REMARKS TO SC TECHNICAL COLLEGE SYSTEM BOARD
Sue-Ann Shannon
May 23, 2007
(Agriculture/Energy)
Thank you for the opportunity to speak with you today about the efforts of the Palmetto Institute, and many others, in our quest to propel the role that agriculture plays in our economy. I have said this before, but it bears repeating: It is not a coincidence that we are meeting in Orangeburg today – home to fertile land, a tradition of farming, and a technical college that is a leader in agribusiness research and education. I applaud all of you for recognizing the critical intersection of education and workforce quality with agriculture, an essential economic engine in this State.
I’m sure you are aware of the work of the Institute, Darla Moore, and our Board, but we have made it a point to discuss initially who we are and why we do what we do. We are a nonpartisan, nonprofit research and educational organization. We have no hidden political motives. No hidden agenda. The central mission and singular goal of the Institute is to create a business, community, political, and educational climate that will produce dramatic and sustained growth in the creation, distribution, and retention of wealth for every person in South Carolina. Our primary measure of success is the per capita income of our citizens, which in 2005 was $28,212. As you know, per capita income is not the easiest metrix, but it was important to us that we help to bring up the economic success of all South Carolinians, especially those in our more rural and impoverished areas.
In my conversation with you today, there are 3 general questions I would like to answer. One, with our past focus on hard data, tax policy, and the clustering initiative, how in the world did we suddenly converge on agriculture and energy? Two, what are our expectations and proposed plan? And, last, what progress have we made and where do we go next?
First, how did we get interested in ag and energy? Well, for one, our Board Chair, Darla Moore (who will be inducted into the Business Hall of Fame tomorrow night) has a passion for dirt. If Darla had her druthers, she would prefer to be introduced as “a farmer from Lake City.” Her husband, Richard Rainwater, an extremely successful private equity investor, years ago looked over the clouds and predicted that oil prices would rise substantially. He bought oil at essentially a few bucks a barrel. Fortune 500 and others said it had finally happened: The great Richard Rainwater had lost his touch. Well, I’m sure you can finish the rest of this story!
Part of our research involves looking at trends and one of the things we noticed, and is generally well known, is that we no longer enjoy capitalism to ourselves. Third world countries and other nations are now catching up and, in some cases, passing us by. We have seen a year of strong demand for agricultural products, as they compete for both energy and food. For example, we are seeing record prices for corn in a time of increased supply, and it doesn’t take an economics major to figure out that something else is going on!
Competition for raw products is fierce. Competition for a skilled workforce is equally fierce. During our Agriculture Summit last fall, Darla noted the large numbers of people in the audience with gray hairs (or no hairs, as some of the attendees later pointed out to us). Did you know, for instance, that the average age of our timber harvesters is 57 years old?
Second, what do we hope to achieve? Building on our agricultural cluster and developing an energy plan are what Darla likes to call “low-hanging fruit.” We now have a unique opportunity to simultaneously expand our agricultural economy, address issues of global warming, reduce our dependence on foreign oil while, at the same time, introducing and educating our youth to these new global opportunities.
We are not pursuing this because we are traditionally an agricultural state. Outside experts and authors of books like The Deep Economy and The Long Emergency are signaling us as to the new role that agriculture and energy independence is playing in the global economy. We can no longer continue on the present course of sole fossil fuel dependence. China's gasoline consumption increased nearly 240% between 1980 and 1999, and that number will only continue to soar as its economic activity increases. South Carolinians consume 2.5 billion gallons of gas every year. As the world population continues to grow, and as more countries embrace capitalism, and as the Chinas and the Indias of the world begin to take a more prominent role on the economic stage, and, if one day, few can afford to ship food products from Kansas to Costa Rica: Will we be ready?
We are approaching a crisis and we have to adapt. An example is the evolution of our nation's economy: From agriculture to manufacturing to high-tech, with South Carolina slowly mirroring the shift from agriculture to textiles to the new knowledge-based economy. We have to ask ourselves if we're going to continue to trail behind others or are we going to seize upon this opportunity? The real question is: Do we have the will?
Lastly, what have we done and where are we heading? We sponsored an inaugural Ag Summit last fall in Charleston and invited farmers, government, education, and others to come together so that we could all start working in the same direction. It was a great collaborative effort and, by the end of the day, 10 action items were set forth. They included:
1. Create an Advisory Board to review projects and discuss action steps, serving as a private/public collaborative clearinghouse and forum. This Board has met twice and signed off on legislation that would, among things, offer incentives for use of ethanol products.
2. Seek innovative advantages through public/private research and commercialization.
3. Adapt to and protect our environment: A recent Statewide poll of likely primary voters, both Republican and Democrat, revealed that action is needed now to address global warming and should be part of the next Presidential campaign platform.
4. Seek competitive advantages in the global economy through the use of our ports and other international means of trading in South Carolina: We are now looking at ways to use our ports for innovative economic opportunities. For instance, not including the fuel needed for auxiliary power supplies, nearly all diesel container ships burn heavy fuel oil #6 – what is left over after the lighter fuels such as gas, kerosene, and diesel are extracted during distillation – literally, the bottom of the barrel! Depending on engine size, hull design, and rate of speed, a typical ship will carry between 10 to 15 thousand tons of fuel and consume it at the rate of 200 to 250 tons per day. What if we offered them an incentive to purchase our homegrown fuel and to use our ports instead of going next door?
5. Market-Market-Market. Officials in New Jersey say they get a $68 return on every $1 they invest in marketing their agricultural products. Yesterday, the Department of Agriculture and Chernoff Newman launched a statewide ag marketing and branding campaign that we hope will usher in a new prosperous era for homegrown products. Agritourism - merging our 2 strongest clusters- is being heavily promoted.
We are currently in the process of raising dollars to facilitate a Statewide comprehensive mapping assessment of our agriculture and bioenergy resources - that is, indigenous and potential resources. SC is a grain-deficient state and even Iowa will import its own corn thanks to the many ethanol facilities now springing up. As part of this study, we will examine the historical and projected supply & demand, as well as opportunities for growth. We will review our current infrastructure and identify any gaps. We will look at competitive energy activities and best practices. Finally, we will use that research to develop a comprehensive Statewide agricultural and energy plan that will serve as the roadmap and tactical implementation strategy for growth. Don't misunderstand me: Local activities are taking place. For instance, Clemson, Coastal Carolina, and Santee Cooper are partnering to establish a wind power project in Horry County; York Technical College has researched the economics of solar heating and partnered with Rock Hill on clean diesel retrofits; ThinkTec recently sponsored an alternative energy summit; bio-tech training here at Orangeburg-Calhoun Tech; Several universities and the Savannah River National Lab are working on research and commercialization of transgenic cellulose materials; and billions of dollars are currently available from the federal government to look at this kind of research.
But, North Carolina and other states have already passed legislation to create a statewide strategy for alternative energy and set intrastate goals. The Institute will soon release a white paper on alternative energy research and options that will be the compilation of months of research produced by our interns through the Darla Moore School of Business. We need to take advantage of all possible opportunities while the momentum continues to build.
I would like to detour for just a moment to talk about the “Achieving the Dream” initiative. We are very excited that South Carolina was chosen as part of Lumina’s national initiative to improve the achievement of students facing traditional barriers to success. When I announced the selection during my presentation to our Board at our last meeting in March, Darla let out a “holler” when I also mentioned in passing that all 4 colleges selected to participate are headed by females. She was pleased, and we are all excited about this new opportunity.
Thank you, again, for giving me this occasion to talk with you about our efforts. As Mark D’Amico can attest to, I am a huge fan of the Technical College System, having taking a significant number of classes before going on to get my 4-year and law degrees. In fact, I have even been recruited into teaching paralegal classes at Midlands, which started on Monday.
We have to continue to demand more from our leaders, each other, and ourselves. We have to encourage successful policies, real incentives, and commitment to rural development in SC. Most importantly, we have to set aside parochial interests for the good of the State. We look forward to working with each of you on our efforts as we move forward. Thank you.