Our View: With a Depressed Farm Economy, America’s Agricultural Producers Should Be Able to Count on the Farm Safety Net
“If history is any guide, we know how fleeting the good times are,” warned Rep. Frank Lucas during opening remarks at a hearing on the rural economy three years ago when he was then the chairman of the House Agriculture Committee.
What would become the 2014 Farm Bill was still in the throes of the legislative process, but Chairman Lucas was advising everyone to keep a smattering of perspective as the process was unfolding and while the farm economy was still relatively strong.
“Agriculture is highly cyclical and the agriculture community must be prepared for bad yields, bad prices, and much lower net farm income in the future,” he continued. In other words, forget about what is happening today, and write the farm bill for the bad times that will inevitably come.
Indeed, no sooner had the president signed the new farm bill into law then the farm economy started to collapse.
The U.S. Department of Agriculture (USDA) reported earlier this year that net farm income is expected to drop for the third straight year, which means a decline by more than 50 percent and a 47 percent decline relative to the previous four-year average.
Over the last year, the Kansas City Federal Reserve Bank’s quarterly reports have been highlighting these deteriorating conditions, which they attribute to several years of consecutive low crop prices combined with elevated input costs. In March, they wrote, “The weakening has been relatively gradual over the past few years, but it has been persistent and has intensified in recent months amid mounting financial stress for some agricultural producers.” A few weeks ago, in another report, the bank warned that debt was accumulating due to depressed farm income.
And, just last week, the Federal Reserve Bank of Chicago issued an analysis that shows how farmland values in the Midwest are experiencing the largest quarterly decline in nearly 30 years.
To gain a better sense of the situation and to assess how the new farm law is holding up under pressure, the House Committee on Agriculture has been conducting a series of hearings on the farm economy to examine everything from credit conditions to input costs to food prices and even environmental regulations. Witnesses representing a broad spectrum of the rural economy have offered sobering testimony and reasons why the farm bill is so important.
“The last thing the sector would need at this point is some substantial reduction in the level of federal commitment,”Zippy Duvall, the new president of the American Farm Bureau Federation, told committee members.
Yet, this mountain of evidence is never enough for perennial critics like the Environmental Working Group (EWG) and the American Enterprise Institute (AEI) who continue to perpetuate dishonest tales about the cost, mechanics, and purpose of farm policy.
Later today, they will host a joint briefing with some Congressional staff to discuss “the real state of the U.S. farm economy” and somehow try to spin depressed commodity prices and falling farmland values into political and profitable gain for their respective organizations.
In a promotional email obtained by Farm Policy Facts, they tease that they will have the “full story” rather than “the one-sided perspective that has been promoted in the House Ag Committee hearings.”
It is uncertain what kind of perspective they could possibly offer having devoted years to attacking the livelihoods of farmers for profit, but as the House Agriculture Committee Chairman K. Michael Conaway stated recently, these groups “live in a fantasy land where markets are fully functioning, foreign countries play by the rules, and the weather always cooperates. Unfortunately, our farmers and ranchers must operate in the real world, and it is in our nation’s best interest to continue providing them with the risk management tools they need to continue feeding and clothing our nation.”
Farmers like to call themselves the eternal optimists, but these real world conditions that Chairman Conaway and others have described have provided plenty of reasons to keep them up at night. The ability to count on farm policy to get them through a tough year or more shouldn’t be one of them.