Farm leaders say next farm bill may need to make some changes
April 15, 2016
A House Agriculture General Farm Commodities and Risk Management Subcommittee hearing this week appears to be the first hearing on the 2018 farm bill, with farm leaders commenting on the importance of commodity supports and the need for some changes – particularly in cotton and dairy.
Rep. Rick Crawford, R-Ark., the subcommittee chairman, opened the hearing by noting, "While some safety-net features of the farm bill may meet the current economic test, other features have yet to prove their mettle. Two important questions we must keep asking are: One, can the existing safety net meet the growing challenges of a prolonged period of depressed prices? And two, will these policies be effective when farmers and ranchers need them most?"
Crawford continued, "We know the answer already in the case of STAX for cotton. Crop insurance is not designed to withstand the pressures caused by the predatory trading practices of China and India."
Crawford also thanked House Agriculture Committee Chairman Michael Conaway, R-Texas, for taking the position that the Agriculture Department should be able to declare cottonseed an oilseed.
Agriculture Secretary Tom Vilsack has said Congress has not given USDA that authority, although he has said he is working on other types of aid to the cotton industry.
Crawford added, "I am hopeful Secretary Vilsack will announce soon that immediate and meaningful help is on the way. I am also hopeful that we will continue to work toward a more permanent solution to a serious problem for cotton farmers that is not going away anytime soon."
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Crawford also said, "While we were able to deliver a farm bill in 2014 that saved taxpayers some $23 billion, primarily through the elimination of the direct payment program, our colleagues must now appreciate that we will struggle mightily to write an effective farm bill in 2018 with the very limited amount of money we have left."
He concluded, "I believe it is time to look beyond the farm safety net for budget savings and deficit reduction, as our farmers have already been asked to shoulder their fair share of the burden. For my colleagues who will share the responsibility of writing a new farm bill, I hope that the lessons from the 2014 farm bill will not be lost on us: The best safety net is the kind that will be there not when times are good, but when the bottom is falling out."
American Farm Bureau Federation President Zippy Duvall noted in his testimony that while USDA has said net cash farm income was $135 billion in 2013, it is projected to be $91 billion in 2016. Long-term projections show net cash income averaging less than $80 billion for the coming decade, and net farm income at less than $70 billion.
"It is this very situation — this economic reality, if you will — that makes the safety-net programs provided by the farm bill so important," Duvall said. "Younger and newer farmers and livestock producers are about to go through a steep learning curve on the difference between 'variable' and 'total' costs of production."
Duvall highlighted a series of regulatory and court decisions that he said have made life difficult for farmers.
National Farmers Union President Roger Johnson said that overall Title I programs are working well, but he noted that there have been some problems with the Agricultural Risk Coverage program that most farmers signed up for, and with the cotton STAX program and the dairy program. Johnson said that the Price Loss Coverage program, an alternative to ARC, has not faced implementation issues.
He added, "NFU would have liked to see a single program in the form of PLC that contained higher reference prices with crop insurance serving as the backstop."
USDA Chief Economist Robert Johansson testified, "A strong dollar coupled with high levels of global agricultural production leave U.S. producers facing commodity prices that continue to decline from record levels and a more difficult trading environment than last year."
Joe Outlaw, a professor who is the co-director of the Agricultural and Food Policy Center at Texas A&M, testified that crop insurance and the commodity programs are "equally important – especially during times of low prices. For example, lenders tend to view crop insurance as being more important because the insurance guarantee is 'bankable,' meaning it is something on which they can base a loan. On the other hand, producers see the commodity assistance as the only chance they have of coming close to breaking even in a low-price environment."
He concluded, "And finally, in my opinion, the interest groups that continue to call for changes that would negatively impact these two key policy tools clearly either have no idea how difficult the financial situation is across agriculture or they simply do not care. Farmers in this country deserve better than to continually be threatened with changes that I consider a dismantling of the safety net."
–The Hagstrom Report