Ag subcomittee holds hearing focused on farm economy

Ag subcomittee holds hearing focused on farm economy

Members of Congress ask what they can do to help farmers facing downturn in the farm economy.

Updated to add comments from Roger Johnson, Joe Outlaw and Rob Johansson.

The House Agriculture Committee Subcommittee on General Farm Commodities and Risk Management held the first in a series of hearings April 14 focused on the farm economy.

“Today, the economic conditions we face in farm and ranch country are fundamentally different than the conditions we faced when we crafted the 2014 farm bill,” said Rep. Rick Crawford, R-Arkansas, subcommittee chairman in his opening statement. “In just three years, net farm income has fallen by 56%. You would need to go back to the start of the Great Depression to find a comparable collapse in net farm income.”

The House Subcommittee on General Farm Commodities and Risk Management held a hearing, Focus on the Farm Economy: Growing Farm Financial Pressure, on Thursday, April 14. (Photo: Zoonar O Kovach/Thinkstock)

Real farm incomes are at a 20-plus year low, added Rep. Tim Walz, D-Minnesota, ranking member on the subcommittee, in his opening statement.

Testifying before the committee were American Farm Bureau president Zippy Duvall, National Farmers Union president Roger Johnson, Rob Johansson, USDA chief economist, and Joe Outlaw, professor, extension economist and co-director of the Agricultural and Food Policy Center at Texas A&M.

“Just as you all are doing by holding this hearing, farmers and ranchers are asking how the outlook for the agricultural economy got here after so many years of good prices and higher than normal farm income figures,” Duvall said in his prepared testimony.

Related: Be prepared for the 'reset of the ag economy'

It’s an old story, Duvall said, as “the cure for high prices is high prices.” Farmers and ranchers boosted production to take advantage of strong prices.

“As our economists have warned over the years, once demand stops growing and the inherent delay in those signals reaching farmers and ranchers is realized, agriculture experiences a period of effectively producing the profit out of the system,” Duvall said.

Johansson said it’s likely producers will need to cut back in 2016. Some may rely on cash reserves from the good years. Others may increase their loans, cut input costs or increase their reliance upon government farm programs.

“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,” he said.

Outlaw referenced more than 30 years of data collection from farmers in his remarks, saying both federal crop insurance and Title 1 of the farm bill are important and the situation in farm country would be worst without them.

“In my opinion,” he said, “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.”

Cotton

Johnson said several Title One programs should be reviewed by the committee, including the Stacked Income Protection Plan.

“The current economic situation for cotton is anemic and is threatening to cause long-term and potentially irreversible damage to the industry and the associated infrastructure,” he said. “The infrastructure for the U.S. cotton industry (gins, warehouses, market co-ops and merchants, and cottonseed crushers and merchandizers) will continue to shrink unless there is a stabilizing policy for cotton to help sustain the industry is periods of low prices.”

Cotton futures are trading in the 55- to 60-cent range, the lowest levels since 2009, Johnson said.

China is paying its farmers $1.40 a pound for cotton, said Rep. Mike Bost, R-Illinois, while U.S. farmers are receiving less than 60 cents a pound for far superior cotton. In his district, 80% of the cotton is exported.

“Why can’t we demand that we get a fair price for our cotton?” he asked.

Related: Ag secretary seeks ways to help cotton growers

WOTUS

Rep. David Scott, D-Georgia, said over regulation of farmers is an issue and said the EPA’s Waters of the U.S. rule is terrible.

“There comes a time when farmers have to stand up and fight back,” he said. “The EPA is totally wrong on this. We can make a stand in the courts, at least a judge can give the farmers a stay until this administration is gone and then we have another chance, a new day with a new administration that can come in and treat the farmers and the agriculture industry with the respect they deserve.”

Related: President vetoes WOTUS disapproval bill

Bright spots

Johnson said the organic and local foods sectors continue to grow, with 21,781 certified organic operations in the United States. The number of certified organic operations in the U.S. increased by nearly 12% from 2014 to 2015 and nearly 300% since 2002.

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