February 25, 2017

Farm Bill a Needed Safety Net in Down Cycle

 |  By: Wyatt Bechtel

In a down agriculture market safety nets will be needed more than ever and now is not the time to make cuts to agriculture funding say producers who spoke for a Senate hearing.

On February 23, the U.S. Senate Committee on Agriculture, Nutrition, and Forestry held its first 2018 Farm Bill hearing on the campus of Kansas State University in Manhattan, Kan.

Leading off the discussions was Senator Pat Roberts (R-Kan.), chairman of the committee, who says he will work to make sure his colleagues in the Capitol understand farmers and ranchers are facing major economic differences compared to the 2014 Farm Bill.

“This Farm Bill journey will not be like the last one.  The agriculture sector enjoyed high prices during the last debate.  Now, we face multiple years of low prices, across the board,” Roberts says.

The last farm bill had $6 billion in budget cuts from USDA programs, but it will be difficult to make those types of cuts again in a down agriculture cycle.

While the last farm bill was difficult to get passed it aided approximately 16 million people employed in agriculture and related food industries, says Senator Debbie Stabenow (D-Mich.), ranking member of the committee.

“The process was long and took an unconventional path. We faced a tough budget situation and we had to make hard choices,” Stabenow says.

Currently, the U.S. has a $19 trillion budget deficit and the Trump administration has made plans to cut various program funding for government agencies like the Environmental Protection Agency and the Department of Education.

“All of ag is struggling, not just one or two commodities.  We must write a bill that works across the countryside,” Roberts says.

A panel of Kansas farmers and ranchers spoke at the hearing voicing there areas of concern with the upcoming farm bill.

Safety Net

Kansas Soybean Association president Lucas Heinen, points out commodity prices have dropped approximately 40% since the last farm bill.

A row crop farmer from Everest, Kan., Heinen says the drop in prices “justifies an increase in funding to strengthen the farm safety net and to make other worthwhile investments.”

Echoing those sentiments on maintaining crop insurance in the farm bill was Cameron Pierce, a sunflower, wheat and canola grower from Hutchinson, Kan.

“Having a safety net insures safe and affordable food can be grown in Kansas and across the nation,” Pierce says.

Representing Kansas Farm Bureau’s Young Farmers and Ranchers Committee, Amy France from Wichita County was concerned with having a workable commodity safety net. Crop insurance programs have helped many farm businesses during tough times, including France’s dryland crop farm and cattle ranch.

“Unfortunately, they have been complex, confusing, burdensome, and those are just a few of the words I can use in front of my children,” France says.

France would like to see some people with “hand in the dirt experience” help draft farm policy.

Moscow, Kan. farmer Tom Lahey shared his thought on what the farm bill means to his cotton growing operation, in addition to raising cattle, sorghum and wheat.

“Shortly after the passage of the 2014 Farm Bill cotton prices made a swift decline,” Lahey says.

Cotton has been excluded from programs that protect other crops. Making cotton eligible for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs would be beneficial, Lahey says.

Livestock Concerns

Livestock producers can be directly or indirectly affected by farm bill policy, says David Clawson, Kansas Livestock Association (KLA) president. Clawson operates a ranch, row crop operation and dairy in Western Kansas.

In response to the Grain Inspection, Packers & Stockyards Administration (GIPSA) Farmer Fair Practices interim rules Clawson says, “KLA members oppose involvement of the federal government in determining how cattle are marketed.”

Value based marketing has helped put a premium on quality cattle. The rule has been interpreted to allowing for a single pricing system, regardless of quality, making it more difficult stay profitable.

Third generation farmer Michael Springer from Independence, Kan. raises 85,000 hogs annually and he does not see GIPSA helping the industry.

Springer says Farmer Fair Practices rules “would likely lead to more consolidation in the livestock industry.” This is because it makes it easier to sue packing companies if a farmer thinks they are not getting a “fair” price for their livestock. These lawsuits could lead to increased costs for packers.

“We do not need government intervention in the market because it is working,” Springer says.

Springer is also concerned with the lack of a vaccine bank for foot-and-mouth disease (FMD) in the U.S.

“If this country were to have an FMD outbreak it would not only devastate my farm and the whole livestock industry, but the entire U.S. economy,” Springer says.

A study from Iowa State University estimates if a FMD outbreak were to occur it would shut down meat exports, costing U.S. beef, pork, corn and soybean producers $200 billion over 10 years.

Ongoing immigration reform while not impacted by the farm bill is vital to labor in agriculture particularly for dairies. Linda Foster, a member of the Dairy Farmers of America cooperative runs a 170 cow dairy with her husband and son near Fort Scott, Kan. They recently went to a robotic operation in part because of labor concerns.

“I urge congress to address the needs of a stable and legal workforce,” Foster says.

During the last farm bill the Margin Protection Program (MPP) was added under the guidance of the National Milk Producers Federation, who helped craft the program.

The final version of MPP was cut by 10% in funding from the original proposal. It rendered the program ineffective, Foster says.

“The changes congress made to the original MPP diluted the costs that farmers like me face every day and diluted the effectiveness of that program,” Foster says.

A return of the 10% cut from MPP and a change in the feed formula calculation should help fix the program.

Trade Impacts

All of the panelists also mentioned the importance of trade to their farms and industry segment.

Exports have a huge potential to be successful and create profitability for farmers, says Kansas Corn Commission chairman Kent Moore of Iuka, Kan.

“We need the ability to aggressively pursue trade to sell American grain and American meat around the world,” Moore says.

Moore points out that funding for trade promotion and marketing programs has dropped by about 40% in past few years.

Kent Winter, wheat and sorghum farmer from Mount Hope, Kan., would also like to see increased funding for trade promotion programs.

“Trade by way of exports remains vital for our industry,” Winter says.

Wheat would benefit from improved trade says Ken Wood, a farmer from Dickinson County who serves as president of the Kansas Association of Wheat Growers.

“Increasing trade is one of the easiest and most effective ways to increase commodity prices and improve the rural economy,” Wood says.

Comments, questions and concerns can be shared with the committee for the next five business days by going to www.agriculture.senate.gov and clicking on the Farm Bill Hearing box on the left side of the screen.