or to grow grow the livestock that that that helps with their income.

And so a lot of challenges, I think it'll be another challenging year, but hopefully it'll be we're we're always optimistic.

We're always optimistic that you know, this year was a challenge, next year will be better.

We always have that mindset and you almost have to be to, to be in agriculture.

So hopefully it'll be better next year.

You will continue as secretary under the new administration.

The governor elect has indicated she wants you to remain in your position.

Have you discussed the job with or the policy aspect of agriculture with her?

What are going to be, what are the administration's priorities?

That's the best you know sure yeah well you know we we've had a few different conversations and you know I think governor elect Sanders is going to do an incredible job for Arkansas.

She's you know she's very passionate about about the position and about our state and and she understands how important agriculture is and so she she recognizes you know the the issues that are out there whether that's you know the challenges we've had with the the drought conditions or feral hogs Raven influenza you know she she knows that those are out there and how important those are but but certainly a deep appreciation for for our industry and how important it is.

For our state as a whole and you look at, you look at an industry that's 19 to $20 billion economic impact every year at our state largest industry.

And she's, she's, she knows that and sees that and wants to be helpful and we'll continue to find ways to to help our industry be successful.

Well, has she been specific about that?

Has she said secretary Ward W Ward, I want this done or this is where I want to take the department?

Not yet.

You know I think with the legislative session coming up I think we'll have some more of those conversations in the future, but probably in the near future.

But you know, I think she recognizes how important it is.

Some some of the more finer details were left to be figured out.

Well that session is just days away literally.

Did you have an agenda does the apartment have a package for not yet.

You know we we had come up with some some items that Governor Hutchinson took a look at and those were mostly just clean up sort of items you know cleaning up statutory language to make sure programs operated more more efficiently but broader you know policy sort of changes or anything like that.

We haven't haven't proposed anything along those lines.

You know I think industry will probably have some and we'll we'll see what those are but and and we'll work.

The governor elect to make sure that we're doing what's best for the state of Arkansas.

Arkansas Secretary of Agriculture W Ward, thank you very much for being with us.

As always, come back soon.

Thank you.

And we'll be right back.

This is our final edition of Arkansas Week for the year, at least in our usual format owing to holiday schedules.

Our next two broadcasts will be interviews we conducted with Governor ASA Hutchinson a few days ago, a conversation as he ends his eight-year tenure.

Of course, we'll return on the 1st Friday and Sunday of the New Year with an eye to a new governor, a new general.

Assembly new issues.

New news.

And now, as is our custom, we conclude this year with a nod to the men and women who left the public arena in the previous dozen months.

They were players in politics or policy or business or education or all of the above.

And others among them helped us cover the news.

They left a mark.

We'll see you next year.

Support for Arkansas Week provided by the Arkansas Democrat Gazette, The Arkansas Times and KUARFM 89.