Vilsack touts rural economy
Agriculture Secretary Tom Vilsack will announce at the USDA’s Agricultural Outlook Forum on Thursday that the rural economy is sound and in better shape than when President Barack Obama took office, even though crop commodity prices are now down.
In testimony at the House Agriculture Committee hearing today on the state of the rural economy that amounted to a preview of his Outlook Forum speech, Vilsack said that USDA expects real net farm income to be the lowest since 2002 but median family-farm household income rose to $81,000 in 2015, a figure that includes off-farm income, which is higher because the overall rural economy has improved.
Rural poverty rates are “coming down significantly,” he said.
“Policies pursued by President Obama after the collapse of the U.S. economy in the great recession helped the U.S. economy recover jobs and strength over the past seven years,” Vilsack said in his prepared testimony.
“U.S. GDP [gross domestic product] is rising, and the national unemployment rate continues to decline. Between 2010 and 2015, median farm household income increased by more than 40 percent as farm households seized opportunities to increase off-farm income. During that period the median value of off-farm earned income also rose by 46 percent and nearly tripled for off-farm unearned income.”
Vilsack said commodity prices have gone down because of the slowing global economy, particularly in China; the strong dollar; and big harvests in the United States and in other parts of the world.
Farmers have been helped by low-interest and low-energy costs, and debt-to-asset ratios remain strong and stable, but farmers are expected to borrow more money while USDA programs are expected to make larger payouts, the secretary said.
Vilsack’s positive outlook did not impress southern Republicans, who expressed annoyance that the secretary said he does not have the authority to declare cottonseed an oilseed and make it eligible for farm subsidy payments.
House Agriculture Committee Chairman Michael Conaway, R-Texas, started off the hearing by repeating previous statements that the absence of cottonseed in the farm bill and authority given to the secretary to designate “other oilseeds” means Vilsack does have the authority.
But Vilsack said the provision to designate other oilseeds has been in other farm bills and has been used to designate oilseeds that came into the marketplace for the first time between farm bills.
Vilsack stood his ground, saying it was not lawyers preventing him from declaring cottonseed an oilseed but the oath he took when he became secretary to follow the law and the Constitution.
“The reality is that Congress made a decision not to include cottonseed under the other oilseeds. That decision made it impossible for me to do what you are asking me to do,” Vilsack said.
Vilsack said he is willing to help the cotton growers through the Commodity Credit Corporation if Congress restores his ability to use Section 32 to help farmers. He said he would create a cost-share program to aid cotton ginners if the industry wants it.
Stating that the low cotton prices are caused by decisions made in India and China, Conaway told Vilsack that “it all comes down to whether you stand by farmers” when they are under threat from foreign countries.
Conaway said he has had an initial discussion with the House Appropriations Committee about removing the prohibition on the use of Section 32, a provision that goes back to a 1930s law that USDA can use the CCC to help farmers in distress, but had been told there is a “history” to the prohibition.
One member noted that the prohibition was put in after USDA used the provision to help farmers in Arkansas when then-Senate Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., was running for re-election in 2010.
Vilsack also said that even if Congress has reservations about restoring Section 32 for this use, members should remember that the fiscal year 2017 Agriculture appropriations bill will be implemented mostly by a new secretary of agriculture in the next administration.
He said that if the industry wants a program to help cotton gins, he would go to the Office of Management and Budget and ask for permission and authority “and try to get it up as quickly as possible,” but that “some folks in the industry have told us it is not something they want us to do.”
Vilsack said that whatever programs are used to help the cotton growers, they should be a “bridge” to the next farm bill so that lenders would have confidence in making loans to the cotton industry.
Rep. Austin Scott, R-Ga., told Vilsack he considered his comments on the rural economy inconsistent, but Vilsack said the point he wanted to make is that the rural economy is not in the kind of trouble it was in in the 1980s when farmers went bankrupt.
Members from other parts of the country asked about other programs.
After Vilsack said that signup to idle land under the Conservation Reserve Program has been strong and that USDA will have to decide which applications to accept by focusing on highly erodible land, House Agriculture Committee ranking member Collin Peterson, D-Minn., told Vilsack he is worried that the CRP is becoming too concentrated in areas of highly erodible land.
The CRP was set up as a supply reduction program, Peterson said, adding that he believes the program was most successful when it was “spread out in big tracts” that were particularly good for wildlife habitat.
House Agriculture Nutrition Subcommittee ranking member Jim McGovern, D-Mass., asked Vilsack what he thought of the proposal by House Agriculture Appropriations Subcommittee Chairman Robert Aderholt, R-Ala., to test food stamp beneficiaries for drugs.
Vilsack noted he had told Aderholt that he doesn’t think the drug testing would solve the problem but would instead create a stigma.
There need to be more programs for prevention and treatment, Vilsack said, and he noted that in rural areas USDA is working with the faith-based community to encourage an atmosphere in which rural people can acknowledge their problems and ask for help.
In response to a question from former House Agriculture Committee Chairman Robert Goodlatte, R-Va., about USDA assistance to the biofuels industry, Vilsack vigorously defended ethanol, saying it has reduced gasoline prices. Goodlatte disagreed, but Vilsack said he was referring to gasoline prices over time.
On the question of biotech labeling, Vilsack said the important thing is that Congress create a period in which the government and industry can educate the public on genetic modification before labeling. He added that the real question is what happens if there is not acceptance of it when that period is over.
Vilsack noted that the U.S Forest Service is spending most of its budget on fighting forest fires and said it is vital for Congress to change the way forest fires are fought.
“We are not a fire department. We are the Forest Service,” Vilsack said.
–the Hagstrom Report
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