Farm Bill Discussions Underway

Farm conditions are not yet ripe for a 1980s-style farm ‘bust,’ but ag economists told a House Agriculture pre-farm bill hearing income and debt continue to deteriorate and changes may be needed in the next farm bill to prevent a crisis.

holes in the 2014 farm safety net for dairy and cotton and predatory trade practices by China, were just some of the urgent problems highlighted by farm economists and lawmakers.

USDA Chief Economist Robert Johansson spoke on farm income…

“Farm income is expected to remain relatively flat in 2017.     Credit availability continues to tighten, but continued resilience in the farm sector is expected.  Reversing the direction of the last two years, we do expect to see net cash income to rise slightly from 2016, but however as you mentioned,   net farm income, a broader measure is forecast to fall slightly.”             

Assistant Vice-President at the Omaha branch of the Federal Reserve Bank of Kansas City, Nathan Kauffman, on the scope of the down economy, says…

“A farm crisis on the scale of the 1980’s still does not appear immanent, as farm loan delinquency rates remain low, and credit availability generally remains strong.  But, if farm income remains persistently low, if farm land values continues to decline, and if debt continues to rise, all of which have been trends in recent years, it is possible that key indicators of financial stress, such as debt to asset ratios could rise to levels similar to the 1980’s over a longer time horizon.”

And Texas A & M Professor and Extension Economist Joe Outlaw, after his department surveyed more than 60 crop farms in 20 key agriculture states last year…

“There was only farmer that reported making a yield on the 2016 crop.  Corn farmers and North Dakota and Iowa as well as cotton farmers from West Texas indicated that the only reason they broke even in 2016 was record yields.”

Outlaw says the 2014 farm safety programs worked as intended for all crop farms, except cotton. Others cited problems with the Dairy Margin Protection Program. Outlaw dismissed claims by some interest groups that farm payment programs are too lucrative and argued more funding is needed as adverse farm conditions are expected to continue…

“The combination of federal crop insurance and Title I commodity programs has helped the overwhelming majority of US producers stay in business during very difficult times.  While the farmers we met with all expressed a concern for the future, many indicated that there wouldn’t be a future without crop insurance to protect against weather problems, and the ARC and PLC programs to protect against low prices and incomes.”    

Committee Chair Mike Conaway and Ranking Democrat Collin Peterson both called for a different farm bill approach than 2014, deciding program needs first, before proposing budget cuts. Conaway noted real 2014 farm bill savings were $100 billion, not the $23 billion claimed at the time.