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Governor: Exports, cost cutting key for state ag

During a keynote address Thursday at Farmfest, Gov. Tim Pawlenty calls for increasing state agricultural exports and cutting regulatory and tax costs to make the state more competitive . Photo by Tom Cherveny, West Central Tribune.

By Tom Cherveny

West Central Tribune

GILFILLAN -- The state needs to continue to expand its agricultural exports, cut regulatory costs and taxes to be more competitive, and fund research to promote the renewable energy industry, Gov. Tim Pawlenty told a Farmfest audience on Thursday.

In a speech that dealt almost equally with state and national issues, Pawlenty kept to a less government is better theme. "The answer in a highly taxed state isn't to add taxes,'' said Pawlenty.

The governor acknowledged at the onset that both the state's dairy and pork industries are "on the ropes'' due to prices that have plummeted to all-time lows.

The pork industry's problems are "substantially related'' to dropping international demand for U.S. pork, according to the governor.

Until the recent scare over the H1N1 flu virus, commonly called swine flu, spread around the world, Minnesota saw 25 percent of its pork sold overseas. That has now dropped to 15 percent.

Pawlenty blamed the drop in part on consumer worries, but more so on what he termed "flat out old protectionalism'' on the part of some governments, including China and Russia.

He called on Washington to use its leverage to demand fair trade opportunities.

Minnesota has seen its agricultural exports grow by 50 percent in the last five years, and the state leads the nation in almost every measure when it comes to expanding overseas ag sales, according to Pawlenty.

At home, he called on Minnesota lawmakers to cut taxes, and regulatory and insurance costs that raise the costs of production for agricultural producers.

He said the state has to curtail spending for social services, welfare and health care or what he termed the ''big monster'' that is "sucking all of the oxygen out of the room.'' He called the growth in spending in those areas "reckless and unsustainable,'' and warned that they threaten to bankrupt the state.

He said they represent 33 percent of current state spending and will represent 85 percent or more within 25 years.

Pawlenty said the money diverted to social services and welfare is keeping funds from economic development and agriculture. He chided the Legislature for providing only $1 million in a program designed to help dairy producers adopt modern technology. The program saw requests for $11 million in only 30 days, he said.

The governor also complained that the Legislature has continued to take aim at his JOBZ program that provides tax incentives to businesses locating in rural areas. He charged that the Legislature also rejected other tax incentive programs that he wanted to target specifically to rural areas.

The governor said he continues to support funding to help Minnesota's renewable energy sector develop the next generation of technology that will make cellulosic ethanol and other "radical'' but needed leaps possible.