[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
FINANCIAL CONDITIONS IN FARM COUNTRY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JULY 23, 2024
__________
Serial No. 118-23
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
57-258 PDF WASHINGTON : 2024
COMMITTEE ON AGRICULTURE
GLENN THOMPSON, Pennsylvania, Chairman
FRANK D. LUCAS, Oklahoma DAVID SCOTT, Georgia, Ranking
AUSTIN SCOTT, Georgia, Vice Minority Member
Chairman JIM COSTA, California
ERIC A. ``RICK'' CRAWFORD, Arkansas JAMES P. McGOVERN, Massachusetts
SCOTT DesJARLAIS, Tennessee ALMA S. ADAMS, North Carolina
DOUG LaMALFA, California ABIGAIL DAVIS SPANBERGER, Virginia
DAVID ROUZER, North Carolina JAHANA HAYES, Connecticut
TRENT KELLY, Mississippi SHONTEL M. BROWN, Ohio
DON BACON, Nebraska SHARICE DAVIDS, Kansas
MIKE BOST, Illinois ELISSA SLOTKIN, Michigan
DUSTY JOHNSON, South Dakota YADIRA CARAVEO, Colorado
JAMES R. BAIRD, Indiana ANDREA SALINAS, Oregon
TRACEY MANN, Kansas MARIE GLUESENKAMP PEREZ,
RANDY FEENSTRA, Iowa Washington
MARY E. MILLER, Illinois DONALD G. DAVIS, North Carolina,
BARRY MOORE, Alabama Vice Ranking Minority Member
KAT CAMMACK, Florida JILL N. TOKUDA, Hawaii
BRAD FINSTAD, Minnesota NIKKI BUDZINSKI, Illinois
JOHN W. ROSE, Tennessee ERIC SORENSEN, Illinois
RONNY JACKSON, Texas GABE VASQUEZ, New Mexico
MARCUS J. MOLINARO, New York JASMINE CROCKETT, Texas
MONICA De La CRUZ, Texas JONATHAN L. JACKSON, Illinois
NICHOLAS A. LANGWORTHY, New York GREG CASAR, Texas
JOHN S. DUARTE, California CHELLIE PINGREE, Maine
ZACHARY NUNN, Iowa SALUD O. CARBAJAL, California
MARK ALFORD, Missouri ANGIE CRAIG, Minnesota
DERRICK VAN ORDEN, Wisconsin DARREN SOTO, Florida
LORI CHAVEZ-DeREMER, Oregon SANFORD D. BISHOP, Jr., Georgia
MAX L. MILLER, Ohio
______
Parish Braden, Staff Director
Anne Simmons, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
Crockett, Hon. Jasmine, a Representative in Congress from Texas,
submitted report excerpt....................................... 79
Scott, Hon. Austin, a Representative in Congress from Georgia,
submitted article.............................................. 77
Scott, Hon. David, a Representative in Congress from Georgia,
opening statement.............................................. 4
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 1
Prepared statement........................................... 3
Submitted letter on behalf of Todd Van Hoose, President and
Chief Executive Officer, Farm Credit Council............... 77
Witnesses
Allen-Tully, Ph.D., Dana, President, Minnesota Corn Growers,
Eyota, MN...................................................... 7
Prepared statement........................................... 8
Dunlow, David, Chairman, American Cotton Producers; Producer
Director, National Cotton Council, Henrico, NC................. 12
Prepared statement........................................... 13
Hotchkiss, Anthony ``Tony'' W., Chairman, Agriculture and Rural
Bankers Committee, American Banking Association, Evansville, IN 16
Prepared statement........................................... 18
Caldwell, Joseph ``Joey'' G., Senior Vice President for Retail,
GreenPoint Ag Holdings, LLC; Board Member, Agricultural
Retailers Association, Decatur, AL............................. 23
Prepared statement........................................... 25
Rainey, Ph.D., Ronald, Assistant Vice President, Professor,
Division of Agriculture; Director, Southern Risk Management
Education Center, University of Arkansas, Little Rock, AR...... 27
Prepared statement........................................... 28
Submitted question........................................... 99
FINANCIAL CONDITIONS IN FARM COUNTRY
----------
TUESDAY, JULY 23, 2024
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 10:00 a.m., in Room
1300 of the Longworth House Office Building, Hon. Glenn
Thompson [Chairman of the Committee] presiding.
Members present: Thompson, Lucas, Austin Scott of Georgia,
LaMalfa, Rouzer, Bacon, Bost, Johnson, Baird, Mann, Feenstra,
Miller of Illinois, Moore, Finstad, Rose, De La Cruz, Duarte,
Nunn, Alford, Chavez-DeRemer, Miller of Ohio, David Scott of
Georgia, Costa, McGovern, Adams, Spanberger, Hayes, Brown,
Davids of Kansas, Slotkin, Salinas, Davis of North Carolina,
Budzinski, Sorensen, Crockett, Jackson of Illinois, Carbajal,
Craig, Soto, and Bishop.
Staff present: Tim Fitzgerald, Harlea Hoelscher, Patricia
Straughn, Trevor White, John Konya, Kate Fink, Clark Ogilvie,
Emily Pliscott, Ashley Smith, and Dana Sandman.
OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA
The Chairman. The Committee will now come to order. Good
morning, and thank you for joining today's hearing entitled,
Financial Conditions in Farm Country. After brief opening
remarks, Members will receive testimony from our witnesses
today, and then the hearing will be open to questions. So let
me take the liberty of my opening statement.
Good morning, everyone. I would like to welcome you all
today to today's hearing on the state of the farm economy. I
would like to extend a special welcome and thanks to our
witnesses. The panel that we have convened will share their
insights and personal experiences on the deteriorating
financial conditions facing producers in the agricultural
supply chain.
Agriculture is not just an industry; it is the backbone of
our economy and a cornerstone of our national security.
American farmers, ranchers, and the supply chain they rely on
work together tirelessly to feed and clothe our nation and the
world, while providing more than 48 million jobs.
Despite their resilience and ingenuity, the unprecedented
challenges facing the entire agriculture sector threaten to
ignite another farm financial crisis. Declining prices in cash
receipts, escalating natural disasters, and increasing input
costs have created a perfect storm that will compromise the
foundation of our agriculture economy.
We are living through the largest 2 year decline in farm
income in history. At the end of 2024, total farm sector debt
will be the highest the United States has seen at least since
1970. Most farmers and ranchers, including those here today
with us, are likely to be worse off financially by year's end.
Unfortunately, the farm safety net that is meant to provide
our farmers and ranchers with stability during these times has
not seen significant investment since 2002. In fact, the
resources dedicated to the total farm safety net have declined
30 percent over the past 22 years. The Commodity Title alone
has seen an 81 percent reduction in spending power during that
same time. Simply put, the lack of support for those that feed
the world is unacceptable.
That is why this Committee listened to the communities
across the country and passed the bipartisan Farm, Food, and
National Security Act of 2024 (H.R. 8467) 2 months ago. It
represents the largest permanent investment in the farm safety
net, conservation, trade promotion, specialty crops, research,
and livestock biosecurity in more than 2 decades. It will give
renewed strength to the farm safety net just when producers
need it most.
There are a few pundits that have taken the last few months
to spread misinformation about this Committee's bipartisan
product in an attempt to sow division. Now, let me be clear.
This is a farm bill that provides significant improvement for
all producers. The legislation was drafted under the principle
that we would deliver what America's producers need, no more
and certainly no less. As a result, it looks different from
state to state and from farm to farm. The policy changes this
Committee made were targeted to provide the greatest return on
investment possible so that all producers will be better off.
The bill passed out of this Committee is an investment in the
future, not a venue for empty relitigating of fights from the
past.
But if folks do want to discuss the past, here are the
facts. The 2002 Farm Bill was the last farm bill to invest in
the commodity programs. The Democrat-led 2008 Farm Bill, not
this current Committee, cut money out of the crop insurance
while investing in conservation and nutrition programs. Because
of a deficit reduction exercise, the 2014 Farm Bill saw
commodity programs cut by over 30 percent while conservation
and nutrition were left relatively unscathed.
Finally, since the enactment of the 2018 Farm Bill,
Democrats in Congress unilaterally added billions to climate
and conservation programs, and the current Administration added
\1/4\ of $1 trillion to the nutrition programs, all while
ignoring the farm safety net. The romanticized Farm Bill
Coalition often talked about is a one-sided partisan talking
point.
Producers are constantly reminded of hundreds of billions
of dollars of SNAP and climate spending and reprimanded when
they seek any level of parity. Now, I will not apologize for
advancing a bill that seeks to put the farm back into farm
bill. I also won't apologize for advancing a bill that was
written by every Member of this Committee, 40 provisions that
were put into this that were just led by my Democratic
colleagues and friends, and I don't put things in legislation
just to kind of buy a vote. I put it in there because it was
great legislation. It helped to put the farm back into farm
bill, 140 provisions that were led in a bipartisan way, at
least one Democrat, one Republican, so a strong bipartisan bill
that puts the farm back into farm bill.
Now, I am tired of the politics and the gamesmanship, and I
know folks out in the countryside are, too. Unfortunately,
through this process, I have been saddled with a meddling
Senate Democrat and others who do not seem to appreciate the
dire circumstances in farm country. As recently as last week,
House Agriculture Committee Democrats expressed a preference to
see a bill fail before engaging. So I will say this again. If
there are Members on the other side of the aisle who truly want
to see a farm bill come to fruition this year, my door remains
open to renegotiation from any partner willing to come to the
table with a serious proposal and not more redlines.
For those who believe that the only path forward with the
time we have remaining in this Congress is an informal pre-
conference negotiation with the Senate, that is not my
preferred option, but it is one I am willing to entertain.
However, I cannot reconcile, nor negotiate a bipartisan 900
page bill with a partisan 90 page summary. For that to be
viable, Chairwoman Stabenow needs to unveil her bill text.
I hope that after listening to our guests today, everyone
in this room and watching across the country will understand
the urgency by which we must act. For the first time in a long
time, this Committee has a chance to be proactive instead of
reactive to prevent disaster for our producers rather than
picking up the pieces afterwards with ineffective and
inefficient ad hoc support and to establish a foundation for
the future of the farm economy. Let's not waste that
opportunity.
[The prepared statement of Mr. Thompson follows:]
Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Good morning. I'd like to welcome you all to today's hearing on the
state of the farm economy. I would like to extend a special welcome and
thanks to our witnesses. The panel we've convened will share their
insights and personal experiences on the deteriorating financial
conditions facing producers and the agricultural supply chain.
Agriculture is not just an industry; it is the backbone of our
economy and a cornerstone of our national security. American farmers,
ranchers, and the supply chain they rely on work together tirelessly to
feed and clothe our nation and the world while providing more than 48
million jobs.
Despite their resilience and ingenuity, the unprecedented
challenges facing the entire agricultural sector threaten to ignite
another farm financial crisis. Declining prices and cash receipts,
escalating natural disasters, and increasing input costs have created a
perfect storm that will compromise the foundation of our agricultural
economy. We are living through the largest 2 year decline in farm
income in history. At the end of 2024, total farm sector debt will be
the highest the U.S. has seen since at least 1970. Most farmers and
ranchers, including those here with us today, are likely to be worse
off financially by years' end.
Unfortunately, the farm safety net that is meant to provide our
farmers and ranchers with stability during these times has not seen
significant investment since 2002.
In fact, the resources dedicated to the total farm safety net have
declined 30 percent over the last 22 years. The commodity title alone
has seen an 81 percent reduction in spending power during that same
time.
Simply put, the lack of support for those that feed the world is
unacceptable.
That's why this Committee listened to communities across the
country, and passed the bipartisan Farm, Food and National Security Act
of 2024 2 months ago. It represents the largest permanent investment in
the farm safety net, conservation, trade promotion, specialty crops,
research, and livestock biosecurity in more than 2 decades. It will
give renewed strength to the farm safety net just when producers need
it most.
There are a few pundits that have taken the last few months to
spread misinformation about this Committee's bipartisan product in an
attempt to sow division. Let me be clear; this is a farm bill that
provides significant improvements for all producers. The legislation
was drafted under the principle that we would deliver what America's
producers need; no more, and certainly, no less. As a result, it looks
different from state to state and from farm to farm. The policy changes
this Committee made were targeted to provide the greatest return on
investment possible so that all producers will be better off. The bill
passed out of this Committee is an investment in the future, not a
venue for empty relitigating of fights from the past.
But if folks do want to discuss the past, here are the facts: the
2002 Farm Bill was the last farm bill to invest in commodity programs.
The Democrat led 2008 Farm Bill cut money out of crop insurance while
investing in conservation and nutrition programs. Because of a deficit
reduction exercise, the 2014 Farm Bill saw commodity programs cut by
over 30 percent, while conservation and nutrition were left relatively
unscathed. Finally, since the enactment of the 2018 Farm Bill,
Democrats in Congress unilaterally added billions to climate and
conservation programs, and the current Administration added \1/4\ of $1
trillion to nutrition programs, all while ignoring the farm safety net.
The romanticized ``farm bill coalition'' often talked about is a one-
sided, partisan talking point. Producers are constantly reminded of
hundreds of billions of dollars of SNAP and climate spending, and
reprimanded when they seek any level of parity.
I will not apologize for advancing a bill that seeks to put the
farm back in the farm bill.
I am tired of the politics and gamesmanship, and I know folks out
in the countryside are, too.
Unfortunately, throughout this process I have been saddled with a
meddling Senate Democrat and others who do not seem to appreciate the
dire circumstances in farm country. As recently as last week, House
Agriculture Committee Democrats expressed a preference to see a bill
fail before engaging. So, I will say again: if there are Members on the
other side of the aisle that truly want to see a farm bill come to
fruition this year, my door remains open to negotiation from any
partner willing to come to the table with a serious proposal, not more
red lines.
And for those who believe the only path forward with the time we
have remaining in this Congress is an informal pre-conference
negotiation with the Senate, that is not my preferred option, but it is
one I am willing to entertain. However, I cannot reconcile nor
negotiate a bipartisan 900 page bill with a partisan 90 page summary.
For that to be viable, Chairwoman Stabenow needs to unveil her bill
text.
I hope that after listening to our guests today everyone in this
room and watching across the country will understand the urgency by
which we must act. For the first time in a long time, this Committee
has the chance to be proactive instead of reactive, to prevent disaster
for our producers rather than picking up the pieces afterward with
ineffective and inefficient ad hoc support, and to establish a
foundation for the future of the farm economy. Let's not waste that
opportunity.
With that I yield to the Ranking Member.
The Chairman. And with that, I would now like to welcome my
good friend, the distinguished Ranking Member, the gentleman
from Georgia, Mr. Scott, for any opening remarks he would like
to give.
OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
Mr. David Scott of Georgia. And thank you, Mr. Chairman,
and it is good to see you and be with everyone this morning.
Ladies and gentlemen, our hearing today is focused on farm
financial conditions and the well being of our farmers and the
health of our rural communities. Over the past few years, we
have heard the cry for a stronger farm safety net, and here is
why. Commodity prices are not keeping up with higher input and
credit costs. That is where we are and why we need to really
address this issue to help our farmers.
It is clear that we need to come together, Republicans and
Democrats, on a farm bill that strengthens the farm safety net,
and we are going to do it together. I remain committed to
enacting a truly bipartisan farm bill this Congress that
enhances the safety net for our farmers and protects the safety
net for hungry families as well.
Our challenge remains today what it was before. How do we
pay for what we need to be done in the farm bill? I remain
concerned that the pending 2024 Farm Bill eliminates USDA's
ability to use CCC funds to help insulate and protect our
farmers from market shocks. Ladies and gentlemen, in 2020,
then-Agriculture Secretary Sonny Perdue, my good friend who I
served with in the Georgia State Senate as State Senators,
Secretary Perdue used approximately $23 billion in CCC funds
for the Coronavirus Food Assistance Program, and this helped
our farmers survive lower prices that were rising as a result
of COVID-19. We didn't restrict the CCC when my friend Sonny
Perdue was Agriculture Secretary, and we must not do it now for
the same reason.
In 2018 and 2019, Sonny Perdue used the CCC for the Market
Facilitation Program, which distributed $23 billion in payments
to eligible farmers to help offset losses from the Trump trade
war. And while Secretary Perdue's trade program had many
faults, the ability of USDA to help farmers stay afloat was
essential. We will hear more about this from our witnesses
later today.
And I also want to call to everyone's mind that both former
President Donald Trump and his partner, Senator J.D. Vance,
have promised even more tariffs and trade wars. They have said
so. The Republican Party even enshrined this in their official
party platform last week. So let's be real. There is no way we
got the farmers' best interest at heart if we are going to
remove the CCC helping hand when our contenders for the
Presidency on the Republican side have already said they would
do a trade war.
American farmers bore the brunt of the trade war the last
time, and they would be hard hit again if Republicans pursue an
economic agenda that will undermine the stability of the
American commodity prices and lead to a retaliatory tariff war.
The prospect of a new trade war while eliminating the
Secretary's CCC authority, the only tool that kept family
farmers afloat, is nearsighted and it is dangerous.
Bottom line, if we want to get a farm bill done this year,
as these witnesses who are before us want, we have to find a
different way to pay for it without locking away this important
tool for 5 years. We have to have the CCC.
I am sincere in my offer to you, Mr. Chairman, my friend,
to work on a bipartisan basis to find an acceptable improvement
to the bill and to bring it to the floor. Time is marching on,
as I pointed out in our last hearing. We are in a desperate
time situation. I look forward to working with you and the
Committee, and Democrats on my side look forward to working
together. There is nothing we want more than a good bipartisan
bill.
I look forward to hearing from our distinguished panel
today as they share their work in addressing the current
financial situation of our farmers across our nation. Thank
you, Mr. Chairman.
The Chairman. I thank the gentleman.
The chair would request that other Members submit their
opening statements for the record so that our witnesses can
begin their testimony and to ensure that there is ample time
for questions.
To introduce our first witness today, I am pleased to yield
to the gentleman from Minnesota, Mr. Finstad.
Mr. Finstad. Thank you, Mr. Chairman.
Mr. Chairman, Members, it is an honor for me today to
welcome my friend and constituent of southern Minnesota to the
Committee today, Dr. Dana Allen-Tully. Dana is a great example
of southern Minnesota values. She serves as President of the
Minnesota Corn Growers Association, where she advocates on
behalf of 7,000 farm families, including mine. She has
dedicated her career to agriculture as a leading voice for
farmers in Minnesota and across this country. As long as I have
known Dana, she has always said yes to every opportunity to
give back to her community.
Dana and her family own and manage a diversified family
farm near Eyota, Minnesota, where she raises dairy and produces
corn, soybeans, alfalfa, alongside her parents, brother, and
husband Jim, who is with us here today.
Dana is a product of the University of Minnesota. Go
Gophers. That is where I met Dana years ago. She received her
undergraduate education there, as well as a doctorate in
ruminant nutrition with a focus on dairy, one of the smartest
people that I had the honor to go to school with.
Dana, thank you for joining us here today. We look forward
to hearing your testimony about the issues affecting corn
growers and the overall farm economy.
And, Mr. Chairman, with that, I yield back.
The Chairman. I thank the gentleman.
Now, to introduce our second witness, I am pleased to yield
to the gentleman from North Carolina, Mr. Rouzer.
Mr. Rouzer. Thank you, Mr. Chairman.
It is my pleasure and honor to introduce Mr. David Dunlow,
who I have known for a long, long time, and a great farmer in
North Carolina, big in cotton, peanuts, and everything else. He
is an incredible farmer and been a great advocate for the
industry for many, many years. Great to have you here.
The Chairman. I thank the gentleman.
Our third witness today is Mr. Tony Hotchkiss, the Chairman
of the Agriculture and Rural Bankers Committee for the American
Banking Association. Welcome.
Our fourth witness today is Mr. Joey Caldwell, who is the
Senior Vice President for retail for GreenPoint Ag Holdings,
LLC. Welcome as well.
And our fifth and final witness today is Dr. Ronald Rainey,
who is the Assistant Vice President, Professor, and Center
Director for the University of Arkansas Division of
Agriculture.
To all of our witnesses today, thank you for joining us
today. You each have 5 minutes. The timer in front of you will
count down to zero, at which point your time has expired. Dr.
Allen-Tully, please begin when you are ready.
STATEMENT OF DANA ALLEN-TULLY, Ph.D., PRESIDENT, MINNESOTA CORN
GROWERS, EYOTA, MN
Dr. Allen-Tully. Chairman Thompson, Ranking Member Scott,
Committee Members, thank you for inviting me to testify. My
name is Dana Allen-Tully, and my family and I operate a
diversified family farm near Eyota, Minnesota, where we produce
dairy, corn, soybeans, alfalfa, and vegetables. I also serve as
President of the Minnesota Corn Growers, representing thousands
of farm families.
I would like to begin by thanking each of you for serving
on this Committee and for the work you do on behalf of farm and
ranch families, rural communities, and all people who are
helped by the farm bill.
I don't want to be discouraging this morning, but it is
important to provide a glimpse at today's economic picture for
agriculture. Unless conditions change, we are facing a perfect
storm, though I don't think it will be fully understood until
early next year when farmers are unable to secure loans because
they can't cash-flow. Plummeting crop prices, high cost of
production, doubling interest rates, natural disasters, and
tightening credit are some of the key culprits.
Working capital is fast depleting. John Deere's layoff of
thousands of workers is a canary in the coal mine. A farm bill
extension will not stop the hemorrhaging. Even a new farm bill
with a strong safety net may not be timely or sufficient,
though I pray Congress passes a farm bill this year because it
will help in the long run. In the near-term, Senator Heinrich
has said that Congress must pass a disaster supplemental as
soon as possible. If things don't turn around, a supplemental
may be needed to address production and economic losses.
USDA says farm income will fall sharply this year. In the
biggest year-to-year drop on record, net farm income will fall
$43 billion, or 27 percent, after falling 19 percent from 2022
to 2023. Since 2022, net farm income has fallen 40 percent, the
largest 2 year drop on record. The national average corn yield
a farm would have to make this year to break even is 219
bushels per acre, 27 percent higher than the 10 year average,
and for soybeans, it is 56 bushels, or 12 percent higher.
This is true across all commodities. We are all facing
losses of more than $150 per acre. The University of Minnesota
puts our losses at $233 per acre. Bottom line, farm and ranch
families need help.
What can you do? Putting aside other issues, the Commodity
Title and crop insurance provision in the House farm bill are
excellent and would go a long way in helping all farm families,
regions, and commodities. The PLC/ARC reference price
represents a 40 increase and, along with the reference price
escalator, should help carry us through to better times. It
also makes key improvements to ARC, updates pay limits, and
helps to ensure eligibility rules don't lock family farms out
of the safety net.
My family members and I work on the farm, but we want to
make sure our farm continues after us, so we recruited a couple
of young great farmers, beginning farmers who work with us. We
regard them as family, and we hope the farm bill will ensure
farm families like ours are not penalized. If the Senate
committee can produce a bipartisan bill very soon with the same
safety net provisions, Congress will be well-positioned to pass
a farm bill farmers can count on.
Second, urge USDA to resume ERP payments for 2022. Two
years is a long time to wait.
And third, watch the farm economy over the coming months,
and if that perfect storm keeps developing, consider a disaster
supplemental covering production and economic losses. In
Minnesota, we have had a lot of flooding. In other parts there
is severe drought. And all producers are facing economic losses
because prices don't cover our costs.
During the 1980s farm financial crisis, a lot of farms and
main street businesses were lost. Help came but it was too
late. The next big crisis began in 1998. Congress took
immediate action and prevented devastation, showing an ounce of
prevention is worth a pound of cure.
Beyond the farm bill, there are lots of other issues
impacting producers. We have a record trade deficit of $32
billion. The U.S. used to always run a surplus. We need new
trade agreements to open up foreign markets. We should not cede
world markets to countries with poor environmental and labor
standards, especially to our adversaries. We need to promote
biofuels like ethanol, which are good for the environment,
jobs, and family pocketbooks.
Rules implementing sustainable aviation fuel tax credits,
CAFE standards, and other flawed regulations are locking out
American farm families from offering proven solutions while
extending these opportunities to Brazil and China.
I will close with this thought. We are experiencing
unprecedented rates of hunger. American farm and ranch families
are the solution to this crisis. A USDA official told us by
2050 there will be ten billion people on the planet. He also
added that we will need to plow up all of the world's forest
land to feed everyone. That sounds ominous, but we have been
here before. In the 1970s, we faced the same grim news, but an
Iowa farm kid named Dr. Norman Borlaug, whose statue is in the
Capitol Rotunda, said America's producers got this and we did.
Secretary Vilsack honored Dr. Borlaug for saving billions
of lives and millions of acres of pristine forest land. We can
do it again, but we need good policies to help us. We put
everything on the line for a thin and often negative margin.
Young people aren't going into farming, and that is why the
average age of farmers is nearing 60.
Farmers love their kids, as all parents do, and no parent
wants their kids to go through life facing constant worry. We
need full-time farm and ranch families. We also need Washington
to make the right decisions to help producers defeat hunger
both at home and abroad.
Thank you for the opportunity to testify.
[The prepared statement of Dr. Allen-Tully follows:]
Prepared Statement of Dana Allen-Tully, Ph.D., President, Minnesota
Corn Growers, Eyota, MN
Chairman Thompson, Ranking Member Scott, and Members of the
Committee, thank you for inviting me to testify before you today.
My name is Dana Allen-Tully and my family and I own and operate a
diversified family farm near Eyota, Minnesota where we produce dairy,
corn, soybeans, and alfalfa. I also have the honor of serving as the
President of the Minnesota Corn Growers Association, representing about
7,000 farm families across the state.
I'd like to begin by thanking each of the Members of this Committee
for making the decision to serve on the Agriculture Committee and for
the work that you do every day to promote our nation's farm and ranch
families, our rural communities throughout the country, and all the
people and places positively impacted by the farm bill and the many
other policies under your jurisdiction. Thank you.
Earlier this month, a national news outlet afforded me the
opportunity to explain to its readers why passing a stronger farm bill
this year is so important to farm families like ours. My aim here this
morning is not to discourage you, but I do feel it's important to
provide a glimpse into the economic landscape that producers are facing
right now. Unless conditions change, I believe we're heading into a
perfect storm, a storm that I don't think will be fully appreciated
until early next year when farmers try to get loans but are unable to
do so because they cannot demonstrate the ability to cash flow.
There are a myriad of factors contributing to this situation,
including plummeting crop prices, very high costs of production,
interest rates that have doubled, natural disasters for so many around
the country, and tightening credit. Our working capital is fast being
depleted. Recent analyses by both the Federal Reserve Bank and the Farm
Bureau point to the trouble that is brewing in farm country. And the
recent lay-offs of a thousand workers by John Deere is a canary in the
coal mine.
An extension of the current farm bill will not head off the
economic hemorrhaging that is coming. Unfortunately, even a new farm
bill with a strengthened safety net may not be timely or sufficient to
address the current situation, though this Congress certainly should
pass a strong, new farm bill because it would help address the problems
over the long term. These economic conditions along with natural
disasters may well have been what prompted Senator Martin Heinrich to
declare a couple of weeks ago that Congress ``must pass a disaster
supplemental as soon as possible''.
Recent USDA estimates project that farm income will drastically
fall again this year. In fact, from last year to this year, the decline
will mark the biggest year-to-year drop ever recorded. Adjusted for
inflation, net farm income this year will be down $43 billion, or 27
percent compared to last year, and this comes after a nearly 19 percent
drop from 2022 to 2023. All said, net farm income from 2022 to 2024
will have fallen by 40 percent, which is the single largest 2 year drop
on record.
This helps explain why Purdue University's July Ag Economy
Barometer found farmer sentiment sharply declining as farm families are
left to wonder how they are going to make ends meet. It also helps
explain the increased mental health issues and even suicides we are
facing in rural America.
To provide a little more color to the economic situation, consider
this: The national average corn yield that a farm family would have to
make this year just to break even is 219 bushels per acre--which is 27
percent higher than the past 10 year average. For soybeans, it's 56
bushels per acre--or 12 percent higher than the past 10 year average.
This is true across the spectrum of commodities grown in every region
of the country, whether it's wheat, sorghum, peanuts, rice, cotton, and
so on.
We're all looking at average losses of more than $150 per acre if
crop prices remain at current levels. For Minnesota farmers, the loss
per acre is actually projected to be even higher this year.
UM FINBIN Estimates
2024 Estimates
Input Costs................................................ $625
Cash Rent.................................................. $275
Overhead Expense........................................... $125
Total Cost................................................. $1,025
Current Corn Price......................................... $4
Yield Needed to Cover Costs................................ 256
10 Year Average Yield...................................... 198
Average Expected Loss per Acre............................. 8$2330
University of Minnesota Farm Financial Management Data Base.
So, I know this is a bit sobering but the truth is, our farm and
ranch families across the country are going to need help. The good news
in all of this is that this Committee and Congress are uniquely
positioned to offer a hand.
What specifically can you do?
First, putting aside whatever other issues may divide you, the
Commodity Title and Crop Insurance provisions included in the farm bill
this Committee passed are excellent and would go a long, long way in
helping producers around the country, including in states like
Minnesota. The Commodity Title in the House farm bill in particular
provides a meaningful safety net and it's my sincere hope that it makes
the final cut in whatever Congress sends to the President's desk for
signature.
The $4.10 PLC/ARC reference price is well below what we requested
based on costs of production but it represents a 40 per bushel
increase and, along with the reference price escalator, it should help
carry us through to better times, at least in the long run. It also
improves the revenue thresholds for ARC, and with the increased trigger
to 90% of the previous 5 year average, we see a very tangible and
significant increase in support ahead. This is especially important now
given current conditions.
Corn Cost of Production vs. Price
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
I also greatly appreciate your work to update pay limits and AGI
and to ensure that eligibility requirements do not lock out farm
families likes ours from a safety net. Although my parents, brother,
husband, and I all work on our farm, we needed help and so we've found
a couple of terrific beginning young farmers to join us. They're not
technically our family but we certainly regard them as family and we
hope that the farm bill will always ensure that farm families like ours
are not penalized. If Congress and USDA want beginning young farmers,
allowing these kinds of apprenticeships are vitally important.
Please strongly support these provisions and principles in the next
farm bill because this Committee did a great job in responding to the
needs of all producers, all regions, and all commodities, especially in
the face of tight budget constraints. Thank you. If the Senate
Committee could arrive at a bipartisan bill sometime yet this month,
perhaps that could diffuse the more controversial issues and put the
wind at the sails of getting a new farm bill done this year. We have to
work for this, we have to hope for this--necessity is the mother of
invention.
Second, urge USDA to resume making ERP payments for 2022. In
Minnesota, we did pretty well in 2022 in terms of a crop but we did
have pockets of losses. Two years is a long time to wait for relief--
it's time to get those payments to farm families in need.
And, third, as I mentioned earlier, Senator Heinrich has called on
Congress to pass a disaster supplemental. In Minnesota, we've had lots
of flooding and lots of production losses this year. I know in other
parts of the country, it's just the opposite where drought continues to
grip them. But, across the country, it's the same in terms of economic
losses: the prices we are receiving for what we produce simply cannot
cover our costs, and this is especially true in areas hit by natural
disasters. It's also particularly true for those who rent land, and for
young and beginning farmers. Even if you were able to pass a new farm
bill this year that included the exceptional Commodity Title you wrote,
because support for crop year 2025 will not be provided until October
of 2026, for many the help may well come too late. So, please watch
agriculture's economic conditions closely in the coming months and if
things do not turn around, please consider a supplemental with near-
term assistance for production and economic losses alongside enacting
the farm bill.
I would just add that while I was a little too young to remember
the 1980s farm financial crisis, I heard a lot about it from my mom and
dad and from my grandparents. A lot of farms went under during those
years and a lot of store fronts on main streets shuttered because of
it. Even the big cities felt the negative economic impacts, especially
cities like Minneapolis and Chicago. Help eventually came but it was
too late.
I am old enough to remember the next big crisis in farm country
which began in 1998--corn prices fell below $1. In that instance,
Congress stepped in and took action. Not only did you see producers
through to better times but the positive impact you had on agriculture
and main street helped offset the economic impacts that the crisis
hitting the manufacturing sector was having at the time. So, an ounce
of prevention is certainly worth a pound of cure based on this
experience.
Beyond the need to shore up the farm safety net over the short and
long term, there is a whole host of issues impacting your farm and
ranch families that I'd like to talk with you about more. For example,
we have a record trade deficit of $32 billion this year. Historically,
U.S. agriculture always had a trade surplus. We need to turn this
situation around by starting to negotiate new agreements that will open
up foreign markets to U.S. agricultural goods. We can't afford to cede
world food needs around the world to other countries with poor
environmental and labor standards which are also often our enemies on
the global stage.
Over the course of my lifetime, I've also been excited as a girl
growing up on the farm, thinking about all the good we can do producing
biofuels like ethanol--and we are doing a lot of good for the
environment, for jobs, and for family pocket books. But unfortunately,
rules implementing Sustainable Aviation Fuel tax credits, new CAFE
standards, and other flawed regulations are wrongly locking farm
families like mine from providing proven solutions.
As just two examples: It's very hard to believe that someone in a
position of authority actually believes that a smaller CO2
footprint could result from hauling ethanol clear from Brazil to the
United States as opposed to buying ethanol made right here at home.
And, allowing what's being called ``used cooking oil'' to be shipped
from China in vessels burning bunker fuel to qualify for renewable
diesel tax credits for which U.S. grown crops do not qualify makes zero
sense. Certainly, when Congress was debating these provisions,
lawmakers did not intend for the benefits of U.S. tax credits to
benefit foreign actors over domestic producers.
Again, there are so many other issues making it an uphill challenge
for farm and ranch families--and that's what 98 percent of us are:
family farmers and ranchers--not corporations. Not hardly. But I will
close with another statement made by Senator Heinrich a couple weeks
ago: ``We are experiencing unprecedented rates of global hunger.'' I
have no doubt that this is true, and I want to be a part of the
solution to this very tragic, unnecessary, life-threatening issue.
Last year, when I visited USDA, an official there told us that come
2050, there will be ten billion people on the planet. And, he added, we
will need to put under the plough every inch of forestland in the world
today if we are to feed everyone--that is, unless we can produce a lot
more with less land, less water, less inputs. That sounds ominous.
But Mr. Chairman, Ranking Member Scott, Members of the Committee,
we have been here before. In the 1970s, we faced the same grim
forecast, but an Iowa farm kid named Dr. Norman Borlaug--whose statue
is in the Capitol Rotunda--came along and said America's farmers and
ranchers can do this. We can produce more with less and feed everybody.
Secretary Tom Vilsack, a fellow Iowan, rightly honored Dr. Borlaug not
long ago for not only saving billions of lives around the world but for
also saving millions of acres of pristine forestland. We can do it
again. We must do it again.
But we have to have policies in place that reflect the realities of
farming today. The stakes of farming are so incredibly high--higher
than I ever remember them to be. We are putting everything we have on
the line every single year for very thin and often times negative
margins. Is it any wonder then why the average age of farmers is
nearing 60 years old? Farmers love their kids like all parents, and no
parent wants their kids to go through life in a constant state of worry
that they will work their life away and risk losing absolutely
everything. Please don't get me wrong. I absolutely love farming. I
love everything about it. And if one day I can't make it, I hope I will
look back as I should with gratitude and no regrets. To me, it will all
have been worth it.
But, that's a very tough proposition for people and that's why
young people aren't going into farming anymore. And this is not just a
problem for farm families who want to keep doing what they do--it's a
real problem for the country and the world, most especially for those
who already struggle to put food on the table for their families. We
need full time farm and ranch families to stick with it.
I hope you do not mind the passion with which I offer this
testimony but this all means so much to me and we need Congress and the
Administration to make the right decisions if we want to avoid doubling
down on world hunger and even hunger here at home.
Thank you very much for the opportunity to offer testimony before
you this morning. I'm very grateful to each of you for your time and
attention and I'd be happy to answer any questions you may have.
The Chairman. Thank you, Dr. Allen-Tully.
Mr. Dunlow, please begin when you are ready.
STATEMENT OF DAVID DUNLOW, CHAIRMAN, AMERICAN
COTTON PRODUCERS; PRODUCER DIRECTOR, NATIONAL COTTON COUNCIL,
HENRICO, NC
Mr. Dunlow. Good morning. My name is David Dunlow, and I
farm in Gaston, North Carolina. I currently serve as the
Chairman of the American Cotton Producers. My wife Deborah and
I have three children, and my son William and I have farmed
3,800 acres of cotton, peanuts, soybeans, corn, and wheat,
mostly on rented land. In North Carolina, production costs are
all well above market price. There is not a single commodity I
produce that will cash-flow.
I and other southeastern producers are hanging on by a
thread. Our industry has heard from lenders across the country
who have seen producer equity erode, and without Federal
assistance this year, many of these lenders will no longer be
able to finance growers.
I have never experienced a worse time in my 40 years of
farming, and the stress has taken a toll on my health as I
wonder how our operation will survive. In previous years when
market prices were below cost of production, growers could
benefit from the Commodity Title to offset losses. However,
that is no longer the case. The reference price established
back in 2018, long before the disruptions of COVID, has not
kept pace with inflation, rendering the safety net ineffective
today. The results have been back-to-back years of losses on
our farm, and next year could be just as bleak.
Over my career, I have been able to purchase several small
farms. Now, I have been forced to refinance all these farms to
pay my operating debt from last year. Because of our
deteriorating financial condition, I have not found any
traditional lenders willing to fund our operation. We must rely
on an operating line of credit from a private equity-funded
institution at a higher than market interest rate.
We have also been unable to afford the enormous cost of
upgrading our farm equipment. In 1990, the cost of a new cotton
picker was around $40,000, and the price of cotton was around
74 a pound. Today, a new cotton picker is $1.1 million, and
cotton is still trading in the low 70 nearly 35 years later.
It is the dream of my son William to one day take over my
farm and oversee the operation on his own. However, William is
forced to diversify his income to support his family. William's
two sons Hank and Clyde love being on the farm with their
granddad. I hope my farm can continue to sustain itself so that
one day Hank and Clyde can have the option to take over.
We all talk about new farmers. I gave my future son-in-law
Peyton, who has an agricultural degree from NC State, an
opportunity to work on the farm. However, after having
discussions with my daughter, he decided to seek employment
elsewhere due to the lack of profit provided by our operation.
In closing, I want to commend the Committee for advancing a
bipartisan farm bill that addresses the significant challenges
of all growers. The bottom line is producers need real relief
before the end of this year. We can't wait any longer. Members
of Congress must understand that another straight extension of
the current law is unacceptable. Without support in 2024, I may
no longer be able to farm. Many others are in the same
situation.
Thank you for the opportunity to testify, and I would be
pleased to respond to any questions.
[The prepared statement of Mr. Dunlow follows:]
Prepared Statement of David Dunlow, Chairman, American Cotton
Producers; Producer Director, National Cotton Council, Henrico, NC
Introduction
My name is David Dunlow, and I am a farmer from Gaston, North
Carolina. I currently serve as a Producer Director with the National
Cotton Council (NCC) and as Chairman of the American Cotton Producers
(ACP). I also previously chaired the ACP's Farm Policy Task Force,
working closely with Congress on the creation and implementation of the
seed cotton program for U.S. producers.
I am the grandson of a sharecropper, and I worked under my father
on his farm operation throughout my younger years. I obtained my first
farm loan in 1985 and farmed alongside my father until his death in a
farming accident in 1992. Today, my wife, Debra, and I have three
children. My son William and I farm 3,800 acres of cotton, peanuts,
soybeans, and wheat, mostly on rented land.
The NCC is the central organization of the United States cotton
industry. Its members include producers, ginners, cottonseed processors
and merchandisers, merchants, cooperatives, warehousers, and textile
manufactures. A majority of the industry is concentrated in 17 cotton-
producing states stretching from California to Virginia. U.S. cotton
producers cultivate between 10 and 14 million acres of cotton, with
production ranging from 12 to 20 million 480lb bales annually. The
downstream manufactures of cotton apparel and home furnishings are in
virtually every state. Farms and businesses directly involved in the
production, distribution, and processing of cotton employ more than
87,000 workers and produce direct business revenue of more than $23
billion. Annual cotton production is valued at more than $6.0 billion
at the farm gate, the point at which the producer markets the crop.
Accounting for the ripple effect of cotton through the broader economy,
direct and indirect employment surpasses 265,000 workers with economic
activity of almost $75 billion. In addition to the cotton fiber,
cottonseed products are used for livestock feed and cottonseed oil is
used as an ingredient in food products as well as being a premium
cooking oil.
Economic Conditions on the Farm
The U.S. cotton industry continues to be burdened by increased
production costs, sluggish consumer demand, and supply chain
challenges. Since passage of the 2018 Farm Bill, market conditions for
cotton producers have dramatically changed. World cotton mill use is
more than 2 million bales lower than in 2018, and U.S. cotton's export
share has fallen by seven percentage points, while Chinese polyester
production has increased by over 35 million bales. Combined Brazilian
and Australian cotton production has nearly doubled over this same
period, as a more favorable regulatory environment, efficiency
improvements, and new investments in infrastructure have allowed these
nations to expand their industries and supplant U.S. cotton export
share. This foreign competition, along with an increasingly difficult
regulatory environment in the U.S., has made it hard for me to stay in
business.
This issue is not unique to cotton. Where I farm in North Carolina,
production costs as it relates corn, peanuts, and soybeans are all well
short of market prices. There is not a single commodity that I producer
that will cash flow. I attended a meeting with Southeastern producers
last week, and the sentiments are the same. Growers are hanging on by a
thread. I have heard from lenders across the country who have seen
producer equity erode and without Federal assistance this year will no
longer be able to finance their growers moving forward.
On a personal level, standpoint, I am facing a second consecutive
year in which market prices are well below production costs. This is
simply not sustainable. In previous years, when market prices were
below costs of production, growers could benefit from the farm bill's
commodity title payments, such as those provided by the Price Loss
Coverage (PLC) program, to offset losses. However, that is no longer
the case. The PLC program's reference price, established back in 2018--
long before the disruptions of COVID--has not kept pace with inflation,
rendering it ineffective today. The net result for me personally has
been several years of losses on our farm, severely eroding our equity.
I have never known a worse time in my 40 years of farming, and the
stress has led to personal health issues as I wonder how our operation
will survive. Inputs such as labor, supplies, equipment, parts, fuel,
land rent, fertilizer, and seed have skyrocketed. Some of these
expenses have nearly doubled, and my margins have narrowed over the
last several years. Things have gotten so bad that these days a bumper
crop is required just to break even.
Over my career, I have been able to purchase several small farms,
totaling roughly 600 acres. Now I have been forced to refinance all
these farms to pay farm operating debt. However, because of our
deteriorating financial condition, I have not found any traditional
lending institutions willing to fund our operations. Instead, we have
had to rely on an operating line of credit from a private equity-funded
institution at a higher-than-market interest rate.
We have also been unable to upgrade farm equipment, leading to
higher repair bills that increase our overall production costs. New
equipment, which would help me to remain competitive, is cost-
prohibitive. In 1990, the cost of a new cotton picker was around
$40,000, and the price of cotton was 74 . Today, a new cotton picker is
$1.1 million, and cotton on the December 2024 futures market is still
trading in the low 70 nearly 35 years later.
It is the dream of my son William to one day take over my farm and
oversee the operation on his own. However, William is forced to
diversify his income to support his family. William's two sons Hank and
Clyde love being on the farm with their ``Pap'' and father. I hope my
farm can continue to sustain itself so that one day Hank and Clyde can
have the option to take over the farm. However, that dream of mine and
William will never be a reality if economic conditions do not improve
and assistance is not provided.
I also gave my future son-in-law Peyton, who has an agriculture
degree from North Carolina State University, an opportunity to work on
the farm. However, after discussions with my daughter he has decided to
seek employment elsewhere due to the lack of profit provided by our
operation.
The bottom line is we need a new farm bill this year. While I
understand that political realities may prevent a new farm bill from
being sent to the President's desk, Members of Congress must understand
that another straight extension of the current farm bill is
unacceptable. An extension without additional financial support to
producers only extends the misery, and many farmers like me and others
across the country will not be farming next year without some sort of
assistance.
2024 Farm Bill
I want to commend this Committee for passing the Farm, Food, and
National Security Act on a bipartisan basis.
The legislation contains many of the NCC's farm bill priorities,
including an increase in the ARC/PLC reference price and improved
access to area-wide crop insurance products, such as the Supplemental
Coverage Option (SCO) and the Enhanced Coverage Option (ECO), which
function similar to the Stacked Income Protection (STAX) program. The
bill also, modernizes USDA's marketing assistance loan (MAL) program
and strengthens support to the U.S. textile industry and Pima cotton
producers.
Since 2018, cotton costs of production have increased by 24%. When
converted to a seed cotton basis, the reference price of 36.7 falls
well short of current costs. The House Agriculture Committee provisions
to increase the reference price to $0.42 will provide a PLC safety net
more in line with costs of production and extend a vital financial
lifeline to producers who are currently unable to make ends meet. Like
almost all farmers, I am diversified and all crops need an enhanced
safety net. Though the PLC increases in the House bill vary by
commodity, when I pencil it out on my farm, they all seem consistent
relative to cost of production for each commodity.
Most importantly, increasing the reference price will also give
lenders confidence to continue to finance producers across the Belt.
Cotton producers have overwhelmingly selected the PLC program, with
more than 90% of seed cotton base acres enrolled under this option. The
reference price increase in the Committee-passed farm bill provides
support at a level that will reassure lenders.
In addition, growers enrolled in the ARC/PLC programs are currently
limited in their access to crop insurance due to a prohibition on the
purchase of STAX on their enrolled farms. STAX is a crop insurance
product for upland cotton that provides coverage for a portion of a
producer's revenue based on the county, or area-wide, experience. While
the Farm, Food, and National Security Act maintains the prohibition on
simultaneous enrollment in STAX and PLC, it makes SCO function more
like STAX while maintaining a grower's ability to enroll in PLC. This
change will allow growers to tailor their risk management options
according to their needs while also decreasing their reliance on ad hoc
programs, putting producers in charge of their own production risks.
The upland cotton non-recourse MAL program is a cornerstone of the
U.S. cotton industry, ensuring the efficient movement and orderly
marketing of cotton. We are grateful the House Agriculture Committee
saw fit to raise the loan rate to $0.55, which would put growers very
close to triggering a marketing loan gain or a loan deficiency payment
(LDP) due to the rapid decline in the cotton market.
The Farm, Food, and National Security Act also makes a number of
important modernizing reforms to the MAL program by allowing storage
credits to better reflect actual storage charges; determining a
globally competitive Adjusted World Price (AWP) based on three
international prices and establishing a 30 day window for finalizing
the AWP. If these reforms were in place today, growers would have
already triggered much-needed marketing loan gain or LDP payments.
Extra-long staple (ELS), or Pima, producers, like upland growers,
have also experienced sharp increases in production costs in recent
years, with current costs exceeding the safety net provided by the loan
program. The NCC is grateful that the House Agriculture Committee has
addressed deficiencies in the ELS safety net by increasing the ELS loan
rate to $1.05 and adding ``marketing loan'' functionality to the ELS
loan.
In my home state of North Carolina and other parts of the
Southeast, the textile industry is a vital part of our rural economies,
thanks in large part to the Economic Adjustment Assistance for Textile
Mills (EAATM) program, originally authorized in the 2008 Farm Bill
Receipts must agree to invest EAATM proceeds in equipment and
manufacturing plants, including construction of new facilities as well
as modernization and expansion of existing facilities.
EAATM funds have allowed investments in new equipment and
technology, thereby reducing costs, increasing efficiency, and allowing
domestic mills to be more competitive with foreign mills. This was
shown to be prophetic during the COVID-19 pandemic as the U.S. textile
industry was able to quickly shift their manufacturing facilities to
the production of personal protection equipment (PPE). In addition, the
industry continues to be a critical supporter of products to our
defense industry. Make no mistake, maintaining the production and
growing consumption of cotton here in the United States is a vital part
of our national security.
We are grateful to the Committee for increasing the EAATM rate to
$0.05 per pound on every pound of upland cotton consumed. This will
provide essential support at a critical time for an industry that
continues to withstand apparel imports below cost of production and the
devastating impacts of the de minimis loophole in Section 321 of the
Tariff Act of 1930.
I also want to thank the Committee for increasing the commodity
title payment limits and indexing them to inflation. Current payment
limit policies do not reflect the scale of production agriculture
necessary to be competitive and viable in today's global market.
Artificially limiting benefits only punishes a producer like me and
others who are in vital need of support to be able to continue farming.
It also provides a disincentive to make further investments in my
operation and undermines a U.S. producer's ability to compete in a
global market.
Conclusion
In closing, I want to commend the Committee for advancing a
bipartisan farm bill that provides long-term stability and addresses
the significant challenges all growers are facing across the country.
We now need to get this bill or similar legislation signed into law
as soon as possible, so farmers like me receive some relief before the
end of this year. Without support in 2024, I may not be able to speak
with you a year from now as an active producer. Other growers in my
region and across the country are in the same situation, and many of
these successful producers run family farms that have been in operation
for multiple generations.
The NCC looks forward to working with the Committee and all
commodity and farm organizations and other stakeholders to get the
Farm, Food, and National Security Act across the finish line.
Thank you for the opportunity to testify, and I would be pleased to
respond to any questions.
The Chairman. Thank you. Thank you, Mr. Dunlow, much
appreciate your testimony and just kind of laying out the
implications.
Votes were called at 10:22. We are going to recess the
Committee at this point. My apologies to the witnesses. That
constitutional responsibility to vote kind of gets in the way
of really good work.
We will be back. After the fourth vote, we just ask
everybody to come back because we will resume promptly after
the fourth vote. The first vote is 15 minutes. The remaining
three are 5 minute votes. So the Committee is in recess.
[Recess.]
The Chairman. I appreciate everybody's patience with that
interruption for votes. We will reconvene the Committee here.
And Mr. Hotchkiss, please begin with your testimony when
you are ready.
STATEMENT OF ANTHONY ``TONY'' W. HOTCHKISS, CHAIRMAN,
AGRICULTURE AND RURAL BANKERS COMMITTEE,
AMERICAN BANKING ASSOCIATION, EVANSVILLE, IN
Mr. Hotchkiss. Chairman Thompson, Ranking Member Scott, and
Members of the Committee, my name is Tony Hotchkiss, and I want
to thank you for the opportunity to speak today.
I am the Chairman of the American Bankers Association
Agricultural and Rural Bankers Committee, and I am testifying
in that capacity today. I have 41 years of agricultural banking
experience, the last 10 as director of agriculture for Regions
Bank, from which I recently retired. Before Regions, I worked
in a number of community banks helping to lead their ag
lending. I was raised in Iowa, and like many ag bankers across
this country, I grew up watching, learning, and working for
family and friends who were farmers and ranchers. Ag bankers
have a deep appreciation for the important role producers play
in our economy and the unique challenges they face.
I appreciate the opportunity today to present the views of
the American Bankers Association on financial conditions in
farm country.
Banks continue to be one of the first places that farmers
and ranchers turn when looking for agricultural loans. Our
agricultural credit portfolio is very diverse. Banks finance
large farms, small farms, urban farmers, beginning farmers,
women farmers, minority farmers. To bankers, agricultural
lending is good business, and we make credit available to all
who can demonstrate they have a sound business plan and the
ability to repay.
With our deep connection to farmers and ranchers, banks are
often the first to see changes within balance sheets and cash-
flows on the farm operation often due to changing economic
conditions. Today, I would like to outline the current state of
the agricultural economy as it relates to our customers and
opportunities in which Congress could offer solutions which
would reduce stress on all borrowers and lenders.
With rising input costs and lower commodity prices, farmers
and ranchers have worked through the liquidity and working
capital they built up over the past few years at a more rapid
pace than anticipated and are now beginning to leverage equity
through refinancing debt. This has made agricultural bankers
feel like they are looking over a cliff in regards to the
agricultural economy. For example, we are hearing that bankers
already are starting to refinance debt for almond growers in
California, and we are hopeful this is an outlier and not a
growing trend.
The challenge with refinancing is that, with low commodity
prices, the cash-flow is challenged to even meet the new
payment requirements of the refinanced debt. As has already
been mentioned, the USDA is projecting net farm income to drop
approximately 25 percent from 2023 to 2024. Some regions of the
country will feel the effects sooner than others, but all will
feel it. Based on this, the trend of refinancing debt may
become more commonplace and more challenging as lenders and
producers work together to bridge the low prices we are
experiencing in ag commodities.
Changes are needed to government policy to combat a slowing
agricultural economy. The 2024 Farm Bill provides many of the
needed changes. An increase in the FSA guaranteed loan limits
is very good, improvements to the Downpayment Assistance
Program is very good, and the revised definitions for who
qualifies for beginning farmer and rancher programs is also
good and were all ABA priorities that were included in the 2024
Farm Bill. Additionally, changes to reference prices, dairy
programs, crop insurance, and Farmer Mac are all supported by
agricultural bankers. I would like to thank this Committee for
the tireless work they put in to pass the bipartisan
legislation out of Committee.
Agricultural bankers do believe there are some additional
farm bill provisions that could be added in the future. This
includes the creation of a national process for FSA guaranteed
loan programs to speed up the loan-making process, and also
opening Farmer Mac up by removing the cooperative lender
requirement for energy project loans.
Beyond the 2024 Farm Bill, there are many provisions within
tax reform that are vitally important to agriculture, banks,
and their customers such as carrying on the current estate tax
exemptions and capital gains exemptions for agriculture. The
Access to Credit for our Rural Economy Act of 2023 (H.R. 3139),
better known as ACRE Act, is tax legislation that would create
a level playing field for all lenders to agriculture. ABA
analysis has shown that the ACRE Act would result in a 50 to
100 basis point reduction in interest rates for qualified
borrowers.
Farm banks are healthy and continue to be forward-looking,
growing capital and increasing reserves. Bankers are proud of
the work we do to support our nation's farmers and ranchers.
The ag community is a critical part of our economy, and
America's banks remain committed to serve it through good times
and bad.
Thank you very much for this opportunity. I would be happy
to answer any questions you may have.
[The prepared statement of Mr. Hotchkiss follows:]
Prepared Statement of Anthony ``Tony'' W. Hotchkiss, Chairman,
Agriculture and Rural Bankers Committee, American Banking Association,
Evansville, IN
Chairman Thompson, Ranking Member Scott, and Members of the
Committee, my name is Tony Hotchkiss. I am the current Chairman of the
American Bankers Association's Agricultural and Rural Bankers Committee
and testify in that capacity today. I have worked in agricultural
banking for 41 years, including the past 10 years as Director of
Agriculture for Regions Bank based in Clayton, Missouri, from which I
recently retired. Before Regions, I worked at a number of community
banks helping to lead their agricultural lending. Agricultural bankers
have a deep appreciation for the important role producers play in our
economy and the unique challenges they face. I appreciate the
opportunity to present the views of the ABA on Financial Conditions in
Farm Country.
The American Bankers Association (ABA) is the voice of the nation's
$24 trillion banking industry, which is composed of small, regional and
large banks that together employ approximately 2.1 million people,
safeguard $19 trillion in deposits and extend $12.4 trillion in loans.
ABA is uniquely qualified to comment on agricultural credit issues as
banks have provided credit to the agriculture industry since the
founding of our country. At year-end 2023, 3,808 banks--83% of all
banks nationwide--reported agricultural loans on their books with a
total outstanding portfolio of more than $198.6 billion.
The Farm, Food, and National Security Act of 2024 (H.R. 8467),
commonly known as the ``2024 Farm Bill'', includes comprehensive risk
management tools for farmers and ranchers, loan guarantees for
agricultural loans, rural development projects, nutrition support and
investments in conservation. Banks play a critical role in rural
America, and this legislation provides a vehicle for the banking
industry to help meet the financial needs of farmers, ranchers, and
agricultural communities across the country. The meaningful changes
proposed in the 2024 Farm Bill will allow bankers to better serve their
customers and ensure they have high levels of credit availability in
the years to come.
Introduction
The ABA commends the Committee for including many of our priorities
in this important legislation,\1\ including modernizing the USDA's Farm
Service Agency (FSA) loan guarantee limits, clarifying bona fide
operator rules for beginning farmer programs, modernizing and raising
limits for the down payment assistance program, and providing robust
risk management tools that allow our customers to have greater
stability and predictability for each growing season.
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\1\ https://www.aba.com/-/media/documents/advocacy/what-we-stand-
for/2023-aba-farm-bill-priorities.pdf.
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Banks continue to be one of the first places that farmers and
ranchers turn when looking for agricultural loans. Agricultural credit
portfolios among banks of all types are very diverse--banks finance
large and small farms, urban farmers, beginning farmers, women farmers
and minority farmers. To bankers, agricultural lending is a productive
way to serve our communities by doing business the right way: we make
credit available to all who can demonstrate they have a sound business
plan and the ability to repay. With our deep connection to farmers and
ranchers, banks are often the first to see changes within balance
sheets and cash flows on farm operations, often due to changing
economic conditions.
In 2023, farm banks--banks with more than 14.32 percent of their
loans made to farmers or ranchers--increased lending by 6.7 percent to
meet the rising needs of farmers and ranchers, and now provide $110
billion in total farm loans. Farm banks are an essential resource for
small farmers, holding more than $44.6 billion in small farm loans,
with $9.2 billion in micro-small farm loans (loans with origination
values less than $100,000). Farm banks are healthy, well-capitalized,
and stand ready to meet the credit demands of our nation's farmers
large and small.
In addition to our commitment to farmers and ranchers, thousands of
farm dependent businesses--food processors, retailers, transportation
companies, storage facilities, manufacturers, etc.--receive financing
from the banking industry as well. Agriculture is a vital industry to
our country, and financing it is an essential business for many banks.
Banks work closely with the FSA to make additional credit available
by utilizing the Guaranteed Farm Loan Programs. The increased loan
limits on FSA guaranteed loans is the right policy to ensure more
credit availability to farmers and ranchers. Additionally, entities
like Farmer Mac provide another avenue for banks to increase credit
availability. By purchasing guaranteed loans from banks, Farmer Mac
allows banks to lower interest rates for their customers and provide
better loan products.
Our nation's farmers and ranchers are a critical resource to our
economy. Ensuring that they continue to have access to adequate credit
to thrive is essential for the well-being of our whole nation.
America's banks remain well equipped to serve the borrowing needs of
farmers of all sizes.
In my testimony today I will elaborate on the following points:
b Banks are a primary source of credit to farmers and ranchers in the
United States.
b The Agricultural Economy is Experiencing Headwinds.
b The 2024 House Farm Bill provides needed changes to the Credit
Title including increased limits for the FSA Guaranteed Loan
Programs, changes to the bona fide operator definitions, and
needed changes to Farmer Mac eligibility.
b There are still changes needed to help producers better receive
agricultural credit. The passage of the Access to Credit for
our Rural Economy (ACRE) Act would provide more competition for
agricultural lending and lower the costs for producers.
I. Banks Are a Primary Source of Credit to Farmers and Ranchers in the
U.S.
For many of ABA's members, agricultural lending is a significant
component of their business activities. ABA has studied and reported on
the performance of ``farm banks'' for decades and, we are pleased to
report that the performance of these highly specialized agricultural
lending banks continues to be strong. ABA defines a farm bank as one
with more than 14.32 percent farm or ranch loans (to all loans).
Farm Banks Exhibit Solid Farm Loan Growth
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Federal Deposit Insurance Corporation & American
Bankers Association Analysis.
At the end of 2023, there were 1,442 banks that met this
definition. Farm lending posted solid growth over the year. Total farm
loans at farm banks increased by 6.7 percent to $110 billion in 2023 up
from $103.1 billion for these banks in 2022. Approximately $1 in every
$3 lent by a farm bank is an agricultural loan.
Farm production loans grew at a faster rate than farm real estate
loans. Outstanding Farm production loans rose by 10.0 percent to $45.9
billion. Farm real estate loans grew at a pace of 4.5 percent to a
total of $64.1 billion. Farm banks are a major source of credit to
small farmers--holding more than $44.6 billion in small farm loans
(origination value less than $500,000) with $9.2 billion in micro-small
farm loans (origination value less than $100,000) at the end of 2023.
The number of outstanding small farm loans at farm banks totaled
639,694 with over half--373,353 loans--with origination values less
than $100,000. Farm banks are healthy, well capitalized, and stand
ready to meet the credit demands of our nation's farmers large and
small.
Equity Capital Increases at Farm Banks
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Federal Deposit Insurance Corporation & American
Bankers Association Analysis.
Equity capital at farm banks increased 14.0%, or $5.8 billion, to
$47.2 billion in 2023. Meanwhile, tier-1 capital increased by 6.8%, or
$3.4 billion, to $53.7 billion.\2\
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\2\ Equity capital is invested capital; it consists of the funds
invested in a bank on a long-term basis. Such capital is obtained by
issuing preferred or common stock or retaining a portion of earnings.
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Aggregate tier-1 leverage ratios \3\ increased 30 basis points
(bps) in 2023 to 10.6%. Aggregate tier-1 capital ratios (assessed on
risk-based assets) fell slightly to 14.48%, down 2 bps from 2022
indicating that farm banks are still well capitalized.\4\ Farm banks'
median tier-1 leverage ratio remained 69 bps above where it was before
the start of the Great Recession.
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\3\ Tier-1 leverage ratio is Tier-1 capital divided by total
average assets for leverage capital purposes.
\4\ In 2023, 668 farm banks opted into the community bank leverage
ratio and did not report risk-based capital ratios.
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In 2020-2021, banks experienced an unprecedented influx of
deposits, alongside a pullback in loan demand. This led many banks to
increase their holdings of long-term assets such as Treasury
securities. When the Federal Reserve began rapidly raising the Federal
funds rate over the course of 2022, the market value of those bonds
fell in the rising interest rate environment. Under tangible capital
calculations, unrealized gains and losses are recorded as though the
bank intends to sell those securities immediately at market value. This
volatility in market valuations can distort assessment of a bank's
financial health; post Dodd-Frank, regulatory capital has replaced
equity capital as a reliable measure of the capital available at banks
to absorb shocks.
Farm banks have built strong, high-quality capital reserves and
remain liquid and prepared to manage potential economic headwinds.
II. The Agricultural Economy is Experiencing Headwinds
The agricultural economy is in a position it has not been in for
many years. There is a return to the cyclical agricultural conditions
that were present before the surge of government support during the
COVID-19 pandemic. Rising input prices, combined with lower commodity
prices, have resulted in USDA projecting a 25% reduction in net farm
income in 2024 compared to 2023.
Agriculture commodities fall from 2022 high
Key agricultural commodity prices are off their recent highs.
Fertilizer prices were a big concern after the invasion of
Ukraine; while prices have softened, reflecting weakness in the
agriculture sector, farmers' margins are under pressure from
lower crop prices and higher overall price inflation.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Bloomberg.
With rising input costs and lower commodity prices, farmers and
ranchers have worked through the liquidity and working capital they
built up over the past few years at a more rapid pace than anticipated.
As a result, farmers and ranchers are naturally turning to credit to
finance their agricultural operations. This has resulted in increased
debt levels for agricultural producers across the country.
Bankers believe they may be `looking over a cliff' in regard to the
agricultural economy without changes to current government policy. This
includes adjustments to reference prices and ensuring that crop
insurance covers loss appropriately for producers. Additionally,
bankers desire a faster payment system in the event of natural
disasters. Waiting over a year to receive disaster payments can create
unnecessary credit crunches, that ultimately hurt agricultural
producers and their access to credit.
III. The 2024 Farm Bill Has Great Improvements to Credit Availability
for Rural America
The 2024 House Farm Bill makes important improvements to the credit
title that will increase credit availability in rural America. ABA has
long advocated for the changes that were included in the legislation.
The most significant change is the increase in the FSA Guaranteed Farm
Ownership Loan Program to $3.5 million and the FSA Guaranteed Farm
Operating Loan Program to $3 million. As the cost of agriculture
continues to increase, it is vital to have the FSA loan programs keep
pace with modern agriculture. These new limits will achieve that goal.
As supported by ABA, the bill also makes improvements to the down
payment assistance program by removing arbitrary cap on the size of the
loan and instead caps down payment loans at 45% of the lesser of
acquired price or appraised value. The bill also includes a revised
definition of owner-operator that allows for various business
structures to increase eligibility to beginning farmer guaranteed loan
programs to more producers and customers.
The bill expands options for the Agricultural Mortgage Secondary
Market (Farmer Mac) by allowing guaranteed loans under the 9007 Rural
Energy for America program to be eligible. The legislation also
provides flexibility on farm structure acreage caps by allowing the
Farm Credit Administration (FCA) to establish alternative loan amount
limitations to reflect the treatment as a qualified loan or a
moderately sized agricultural mortgage loan, as determined by the FCA,
accounting for adjustments in geographic differences and valuations. I
would like to thank Congress for these changes within Farmer Mac.
Farmer Mac is a valuable tool in the toolbox for agricultural bankers
because it provides another avenue for banks to increase credit
availability. By purchasing guaranteed loans from banks, Farmer Mac
allows banks to lower interest rates for their customers and provide
better loan products. ABA still believes a needed change for Farmer Mac
is to remove the cooperative lender requirement for energy loans to be
sold to Farmer Mac. This limits the ability for banks to participate in
rural energy projects, ultimately limiting available credit in rural
America.
U.S. Net Farm Income and Net Cash Farm Income, Inflation Adjusted 2003-
24F
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Note: F = forecast; data for 2023 and 2024 are forecasts.
Values are adjusted for inflation using the U.S. Department of
Commerce, Bureau of Economic Analysis, Gross Domestic Product
Price Index (BEA API series code: A191RG) rebased to 2024 by
USDA, Economic Research Service.
Source: USDA, Economic Research Service, Farm Income and
Wealth Statistics.
Data as of February 7, 2024.
Lastly, there are many provisions within the 2024 Farm Bill to
speed up the USDA loan approval process while making it easier for
producers to use USDA loan programs. ABA is supportive of these
measures.
It should be noted that the language to modify the Consumer
Financial Protection Bureau's 1071 Final Rule reporting requirements
for the Farm Credit System is problematic for the banking industry. ABA
supports efforts to provide relief from the 1071 Final Rule, but that
relief should be equal across all lenders.
IV. The Access to Credit for our Rural Economy Act
ABA is a proud supporter of H.R. 3139, the Access to Credit for our
Rural Economy Act (ACRE Act). The ACRE Act has been introduced by
Representative Randy Feenstra (R-IA) and Representative Wiley Nickel
(D-NC). This legislation will help to lower lending costs for farmers,
ranchers, and rural communities. ACRE would remove the taxation on
income earned from interest on agricultural real estate loans, and for
loans for rural residences in a population area of less than 2,500
people with a mortgage value of less than $750,000. By removing this
taxation, banks will be able to lower their interest rates, which helps
to lower costs for borrowers.
ACRE will be beneficial to both new and existing farmers by
lowering interest rates on agricultural real estate. However, access to
credit can be much more difficult for ``Beginning Farmers and
Ranchers'' and ``Socially Disadvantaged Farmers and Ranchers'' due to a
lack of preexisting land ownership and access to other sources of
capital--54% of young farmers say they need more land. ACRE will help
new farmers and ranchers by lowering their costs to acquire land which
is the most capital intense portion of any farming operation, and a
critical asset to achieve long-term, reliable access to credit. Lastly,
ACRE will reduce the need for farmers and ranchers to find off-farm
income by reducing interest payments, which increases the cash-flow
from their operation and reduces the need for off-farm income. It has
been estimated that ACRE will deliver approximately $950 million in
annual interest expense savings for loans secured by farmland.
ACRE will also provide much needed access to credit for rural home
mortgages. According to the 2020 Census, rural America lost population
over the last decade for the first time in history. Additionally,
rising interest rates are putting homeownership out of reach for many
rural Americans. Current interest rates for rural mortgages are
averaging 7.5%. ACRE is estimated to lower those interest rates between
50 and 100 basis points--bringing interest rates down to 6.5% to 7%
from 7.5%, or possibly more. This will result in approximately $450
million in interest savings annually to homeowners.
The U.S. Census lists 17,113 communities with a population of less
than or equal to 2,500. In 2021, $58.1 billion in bank mortgages were
originated in these communities--a need that is only increasing. Given
a conservatively estimated 3% growth, approximately $60 billion in
rural mortgages will qualify for ACRE in 2023. Enacting ACRE will help
provide the additional access to credit that is needed for rural
communities to thrive.
Conclusion
The banking industry is well positioned to meet the needs of U.S.
farmers and ranchers. Rising input prices and declining commodity
prices, however, have resulted in lower net farm income for
agricultural producers. Moreover, debt levels have been increasing, and
bankers are concerned that without changes to government policy,
agricultural producers may experience a tightening of credit
availability. The 2024 Farm Bill and the ACRE Act provide opportunities
to make the changes necessary to provide the credit needed for farmers
and ranchers to successfully navigate tougher economic times. Bankers
continue to see great opportunities in agriculture and will continue to
stand with farmers and all our partners in agriculture going forward.
We will also continue to work constructively with the Committee and
your colleagues in Congress on the 2024 Farm Bill and ACRE Act to help
ensure that farmers have the needed credit to be a successful and a
strong part of the U.S. economy.
Thank you for the opportunity to express the views of the American
Bankers Association. I would be happy to answer any questions that you
may have.
The Chairman. Mr. Hotchkiss, thank you so much for your
testimony.
Now, Mr. Caldwell, please proceed when you are ready.
STATEMENT OF JOSEPH ``JOEY'' G. CALDWELL, SENIOR VICE PRESIDENT
FOR RETAIL, GreenPoint AG HOLDINGS, LLC; BOARD MEMBER,
AGRICULTURAL RETAILERS ASSOCIATION, DECATUR, AL
Mr. Caldwell. Chairman Thompson, Ranking Member Scott, and
Members of the House Agriculture Committee, thank you for the
opportunity to testify regarding the financial conditions in
farm country and their impacts on rural economics. My name is
Joey Caldwell. I am the Senior Vice President at GreenPoint Ag.
We are a farmer-owned agricultural input supplier serving
farmers in rural communities in the southern U.S. Basically, we
supply farmers what they need to grow crops that feed, clothe,
and fuel our nation and beyond. We supply crop nutrition, seed
and crop protection products. We also provide a variety of
services from agronomic and precision technology advice to
application services. We do this in conjunction with our farm
cooperative partners at Alabama Farmers Co-op and Tennessee
Farmers Co-op.
I lead our retail division that has over 85 locations
across ten states. Basically, if the SEC plays football there,
we are likely there, too.
I also appear before you today on behalf of the
Agricultural Retailers Association board of directors and as
the son of a proud west Tennessee farmer. This year will be my
dad's 62nd crop.
When I graduated college in the early 1980s, the farm
economy was so bad it could barely support my dad, mother,
three brothers, and me. However, this led me to a fulfilling
career in supporting the American farmer. At GreenPoint, we are
in the farmer success business. We know that if the farmer
isn't successful, the ag supply chain will not be successful.
We believe that strong farmers make strong families. Those
strong families make for strong rural communities, and it is
those communities that help make the fabric of this great
nation.
While farmers are a fiercely resilient and independent
bunch, it takes a whole lot of people working together to get
them what they need, including you all. Farmers need a strong
farm bill. Most importantly, they rely on the certainty crop
insurance and price support helps provide. I know that many of
you know this. I know many of you care deeply about rural
America. I know there are a lot of pieces that go into
legislation of this size. But I also need you to know that what
matters to farmers and their communities is the certainty that
the farm bill brings. Farmers have a critical need for that
certainty.
Farming isn't like other professions. If I make a mistake
in this role, my company may suffer, and if that mistake is bad
enough, I could lose my job. That would be hard, but I could
start over. Farming is different. When a farmer plants a crop,
they put more than just their job at risk. Their farm is their
home, their livelihood, and pillar in their community. For
many, it is also their family legacy, something passed down to
them over the generations that they hope to pass down to their
kids. If they make too many mistakes or the markets move
against them too badly, they risk losing it all.
When I consider financial conditions and the farm economy's
impact on rural communities, the first word that continually
comes to mind is uncertainty. I look forward to discussing with
you today why that uncertainty continues to hinder progress in
our business and how it can be remedied.
For starters, a new farm bill helps provide certainty about
the risk well beyond the control of the farmer. Weather
destroys crops, and we all know that the changing weather is
increasing those risks. Without this farm bill, the risk may
become too great, eventually putting farmers and rural
communities where they live in dire straits.
We are facing rapidly declining commodity prices and
inflation that has driven up the expenses of farm equipment and
crop inputs. Farm incomes are off nearly 50 percent from the
last 2 years. The ag economy and the American rural communities
helped found this country, and we need help now.
I was glad to see this Committee pass a bipartisan farm
bill, and I urge Congress to pass it and help provide more
certainty. Thank you for all your work in helping keep the
American farmer and our rural communities strong. I look
forward to your questions.
[The prepared statement of Mr. Caldwell follows:]
Prepared Statement of Joseph ``Joey'' G. Caldwell, Senior Vice
President for Retail, GreenPoint Ag Holdings, LLC; Board Member,
Agricultural
Retailers Association, Decatur, AL
Introduction
Chairman Thompson, Ranking Member Scott, and distinguished Members
of the House Agriculture Committee. Thank you for the opportunity to
testify regarding the financial conditions in farm country and their
impacts on rural economies.
My name is Joey Caldwell and I serve as Senior Vice President for
Retail for GreenPoint Ag. We are a farmer-owned agricultural input
supplier, resulting from three financially strong businesses coming
together to better serve farmers and rural communities in the Southern
U.S.
GreenPoint Ag was founded in 2020, through a joint venture of our
parent companies, including Alabama Farmers Cooperative (AFC),
Tennessee Farmers Cooperative (TFC), WinField United, Tipton Farmers
Cooperative, Farmers Inc., and Tri-County Farmers Association. We are a
top wholesale and retail agronomy company, servicing farms and rural
businesses with crop nutrients, crop protection, seed and professional
products. We also offer seed treatment, field scouting, soil sampling,
tissue sampling, custom application and a full array of ag technology
services. We do this in conjunction with our farm cooperative partners
at Alabama Farmers Co-op and Tennessee Farmers Co-op. I lead our retail
division that has over 85 locations across ten states, including
Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi,
Missouri, Tennessee and Texas. We are headquartered in Decatur,
Alabama.
I also appear before you today on behalf of the Agricultural
Retailers Association (ARA), where I currently serve on the Board of
Directors and as the son of a proud west Tennessee farmer. This is my
Dad's 62nd crop and my 42nd. I'm not a farmer today because when I
graduated college in the early 1980's, the farm economy was so bad, it
could barely support my dad, mother, my three brothers, and me.
At GreenPoint, we're in the farmer success business. It is our
mission to help our customers succeed in this ever-changing world. As
with all of us in the U.S. supply chain, we only succeed if the
American Farmer succeeds. We achieve this through delivering profitable
customer solutions through trust-based relationships. We believe that
strong farmers make strong families, and those strong families make for
strong rural communities. It is those communities that help make the
fabric of this great nation.
It is, of course, in our interest, as well as the interest of the
nation and its consumers, to have a solid safety net for producers in
the farm bill and for that, I commend Chairman Thompson and the Members
of this Committee for passing the Farm, Food, and National Security Act
of 2024 through Committee. When I consider financial conditions and the
farm economy's impact on rural communities, the first word that
continually comes to mind is uncertainty. I plan to discuss today why
that uncertainty continues to hinder progress in our business.
The Burdens of Uncertainty
As you know, the uncertainty that burdens the agricultural economy
is also driven by weather events. With business locations in ten
states, our customers are susceptible to a myriad of conditions and are
not immune to any economic impact seen in their aftermath. In many
instances the disaster relief dollars allocated by Congressional
authority can help those affected rebuild and recover. These are
obviously unforeseen circumstances.
There are, however, some economic stressors we see coming long
before their impact is felt by GreenPoint Ag, other ag retailers and
input suppliers, and ultimately the grower. The rising cost of doing
business and inflationary pressures are chipping away at farmers'
margins. It is for this reason, that passing a farm bill, sooner rather
than later, will lighten this burden of uncertainty.
Areas of Significant Uncertainty
The largest issues of uncertainty in the ag retail space include
financing risks, regulatory burdens, energy policy, the Tax Code, and
labor markets. I will quickly touch on each and offer suggestions for
how these burdens can be lightened.
Financing Issues
Customer service is paramount to our business and a key to your
success. This theme carries over into all aspects of GreenPoint Ag,
especially credit and finance. Our retail locations are staffed with
experienced salespeople to custom tailor not only a fertilizer, crop
protection, seed and technology program for customer operations, but
also create finance plans to fits their needs. With several financing
options, varying interest rates and terms, we have options for
everyone.
Regulatory Issues
The regulatory whiplash our industry has felt over the past 2
decades was significant. The EPA needs a scientifically sound,
predictable process for pesticide registrations. This is crucial for
consumers, the environment, registrants, farmers, and ag retailers.
Uncertainty about rules, product availability, and last-minute label
changes complicates stocking and usage decisions for retailers and
producers. EPA decisions should rely on comprehensive, high-quality
scientific data and analyses that go beyond mere correlations. Issues
in this area have led to the loss of valuable products with no suitable
replacements, and unjustified label changes for long-used products.
While we commend the EPA for addressing ESA compliance, the current
Endangered Species Act work plan needs further adjustments to avoid
major disruptions to agriculture. Ag retailers and Certified Crop
Advisors should be involved in developing pesticide mitigation
measures, and EPA's methodology should account for regional practices.
Stakeholder engagement, especially with farmers, is vital throughout
the registration and review process.
Energy Issues
The Biden Administration's climate policies have increased costs
for crop inputs in agriculture. Higher natural gas prices have made
nitrogen fertilizer more expensive, while rising diesel prices have
elevated transportation costs for products to farms and the operation
of agricultural equipment. Diesel, crucial for ag retailers, grain
shippers, and farmers, now costs significantly more. Additionally,
diesel-powered irrigation systems, plastics for crop protection
products, and packaging for food producers have all seen price hikes.
These increased energy costs have, in turn, raised the overall price of
feeding and fueling the nation.
Tax Issues
Section 199A--established under the 2017 Tax Cuts and Jobs Act--
ensures that agricultural cooperatives and other pass-through
businesses can utilize similar tax deductions as corporations that
benefited from the corporate tax rate reduction. This tax provision has
been instrumental in helping farmer cooperatives and their member-
owners invest in their operations, and weather business challenges
driven by a global pandemic, geopolitical conflict, supply chain
constraints, and record inflation.
Our nation's agricultural producers face unique challenges and
risks as they strive to feed the globe, and extending these tax
provisions will remove a critical piece of uncertainty as producers
start planning future investments for their operations and rural
communities. While this issue doesn't necessarily fall under the direct
jurisdiction of this Committee, this tax provision is an absolutely
critical tool for agriculture and rural America. Allowing Section 199A
to expire will effectively raise taxes on agricultural cooperatives and
their farmer-owners. We thank all the Members who have cosponsored the
Main Street Tax Certainty Act, which would permanently extend the
Section 199A provision.
Labor Issues
Finally, I would like to thank this Committee for their work on the
Agricultural Labor Working Group. We need ag labor reform!
Uncertainties in the agricultural labor market have significantly
contributed to rising costs in agriculture. Labor shortages,
unpredictable immigration policies, and fluctuating wage rates have
made it challenging for farmers to secure a reliable workforce. These
issues have increased labor costs and disrupted planting, harvesting,
and processing schedules.
We are approximately 2.5 million workers short of the necessary
levels to meet production needs. To adjust to the instability in the ag
workforce, farmers are forced to find costly alternatives that increase
operational expenses, which are often passed down the supply chain,
leading to increased prices for consumers. Agricultural workers here on
H-2A visas help fill the void.
The instability in the labor market also forces farmers to invest
more in automation and technology, further driving up costs in the
agricultural sector. The ag industry will benefit from this Committee
taking the time to address these issues; and the impact will be
significant.
Conclusion
Agriculture is often the backbone of rural economies. When farmers
struggle, local businesses that depend on their spending--such as
equipment suppliers, retailers, and service providers--also suffer.
Reduced farm income can lead to job losses not only in farming but also
in related industries like food processing, transportation, and retail.
In turn, lower tax revenues from struggling farms and businesses can
result in cutbacks in essential public services like education,
healthcare, and infrastructure maintenance. All of these things are
intertwined throughout our country but are significantly more apparent
in rural communities because of the lack of other industries to help
support local revenue streams.
Implementing supportive agricultural policies that provide
financial assistance, subsidies, and crop insurance to farmers can help
stabilize farm incomes and reduce uncertainty. As I said earlier, I
commend this Committee for their commitment to move the Farm, Food, and
National Security Act of 2024 earlier this summer, and I urge the full
House body and your Senate colleagues to follow your lead and pass a
farm bill before the end of the year. The time to act is now.
Thank you for your continued commitment to supporting America's
farmers and rural economies. I look forward to your questions.
The Chairman. Mr. Caldwell, thank you very much for your
testimony.
Dr. Rainey, please proceed when you are ready.
STATEMENT OF RONALD RAINEY, Ph.D., ASSISTANT VICE PRESIDENT,
PROFESSOR, DIVISION OF AGRICULTURE;
DIRECTOR, SOUTHERN RISK MANAGEMENT EDUCATION CENTER, UNIVERSITY
OF ARKANSAS, LITTLE ROCK, AR
Dr. Rainey. Chairman Thompson, Ranking Member Scott, and
Members of the Agriculture Committee, I thank you for this
opportunity to testify on this important process that means so
much to our farmers and ranchers and our rural communities.
My name is Ron Rainey, and as an agricultural extension
economist with the University of Arkansas, I will highlight
three areas of concern impacting financial conditions in farm
country. That is low profit margins, limited crop insurance
understanding and options for some producer segments, and the
magnified impacts of the current environment on our small,
marginalized, and beginning farmers.
Farmers across the country continue to adapt to the
challenging agricultural environment made worse by the
relatively high input prices, the historically low commodity
prices, and the current relatively high interest rates. The
current environment has placed increasing pressure on
producers' balance sheets, forcing them to increase farm debt
levels as they attempt to survive the current economic
challenges.
Across all ag sectors and types of production, farm
profitability remains a challenge. The issue is magnified even
more for our small, historically underserved, and marginalized
farmers because they have somewhat limited access to many of
the farm safety net triggers, either because of a lack of
historical production, limited additional financing options,
and/or limited access to Federal crop insurance.
USDA's National Agricultural Statistics Service releases
monthly indexes for input prices paid and output prices
received. These indexes include collecting survey responses for
output and input price for agricultural production, crops,
livestock, and food commodities. The spread between these two
indices often helps understand where farmers are getting price
squeezed and how their profit margins are impacted. Current
farm income instability from inflationary pressures, high
interest rates, and several supply chain disruptions are
forcing farmers to pay higher input costs while receiving lower
commodity prices.
In my submitted testimony, I submitted figures 1 and 2,
which is an analysis that compares the annual index value from
2022 to 2024 for two indices, crop prices received and input
prices paid with 2011 as the base year, which was a good year.
There is a circle in that figure 1 highlighting the beginning
of a divergence that began between input/output prices, which
started in 2013. Since then, we have seen a major divergence in
the two indices with the widest gaps being between 2014 to
2020. From 2021 to 2022, we saw both indices increase, but the
gap remained, and the divergence has grown even wider in 2023
and 2024 due to declining commodity prices.
In response to this profitability squeeze, farmers have
been increasing debt levels. A recent article from Kansas City
Fed details recent changes in farm debt levels and highlights
increased debt levels, especially among small- and mid-size
farms. The article details steady increases in farm debt at
commercial banks, mostly by continuing growth in farm operating
debt. The solid development and farm operating debt in the
first quarter signals an increase in farmers' financing needs.
Additionally, many specialty crop producers have limited
crop insurance options. The number of Federal crop insurance
products available for producers has expanded risk-mitigating
options in recent years, whole farm revenue, dairy margin,
livestock, pasture, and forage, to name a few. However, gaps in
coverage remain as you examine Risk Management Agency's
business summary across all products. Many marginalized
producers are only aware of the Noninsured Crop Disaster
Assistance Program, NAP, which is available through USDA's Farm
Service Agency. Additional training is needed to improve farmer
and rancher understanding and use of these products.
Last, I just want to highlight USDA program historical
equity issues and access issues have played a role in limiting
the opportunity for many of our small, specialty crops,
socially disadvantaged farmers to gain economies-of-scale,
increasing their farm size and investing in innovative or new
machinery and/or technology. The lack of opportunity to scale
up and invest results in lower productivity and relatively
higher input cost on average. This results in even tighter
profit margins in this current profit-squeezing environment.
Additionally, many of our new and beginning farmers are
seeking innovative business models to grow their businesses
that leverage new technologies to grow their farm businesses
using new processes, engaging in such things as urban
agriculture, value-added processing and production, and local
and regional food systems. Therefore, I encourage you to look
across the spectrum of farm businesses and business models to
explore opportunities to support other historically underserved
sectors who are facing these same tight profit margins. Thank
you.
[The prepared statement of Dr. Rainey follows:]
Prepared Statement of Ronald Rainey, Ph.D.,\1\ Assistant Vice
President,
Professor, Division of Agriculture; Director, Southern Risk Management
Education Center, University of Arkansas, Little Rock, AR
---------------------------------------------------------------------------
\1\ Authors: Ronald Rainey, Ryan Loy, and Hunter Biram, are
Professor, Assistant Professor and Assistant Professor with the
University of Arkansas' Division of Agriculture.
---------------------------------------------------------------------------
My name is Ronald Rainey, and I am humbled to provide input into
this important, deliberative process that means so much to all of our
farmers, ranchers, and rural communities. I have over 3 decades of
experience working primarily as an Extension Agricultural Economist
with the University of Arkansas, our state's flagship, Land-Grant
University. I currently serve as Assistant Vice President of the
Division of Agriculture and Center Director for the Southern Risk
Management Education Center, which serves 13 states and two territories
in the Southeast United States. My testimony is based on anecdotal
evidence and comments from producers and leadership efforts developing
and implementing regional and national risk management technical
assistance. My University of Arkansas co-authors are agricultural
finance and agricultural policy specialists.
Current Economic Update on Agriculture
Farmers across the South continue to adapt to the challenging
agriculture environment made worse by relatively high input prices,
historically low commodity prices, and current relatively high interest
rates. The current environment has placed increasing pressure on
farmer/rancher's balance sheets, forcing them to increase farm debt
levels as they attempt to survive the current economic challenges. The
gap between the prices farmers receive and the prices that they are
paying for inputs forces farmers to strategically manage their balance
sheets (increasing farm debt levels) to survive. Across our small- and
mid-sized farms and many of our large-scale commercial operations, farm
profitability remains a challenge. The issue is magnified for small,
historically underserved and marginalized farmers because they have
somewhat limited access to many of the farm safety net triggers either
because of a lack of historical production, limited additional
financing options, and/or limited access to Federal crop insurance
products. The current relatively higher interest rate market makes
seeking additional financing a risky and costly tactic to manage the
current market situation. Additionally, many producers have limited
options beyond their balance sheets to manage the added risks.
Many specialty crop producers have limited crop insurance options.
The number of Federal crop insurance products available for producers
has expanded risk mitigating options in recent years: whole farm
revenue, dairy margin, livestock, forage, to name a few. Still, gaps in
coverage remain as you examine Risk Management Agency's business
summary across all products. For example, the poultry sector--which is
the largest single agricultural industry in many southern states--is
dominated by contract production. Contract growers have virtually no
access to insurance products. Additionally, many marginalized producers
are only aware of the Non-insured Crop Disaster Assistance Program
(NAP) available through USDA-Farm Service Agency. The Crop Insurance
Navigator program, a regional Risk Management Agency (USDA-RMA) pilot
project (https://srmec.uada.edu/navigator.html) across the southeast
region is currently highlighting the Federal crop insurance gaps in
understanding, access, and service for marginalized and small farmers/
ranchers.
The Navigator project reveals that even where newer insurance
product offerings are available, a lack of understanding on the
functionality of a number of these more specialized products is a
persistent problem. Additional training is needed to improve farmer and
rancher understanding and use of these products. There also appears to
be training needs for insurance companies and agents on the array of
available products to serve small, specialty crop producers, and
historically underserved. Some producers complain about the lack of a
company/agent offerings in terms of a desired insurance product(s) as
well as a lack of engagement with certain producer groups. Some of the
limited engagement seems to occur from a specialization within the crop
insurance companies. If an insurance company's portfolio of clients in
a particular region is made up primarily of large-scale commercial row-
crop farms, agents/companies appear to have little incentive to
cultivate business among small, specialty crop, and/or livestock
producers, particularly on products for which sales or underwriting
procedures are more difficult, such as whole farm revenue or micro-farm
insurance.
Current Market Challenges--Tightening Farm Profit Margins
The United States Department of Agriculture National Agricultural
Statistics Service (USDA-NASS) releases monthly indexes for input
prices paid and output prices received. These indexes include
collecting survey responses for output and input prices for
agricultural production, crops, livestock, and food commodities. The
spread between these two indices often helps understand where farmers
are getting price squeezed and how their profit margins are impacted.
Current farm income instability from inflationary pressures, high
interest rates, and several supply chain disruptions (e.g., the
Russian-Ukraine war and Panama/Suez Canal) are forcing farmers to pay
higher input costs while receiving lower commodity prices, emphasizing
the need to consider these indexes into the future.
These price indices measure the change in prices paid (and
received) relative to a point in time--2011 in this case (Figure 1).
The base year is often chosen during a time without prevailing
inflation or major supply chain disruptions (Schulz, 2022). 2011 was a
good year for agricultural production and profitability. As such, using
2011 as a base year is a way to highlight how better or worse-off
agricultural producers are compared to a good year.
Figure 1 compares the annual index value from 2000-2024 for the two
indices with 2011 as the base year. The price received index in 2012
was 102.8%, meaning that the crop price received, on average, in 2012
was 2.8% higher than in 2011 (base year = 100%). The [] circle in
Figure 1 shows the beginning of a divergence between input and output
prices. In 2013, when writing the 2014 Farm Bill, the index for input
prices paid was almost exactly the index for output prices received.
This is where most of our current farmer safety net support stems from,
and since then, we've seen a major divergence in the two indices, with
the widest gaps between 2014-2020 (USDA-NASS). From 2021-2022, we saw
both indices increase, but the gap remained, and the divergence has
grown wider in 2023 and 2024 due to declining commodity prices.
Figure 1. Crop Output Prices Received vs. Input Prices Paid
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Loy, Ryan, and Hunter Biram. 2024.
Another way to view the indices is to calculate how they change
year to year. Figure 2 plots the same indices as Figure 1 but shows the
yearly change between the index values. Using this percentage change
helps producers understand (1) the volatility of crop output prices and
(2) the magnitude of change as compared to the previous year. A key
takeaway is that input prices are less volatile (in terms of yearly %
change) than output prices. Secondly, the percentage change in crop
output prices between 2023 and 2024 (^13.8%) is much larger than the
percentage decrease in input prices (^1.38%) during that period.
Without any relief in the form of improved crop prices received,
figure 1 suggests farmers will continue to suffer from cost/price
squeezes and eroding profit margins. Further, figure 2 shows the
magnitude of that spread between the indices in Figure 1; if input and
output prices continue this trajectory, an improved farm safety net
will be warranted. This will be at the forefront of every producer's
mind, with ongoing farm bill debates in 2024.
Figure 2. Year-over-Year % Change in Input and Output Crop Prices
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Loy, Ryan, and Hunter Biram. 2024.
A recent article (Francisco Scott and Ty Kreitman ) detailing
recent changes in farm debt levels highlights increased debt levels
specially among small- and mid-sized farms. The article details steady
increases in farm debt at commercial banks bolstered by continued
growth in farm operating debt. While the observed peaks are relatively
lower than early 2023 observations, the growth in real estate debt
remained robust. The solid development in farm operating debt in the
first quarter signals an increase in farmers' financing needs. While
the current interest rate market helps farmers finance this uptick in
demand for loans, the rates reflect higher cost risk management options
for farmers and ranchers. The considerable growth in agricultural
production loans increased farm debt balances. Figure 3 details farm
debt levels from 1970-2024 for commercial banks. As noted in the
referenced article, the growth in agricultural debt was concentrated
among small- and mid-sized farm lenders. Three quarters of the $15
billion increase in farm debt was attributed to banks with agricultural
loan portfolios less than $500 million. Non-real estate farm loans at
commercial banks ended the first quarter nearly 15% higher than a year
ago, the largest increase since the late 1970s. The rapid increase in
operating debt boosted total agricultural debt even as farm real estate
debt increased only modestly.
---------------------------------------------------------------------------
https://www.kansascityfed.org/research-staff/francisco-scott/.
https://www.kansascityfed.org/research-staff/ty-kreitman/.
---------------------------------------------------------------------------
Figure 3. Farm Debt Outstanding at U.S. Commercial Banks.
Percent Change from Previous Year
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Sources: Reports of Condition and Income and Federal Reserve
Board of Governors.
.5Role of Southern Risk Management Education Center (SRMEC)
The Agricultural Risk Protection Act (ARPA) of 2000, authorized the
Secretary of USDA to carry out the program, Partnerships for Risk
Management Education. Under this authority NIFA partners with four
regional Extension Risk Management Education (ERME) Centers to carry
out a national competitive grants program in Risk Management Education
to educate agricultural producers about the full range of risk
management activities. The Southern Risk Management Education Center
(SRMEC) at the University of Arkansas has been a part of ERME since
2009, serving 13 states and 2 territories--the Southern Region. SRMEC's
goal is to Empower Producers to Manage Risks. The Center strives to
improve producers' ability to manage risk and increase profitability of
southern agriculture by delivering programs designed to change risk
management behavior among key producer populations.
The ERME authorizing language has been amended through successive
legislation, namely the 2008, 2014, and 2018 Farm Bills. As amended,
the language describes the purpose of this risk management partnership
as ``educating agricultural producers and providing technical
assistance to agricultural producers on a full range of farm viability
and risk management activities, including futures, options,
agricultural trade options, crop insurance, business planning,
enterprise analysis, transfer and succession planning, management
coaching, market assessment, cash flow analysis, cash forward
contracting, debt reduction, production diversification, farm resources
risk reduction, farm financial benchmarking, conservation activities,
and other risk management strategies.''
Section 11125 of the Agricultural Improvement Act of 2018 provides
authority for the USDA NIFA to expand the Partnerships for Risk
Management Education program to serve a new audience, defined as
``producers that are underserved by the Federal crop insurance
program''. ERME implemented the expanded program by offering two
separate grant pools within our annual Request for Applications (RFA)
that seeks education project proposals: risk management education (our
traditional program area), and producers underserved by crop insurance.
SRMEC works with a ten member advisory council made up of public
and private agricultural stakeholders that are strategically and
intentionally engaged to serve our region's diverse agriculture
sector--commercial, small, diversified, row-crop, livestock, organic,
sustainable, urban, and specialty. Representation includes farmers,
ranchers, 1862 and 1890 land-grant university faculty, and community
based organization representatives. The Center annually manages $2.5
Million in competitive grants that seek to empower producers to manage
risk on their individual operations through educational offerings. To
manage our two separate grant pools, SRMEC employs a ten member
advisory council and a seven member evaluation panel made up of public
and private agricultural stakeholders to identify our grant regional
priority areas and capacity building efforts across the region.
Additionally our advisory council and crop insurance evaluation panel
serve as reviewers for our grants selection process using a transparent
merit-based process.
In recent years, ERME has been selected to manage additional grant
portfolios because of our national program structure, a national
program delivered regionally. Those new programs include a one-time
meat processing RFA and our just released Technical Assistance
Producers Network (TAPN) RFA which seeks to assist financially
distressed farmers with assistance to understand and improve USDA Farm
Service Agency loan decisions. The TAPN technical assistance focuses on
the Southern and Western regions where FSA loan application denials are
the highest. This technical assistance effort is funded by USDA-FSA to
address limited access concerns and improved customer service issues.
The ERME program has delivered technical assistance across the
country and effectively engaged all segments that make up U.S.
agriculture. The engagement includes working in collaboration with crop
insurance sector and USDA agencies as well as funding projects with
land-grant universities and community-based organizations.
Engagement with Risk Management Agency (RMA) and crop insurance
industry
The ERME program routinely collaborates with RMA to promote RMA
resources and to engage with its regional offices. Both programs
collaborated to jointly develop and distribute a primer, Introduction
to Risk Management (Crane, Gantz, Isaacs, Jose, and Sharp, 2013). The
publication details ERME and RMA's consistent approach to managing
risks across five areas: production, marketing, finance, legal, and
human. The document not only defines each risk area but details
specific tools and strategies to successfully mitigate the unique risks
that agricultural producers face. Beyond the publication and on-going
communications, each ERME Center has RMA representation on its advisory
council. SRMEC has an RMA representative on our Advisory Council and
two representatives on our crop insurance evaluation panel. We
communicate on program and funding areas to build on the synergies of
each program to serve farmers and ranchers. SRMEC actively engages with
multiple regional offices and has on-going conversations with RMA
administrators on ways to enhance outreach efforts and resources.
In addition to the Crop Insurance Navigator program, SRMEC has
collaborated on the release of a publication from University of
Arkansas, Fundamentals of Federal Crop Insurance. The publication
serves as a primer written for farmers/ranchers and their influencers
to understand the history and basics of Federal crop insurance. Lastly,
SRMEC has on-going conversations with the crop insurance industry--
individual companies, National Crop Insurance Services, and Crop
Insurance Professional Association (CIPA)--on ways to collaborate on
company/agent trainings.
Current Condition for SDFRs
The Census of Agriculture reveals that most socially disadvantaged
farmers and ranchers (SDFRs) on average operate relatively smaller
sized farms, thereby leveraging smaller operating loans to produce
their crops each year. It should be noted that USDA program historical
equity and access issues have played a role in limiting the
opportunities for SDFRs to gain economies-of-scale--increasing farm
size and investing in innovative or new machinery/technology. The lack
of opportunities to scale up results in lower productivity and
relatively higher input costs on average. Even when SDFRs participate
in USDA farm programs, they receive a disproportionately lower level of
Federal support in terms of funds to reinvest in their farms. The
cumulative impact of lower support levels over an extended period of
time--10 year, 20 year horizon, etc.--results in real differences in
terms like the size of operation and equipment/facilities investments.
The relatively smaller-sized operations are generally less efficient
creating additional hurdles for economic viability. These operations
lag their majority farmer investments in precision agriculture
technologies and innovative practices because of the relatively tighter
profit margins.
I serve on the board of directors for the Socially Disadvantaged
Farmer and Rancher Policy Research Center at Alcorn State University.
The Policy Research Center actively organizes and examines research,
data, and producer feedback to provide insights to enhance
understanding of SDFR conditions and policy recommendations to enhance
their economic viability and survival. The Policy Research Center notes
the following discrepancy in risk management/crop insurance subsides.
As Federal crop insurance subsidies programs have increased, the
``subsidy gap'' has widened between White and Black farmers. Because
crop insurance subsidies are based on the value of a producers' crop,
the larger subsidy premiums go to producers with the highest sales. The
vast majority of farmers that receive the highest subsides are White.
Another issue that continues to plague SDFRs is real and perceived
trust issues resulting from current/past experiences and on-going
confrontations. For example, there are a number of producers who refuse
to enter a USDA office even in 2024 because of fear-based on
experiences--of disparate treatment, losing their land or being
foreclosed on a loan under perceived less than fair conditions.
Therefore, the ability to build and restore trust and relationships is
a critical hurdle to effectively reach marginalized producers and their
communities with USDA programs/resources. The resulting community
impact of inequitable access to Federal and state programs have played
a significant role in individual and community wealth levels across
both urban and rural areas. Multiple high-poverty rural regions--
Arkansas/Mississippi Delta, Alabama Black Belt, etc.--traces their
roots back to the great depression and the initial farm legislation
which introduced the allotment programs which literally took and/or
reduced acreage from many minority producers.\2\ The resulting
historical Federal policies and their implementation through local
county committees results in present-day inequities among base acre
allotments today for many minority producers.
---------------------------------------------------------------------------
\2\ Agricultural Adjustment Act (1933) (https://en.wikipedia.org/
wiki/Agricultural_Adjustment_Act), Agricultural Adjustment Act
Amendment of 1935 (https://en.wikipedia.org/wiki/
Agricultural_Adjustment_Act_Amendment_of_1935), Soil Conservation and
Domestic Allotment Act of 1936, and Agricultural Adjustment Act of 1938
(https://en.wikipedia.org/wiki/Agricultural_Adjustment_Act_of_1938).
---------------------------------------------------------------------------
In terms of risk management technical assistance, my experience
with managing education projects--ERME projects; Agricultural Finance,
Tax, and Asset Protection Program (https://agftap.org/), and Crop
Insurance Navigator project--reveals that technical assistance in
record-keeping, price risk management (understanding and use of futures
markets), business planning, and tax preparation are core areas to
build and maintain viable businesses. These fundamental processes are
directly linked to credit access and indirectly linked to the use of
crop insurance. Additional technical assistance in these core areas
could enhance producer understanding of ways to leverage crop insurance
products to support their businesses.
Overview of working with 1862, 1890 Land-Grants & Community-Based
Organizations
As SRMEC director, I have been privileged to work with a collection
of public and private agricultural stakeholders assisting our farmers
and ranchers across the region and nationally. SRMEC has intentionally
engaged with diverse stakeholder groups to build meaningful
relationships across not just the entire region but also the diverse
farm types and producer backgrounds. We collaborate annually with 1890
Extension and outreach specialists, small farm program (2501)
directors, and community-based organizations that serve an array of
producer groups ranging from African American, Native American, Hmong,
Organic, Sustainable, Livestock, Row-Crop, Greenhouse & Nursery, to
name a few. Within the 1862 land-grants, we collaborate with the
region's farm management committee--Southern Extension Economics
Committee. The committee is made up of agricultural economists from the
region's land-grant institutions, primarily those with Extension
responsibilities. Annually, the Center supports the region's premiere
academic outreach meeting, the Southern Outlook Conference, which is
hosted by Southern Extension Economics Committee. SRMEC features its
collaborations with the farm management committee and 1890 partners on
our website, https://srmec.uada.edu/.
Lastly, SRMEC partnered with the Agricultural and Food Policy
Center at Texas A&M to lead a collaborative effort among the Southern
Extension Economics Committee to launch Southern Ag Today (SAT),
https://southernagtoday.org/. SAT provides daily insight and analysis
on issues impacting Southern farmers and producers and is a timely
resource for anyone--farmers, ranchers, Extension educators, lenders,
policy makers, and media--who wants a better understanding of the
issues affecting agriculture in the region.
References
Loy, Ryan, and Hunter Biram. ``The Disparity Between Crop Prices
Received and Input Prices Paid.'' Southern Ag Today 4(28.3). July 10,
2024.
Scott, Francisco, and Ty Kreitman. ``Farm Operating Debt Surges in
Early 2024.'' June 20, 2024. Retrieved from https://
www.kansascityfed.org/agriculture/agfinance-updates/farm-operating-debt-
surges-in-early-2024/.
Schulz, L. (2022). Disentangling Input and Output Price
Relationships. Retrieved from: https://www.extension.iastate.edu/agdm/
articles/schulz/SchSep22b.html.
The Observatory of Economic Complexity (OEC). (2024). Fertilizers in
Russia. Retrieved from: https://oec.world/en/profile/bilateral-product/
fertilizers/reporter/rus.
USDA-Economic Research Service (2024). Farm Sector Income &
Finances: Highlights from the Farm Income Forecast. Retrieved from:
https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-
finances/highlights-from-the-farm-income-forecast/.
USDA-Economic, Statistics, and Market Information System. (2024).
Agricultural Prices. Retrieved from: https://usda.library.cornell.edu/
concern/publications/c821gj76b?locale=en.
The Chairman. Thank you, Dr. Rainey, and thank you to all
of our witnesses for your important testimony today.
At this time, Members will be recognized for questions in
order of seniority, alternating between Majority and Minority
Members and in order of arrival for those who joined after the
hearing convened. You will be recognized for 5 minutes each in
order to allow us to get to as many questions as possible.
I now recognize myself for 5 minutes.
As many of you know, there are outside voices and even some
Members of this Committee who have tried to stoke a regional
battle over the Farm, Food, and National Security Act. This
analysis relies upon isolated comparisons of only reference
prices to say the bill favors southern commodities while
ignoring other provisions such as enhancements to ARC, the
addition of base acres, or the affordability of crop insurance,
all of which overwhelmingly benefit Midwest producers, not to
mention policies outside of our jurisdiction such as tax
credits and biofuels mandates, which primarily accrue benefits
to certain commodities over others.
For those of us that were around in 2014, no one benefits
when commodity groups start fighting one another, and the
Committee tried to carefully weigh all these factors rather
than cherry picking certain provisions.
So for the producer witnesses, Dr. Allen-Tully and Mr.
Dunlow, when you assess the cost of production for commodities
on your farm and the suite of Federal policies, farm bill-
related and otherwise, how do you assess the various provisions
of the bill this Committee advanced in May? And how do the
improvements compare to the current law and the alternative
proposed by Chairwoman Stabenow?
So we will start with Dr. Allen-Tully.
Dr. Allen-Tully. Thank you, Chairman Thompson.
Minnesota corn strongly supports the House-passed farm
bill. We would find that the increase in reference price for
corn, the increase of 40 would be a meaningful increase. We
asked for more, but we understand that there are other things
that need to be weighed.
We also are very grateful for the improvements in the crop
insurance title, as well as doubling the funding for MAP and
FMD. There were investments made in the research title as well
and access to voluntary incentive-based conservation. So we are
very happy with the bill that you passed out and understand
that that will provide a meaningful improvement in our safety
net.
The Chairman. Well, thank you very much.
Mr. Dunlow?
Mr. Dunlow. Yes, sir. Thank you. As I mentioned earlier,
just the cost of production and where we are at with the 2018
Farm Bill, it is just not working, not giving us any support.
The provisions in the new farm bill certainly meet a lot of our
needs, but keeping in mind the new provisions still do not
guarantee us a profit. That is not what it is there for.
Referring back to my 40 year career, the farm safety net has
always been there. When things get bad, it catches you, lets
you weather the storm sort of speaking. But the way things are
set up now, the farm bill is working is we are facing a
category 5 hurricane. It is just not helping at all. So the new
provision, new farm bill will be very beneficial to us. Thank
you.
The Chairman. Do either of you to have any insight in terms
of comparison with the ideas that have been put forward in the
Senate for comparison?
Mr. Dunlow. Not 100 percent familiar with that version, but
I do know it doesn't meet as many of our needs. Reference
prices for one are still low enough to where, even if that was
implemented, we would still have massive loss under that
provision.
The Chairman. Dr. Allen-Tully?
Dr. Allen-Tully. Yes, we believe that all commodities are
in the same boat, and our cost of production have all gone up
since 2018. And so a reference price increase for all
commodities is important, and agriculture sticking together is
critical to us moving the farm bill forward.
The Chairman. Yes, going back, it has been since 2002 that
the last investment was made in to Title I, and the erosion
that has occurred, somewhat on purpose with previous farm bills
between 2002 and now where there was a significant amount of
money taken away from the safety net and put into conservation,
put into nutrition. But, quite frankly, we are not going to
have nutrition if we don't have farmers.
So thank you very much, and I now recognize the Ranking
Member for 5 minutes of questions.
Mr. David Scott of Georgia. Yes, thank you, Mr. Chairman.
Dr. Allen-Tully, let me ask you, I am very concerned, as
you heard from my opening statement, about the CCC remaining
and being helpful to our farmers. It has done magnificent work.
So tell me, did you or farmers in your area receive payments
from the Administration during the Trump trade war?
Dr. Allen-Tully. Ranking Member Scott, yes. I think the
vast majority of farmers across the country received payments
through the CCC.
Mr. David Scott of Georgia. How did those CCC payments
impact your ability to move forward?
Dr. Allen-Tully. At the time, they were critical to us
moving forward. I would say that we would appreciate a strong
safety net or a stronger safety net, and so then the
possibility of not having to go into the CCC would be more
desirable because it would just give us more certainty. So at
this point, we are very hopeful that will pass, a stronger
safety net so that we have that certainty.
Mr. David Scott of Georgia. Yes, it is my hope that our
farm bill will take all of this into consideration and show the
great value of the CCC program remaining within the hands of
whomever is the Secretary of Agriculture. That is what does it.
Now, Dr. Rainey, the 2024 Equity Commission final report
shared that previous attempts to strengthen the safety net did
not directly translate to addressing disparity among producers.
So will you tell us more about this disconnect?
Dr. Rainey. Yes, so in terms of the previous response to
questions of the reference prices, I think that there is
needed, but if there is also a provision that talks about
updating base acres, but if you don't have base acres, then
changing reference prices has no impact of the safety net for
you. There are many farmers that are outside of the safety net,
and when you look at Federal crop insurance options, there are
many farmers not actively engaged in that for a number of
reasons, but some of it is an understanding gap.
So on the Equity Commission, we just talked about trying to
remove some of those hurdles to communicate transparently to
allow all segments of agriculture to be seen and to see
programs that they can recognize and employ into their business
plans.
Mr. David Scott of Georgia. And how has this impacted, say,
beginning farmers? There are women-owned farms. There are all
kinds of people and with certain considerations. How does it
impact the vast diversity of ownership of farms?
Dr. Rainey. Yes, I would echo that agriculture is extremely
important to our rural communities, but it is important to
urban communities as well. We see food insecurity across the
country. And what COVID taught us in many ways is that our
farming communities are a source of resiliency for making
communities and areas food-secure, even sometimes replacing
some of our large-scale commercial commodity systems that are
in place, going from the small farmers that are doing direct
marketing at farmers' markets or using the local regional food
systems.
So the way it plays is that across the spectrum of
businesses that make up agriculture, a lot of the farming
groups that aren't able to actively access programs to be
thriving, become efficient, it creates an added hurdle. One of
the advances as an economist is to look at all the
technological innovations. We have things like high tunnels,
hoop houses, container nurseries where they are changing it
that you don't need 1,000 acres to be productive and
profitable. But you do need a nice system, and you need people
that understand and are willing to finance those systems.
So what happens is when they don't get access at USDA, that
makes it an added hurdle for financing. It makes it added
additional hurdles for trying to help explain maybe a new model
that is not a traditional way of looking at it or a traditional
way of marketing. And so it just makes it a much more difficult
path to walk for all of our producers. And there are some
avenues that I think that this Committee can address to help
smooth that pathway.
Mr. David Scott of Georgia. Well, thank you for that, and
thank you for the 20 seconds extra, I appreciate it.
Mr. Finstad. [presiding.] All right. We will go to the
Member from Georgia, Austin Scott.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
And I want to just kind of reiterate that agriculture is
the number one industry in the majority of states in this
country. And even if you are not a farmer, agriculture is
important to the economy of your state. And as I look at things
right now, the thing that scares me, you have John Deere, the
world's largest seller of tractors and crop harvesters--and
this is from an article in June--announced that they were
laying off 610 production workers. So even if you are not a
farmer, if you are one of those 610 workers, the reduction in
prices for our commodities is having a direct impact on them
and their families.
The article states, ``Lower crop prices are leaving
agricultural equipment sellers with an excess of unsold
tractors and combines, leading some to offer discounts and
suspend new orders.'' And it also says, ``The Department of
Agriculture has also forecast farm income would slide $25.5
billion from 2023.''
There has been some discussion about the Commodity Credit
Corporation. Certainly, when ad hoc payments are made, the
Commodity Credit Corporation is used. But wouldn't you agree
that farmers would rather have a safety net system that isn't
dependent on ad hoc payments to get them through the tough
years? Would all of you agree that a good safety net system
that doesn't require the ad hoc payments is more important
than--and then certainly if we get into situations where you do
have to have additional money for the CCC, that is something
that can be done.
And I noticed, Dr. Allen-Tully, you talked about the trade
deficits. We are already in a trade war with a lot of
countries. It is not Trump's trade war. It is a war that has
been levied against the citizens of America, and Donald Trump
is just the first person to respond to it to say if you want
fair trade, it is going to be fair trade, and that is a two-way
street. So I appreciate you bringing up the fact that we have a
trade deficit.
But I want to go back to you, Mr. Dunlow. You and I both
spoke to cotton producers this past week, and the key question
that was asked--and, again, remember that agriculture is the
number one industry in the majority of the states out there--
was asked by a producer to a banker at the event that we both
spoke at, and his question was, ``If farmers have average
yields, what percentage of the farmers will you be able to bank
next year?'' Do you remember that question?
Mr. Dunlow. Yes, sir.
Mr. Austin Scott of Georgia. Do you remember the answer
from the banker, the ag lender?
Mr. Dunlow. Yes, sir. She stated it may be 80 percent of
her current producers with an average crop she would be able to
refinance for another year, which leaves 20 percent out of
business.
Mr. Austin Scott of Georgia. That won't be farming next
year?
Mr. Dunlow. Absolutely.
Mr. Austin Scott of Georgia. And in years gone by, if
someone wasn't going to farm, then there was somebody else that
was willing to pick up and rent the land. But with the balance
sheet changes that we are seeing right now, Mr. Hotchkiss, is
it overly optimistic to think that if a farmer isn't able to
farm next year, that somebody else is going to step in and rent
that property and plant that crop?
Mr. Hotchkiss. Thank you for the question. And I don't know
if it is overly optimistic. And you are right. There has always
been someone that is willing to step up and it has been
competitive. But with commodity prices where they are and the
inability to be able to grow a crop that you could at least
break even, it is going to challenge those that might have
picked up those acres in the past.
Mr. Austin Scott of Georgia. Well, in my state, I mean,
bankers are calling me as much as farmers and saying there is
not a single commodity that our guys are going to be cash-flow
positive on. And if you are not cash-flow positive based on
input prices and commodity prices, you certainly don't grow
your operation or plant--I mean, David, would you expand your
operation right now?
Mr. Dunlow. Absolutely not. I mean, me and my son have gone
through, and certain farms that are less productive, because we
have been forced to lay people off and maybe get rid of some of
the less productive land and a lot of things we are doing are
just trying to survive.
Mr. Austin Scott of Georgia. I am almost out of time. Let
me end with this. Secretary Vilsack was here February 14. I
would hope all of you would watch it. And he said specifically,
``Farm income over the 2021 to 2023 period represents the
highest level of farm income in the last 50 years.'' If you
listen to Secretary Vilsack, everything is just hunky dory and
rosy on the American farm. But I am going to tell you
something. There is a big disconnect between what is happening
in the ag economy and what our current Secretary of Agriculture
thinks is actually going on, on the American farm.
Thank you all for being here.
Mr. Finstad. We will now go to the Member from North
Carolina, Representative Adams.
Ms. Adams. Thank you, Mr. Chairman, and to the Ranking
Member for hosting this meeting. To our witnesses, I thank you
for your testimonies on financial conditions in farm country.
And I want to extend some special greetings to our North
Carolinian Mr. Dunlow on the panel.
But before I get to my questions, I do want to raise
another financial condition in farm country, which is household
food insecurity. It is statistically significantly higher in
both rural places and principal cities like Charlotte than the
national average according to USDA's Economic Research Service.
And so I share that to provide context for the draft farm
bill, which passed out of this Committee, which many of you
have shared today that there are pieces which you like. But the
$30 billion SNAP cut alongside the provisions you highlight
today does a disservice to families in farm country who
disproportionately participate in the program who cannot afford
to put food on the table. So I am hopeful that the conversation
today can provoke bringing together a farm bill that builds a
bigger tent and can support farmers and families who I know are
struggling.
And, Mr. Hotchkiss, my first question is to you. You
mentioned that it would be problematic for the Farm Credit
System to be exempt from the CFPB's 1071 rule on demographic
reporting requirements. So could you discuss whether commercial
banks are prepared to comply with this reporting? And do you
think that a Farm Credit System exemption would disrupt
comprehensive data collection that may reveal who is and who is
not being served by financial institutions?
Mr. Hotchkiss. Thank you for the question, Representative.
First of all, yes, commercial banks are prepared to comply with
the 1071 rule, and your question regarding Farm Credit and the
proposed exemption for them, the reason it is problematic is
because it continues to keep an unlevel playing field. And I
believe and the ABA believes it should be a one size fits all.
Everyone should be held accountable to track and record and
report the same information. And by having that carved out and
having a different agency, that just becomes suspect and very
problematic.
Ms. Adams. Thank you. So, Dr. Rainey, thank you for your
service on USDA's Equity Commission. But when we talk as if the
current financial conditions in farm country are recent, we
have to remember that for some Black and Brown farmers, they
have been facing headwinds for quite a while. So I just asked
Mr. Hotchkiss about the section 1071 rulemaking and the current
bill drafts. So how do you think socially disadvantaged farmers
would feel about Farm Credit System institutions if they knew
that the System could be held to a different and potentially
weaker standard for demographic reporting?
Dr. Rainey. One of my roles as an educator is working as an
advocate, trying to help support more transparent systems. And
coming from many of my stakeholders both in industry and
farming for minority segments, they have been pushing to get
more transparency there because one of the things that is
needed in order to drive good results is good data. And if you
are limited on the data that you are collecting that you can
identify if there are some systemic issues or there are some
problems, then it is hard to address it. So I think that many
in the minority communities would love to see that
transparency, to see that level playing field play out.
Ms. Adams. So, Dr. Rainey, this summer I introduced the
Capital for Beginning Farmers and Ranchers Act of 2024 (H.R.
8598) with Representative Strickland of Washington, and it
authorizes a pilot loan program for beginning farmers to
finance startup expenditures and features multiyear repayment
terms up to 10 years, as well as reduced collateral interest.
So do you see this as a tool that would benefit under-resourced
farmers?
Dr. Rainey. The short answer will be yes. So financial
stress is across agriculture, and because of the systemic
issues, I would say that many of our small and marginalized
farmers and beginning farmers, it is an added hurdle to even
get onto the field if you wish. So any programs that would
support financing, financing is the fuel that drives
agriculture, so any options that can help and assist in that
space would be beneficial.
Ms. Adams. Thank you. And thank you all for your testimony
and your answers. And I have some others, but I will pass them
along. And, Mr. Chairman, I yield back.
Mr. Finstad. We will go to the Member from Nebraska,
Representative Bacon.
Mr. Bacon. Thank you. Thank you all for being here. We
appreciate your testimony and your perspective.
Mr. Dunlow and Dr. Allen-Tully, there have been some
Members of Congress and even some producers who have suggested
that farmers don't need Title I and said insurance is enough to
see them through the bad years. Do you agree with this
sentiment? I would love to hear your thoughts on it.
Dr. Allen-Tully. Thank you. No, we actually would view it
as there are two separate roles. Title I is a price support
system to help us in times that provides consistency but is
well below any cost of production or profitability level. Crop
insurance is a tool that each producer can choose to enter into
based on their yields and their level of comfort related to
risk, and so we view them as separate parts of the safety net
but both are critical.
Mr. Bacon. Our farmers would be undermined by taking away
Title I, bottom line?
Dr. Allen-Tully. Yes.
Mr. Bacon. Mr. Dunlow?
Mr. Dunlow. Yes, I will reiterate what the lady said. We
look at it two different ways. For example, on my farm if
insurance guarantees, if cotton is at 60 a pound, then I take
insurance, I am insured at 60 a pound, which is still well
below the cost of production. But with Title I and reference
prices, it gives a safety net that helps you weather the storm.
In addition to that, it also gives my banker a feeling of
comfort, a 5 year farm bill with knowing if things get bad,
there are subsidies coming in.
Mr. Bacon. Thank you.
Mr. Hotchkiss, your testimony touches on how access to
credit can be more difficult for young, beginning, and socially
disadvantaged farmers. The bipartisan farm bill this Committee
passed just a few months ago expands access to the safety net
for producers by streamlining credit programs, expanding
premium discounts and crop insurance, as well as adding
additional base acres. How important will these changes be for
those producers who struggle with access to credit?
Mr. Hotchkiss. Thank you for your question. All young and
beginning farmers, as they enter into the farm industry, there
is a high cost of entry. And if they don't enter with a family
member, they need these programs so that they can take
advantage of the programs, whether it is downpayment assistance
or interest assistance or any other USDA program. And so they
are absolutely critical in my opinion to allow us to continue
to bring in younger farmers and, as I think was said earlier,
help the aging--the average age of a farmer ranks 62 this year.
We would like to pull that down because we need our farmers to
be here a long time so we can feed the world for a long time.
Mr. Bacon. You need to get the next generation in, totally
agree.
Dr. Allen-Tully, one final question back to you if I may.
The Draft Herbicide Strategy proposed by the EPA would force
growers to adopt costly and burdensome mitigation measures just
to use important tools like glyphosate, Dicamba, atrazine to
protect their crops from damaging weeds and implement
conservation practices. According to the USDA analysis, corn
growers in just Iowa, Illinois, and Nebraska could collectively
face costs as high as $5.5 billion to comply with this
strategy. How do expensive mandates like these impact corn
growers who are already struggling to make ends meet?
Dr. Allen-Tully. So access to any of our crop protection
tools are going to play a critical role in us being profitable,
as well as employing any climate-smart programs. And so that is
kind of a double-edged sword. If they increase regulation
around the crop protection tools that we have, we may not all
be able to participate in some of the crop protection or in
some of the climate-smart practices that are also becoming
clearer and clearer important to our consumers.
Mr. Bacon. Thank you. I have 30 seconds left. I think I
will yield back.
Mr. Finstad. All right. We will go to Representative
Spanberger.
Ms. Spanberger. Thank you so much, Mr. Chairman, and thank
you to the witnesses for joining us here today.
Collapsing on-farm prices, increasing input costs, and
tightening margins are straining farmers' financial stability,
as you all have so clearly laid out throughout your testimony.
In the Commonwealth of Virginia, agriculture is our largest
private industry. It contributes significantly to our
Commonwealth's rural communities and those communities' overall
health, financial health, as well as our overall Commonwealth's
economy. The success of family farms translates directly into
the well being of local economies through job creation, local
spending, and community stability. And protecting family farms
is essential for preserving the agricultural way of life,
feeding the American people, and making sure that generations
can continue to thrive on that land.
One of the potential efforts that I have worked on to
address some of the financial challenges with Representative
LaMalfa, a colleague on this Committee, is the Farm Credit
Adjustment Act (H.R. 6564). This bill--and I just highlight it
in this hearing because I continue to hear from constituents
about the impact it would have--this bill is directly
responsive to the concerns I have heard from farmers across
Virginia about administrative burdens placed on Farm Credit
institutions.
Specifically, this bill would cut red tape by allowing the
Farm Credit Administration to conduct audits of low-risk Farm
Credit institutions less frequently, every 24 months instead of
every 18 months. It is common sense. It is just a 6 month
extension. It would reduce regulatory burdens, lower costs for
Farm Credit institutions, and make sure, frankly, that they
have more bandwidth to serve the needs of farmers.
So as we continue to look at ongoing critical issues, the
way that we are addressing them, I think it is vitally
important to continue the conversation related to this bill and
the effort that it tries to get at.
But I want to begin my questioning talking about some of
the challenges facing the farm safety net programs. Currently,
the shortcomings of farm safety net programs are increasingly
apparent, and again, through your testimony, you have touched
on them. With declining direct access from programs like
Agricultural Risk Coverage and Price Loss Coverage and
increasing reliance on ad hoc disaster aid, improvements truly
are needed to better support farmers.
So, Mr. Hotchkiss, I would like to begin with you. Could
you discuss about the current state of farm safety programs
that have affected agricultural lenders and their ability to
support farmers, and if there are any additional changes or
improvements that you think that might be needed to make these
programs more readily able to support and assist farmers and
help stabilize their financial conditions?
Mr. Hotchkiss. Thank you for the question. From a safety
net perspective, obviously, crop insurance, I believe, is
critical. It is part of the farm bill. It is critical both for
the farmer and benefits them greatly because it allows them to
gain access to credit but it also does give the organization
financing them also some comfort because they do have that
safety net there.
In terms of other issues, the increased limits that are
contained for FSA guarantee limits and the separating of the
operating loan and real estate loan and increasing them both
with the high cost and a continually increasing cost, they are
critical not only for existing farmers, but I believe for young
and beginning farmers because it gives them the ability to get
guarantees with larger operations because of the cost.
And then last, the reference prices, you had asked is there
something that I can suggest. Reference prices have
historically been set once in a farm bill, and I believe with
our economy and our world moving at such a rapid pace, almost
an annual setting of those reference prices makes more sense
because you avoid getting them out of correlation with what is
going on in the market. And I also believe that having a
correlation to the cost to produce versus the market is really
important because there isn't always a strong correlation
between that cost to produce and the market price versus what a
reference price could do from a safety net perspective. And as
has been said by some of my esteemed colleagues here, I believe
it is important that farmers can at least break even.
Ms. Spanberger. Can you just--in my remaining time--I
understand what you are saying. Could you just expand on that a
little bit more in terms of what that shift would be that you
would recommend?
Mr. Hotchkiss. Expand on what specifically?
Ms. Spanberger. When you were talking about how--well, two
parts. Well, now I am running out of time. But specifically,
the annual readjustment that you are----
Mr. Hotchkiss. Well, the reference----
Ms. Spanberger. Would that just not be also highly
disruptive?
Mr. Hotchkiss. If the reference price would be tied to
cost, not commodity market prices, and then either have an
annual adjustment tied to those costs or just be reset by the
USDA on an annual basis. It could be either one.
Ms. Spanberger. Okay. Thank you. That is helpful and
interesting. I yield back.
Mr. Finstad. All right. We will go to my neighbor from
South Dakota, Representative Johnson.
Mr. Johnson. Howdy, neighbor. I wanted to talk banking a
little bit, and of course, the 1071 is the CFPB's, as you know,
sir, their new set of regulations for lenders, pretty broad new
data collection. I just want to get a sense because, clearly,
capital, as we are talking about people expanding operations,
having efficient operations, being able to be sustainable,
particularly for young, beginning farmers, I have to think
these new regulations have an impact on your ability to put
capital out on the street. So talk a little bit about 1071
specifically and if there are other regulations that complicate
that flow of capital.
Mr. Hotchkiss. Is that directed at me? Okay. I am sorry.
Thank you for the question.
Complying with 1071 obviously will increase the cost to
produce, and those costs will be passed on to the producer. I
mean, that is going to happen. And, unfortunately, we don't
need additional costs today because we have enough that are
already being passed on.
The bigger concern I have with 1071 is privacy. In rural
America, everyone knows everybody. Your neighbor just said
that. And so depending upon how things could be reported to the
public, there could be a whole community that know who is being
talked about, and they may not want that information now out in
the public. And to me, it is an invasion of their privacy,
their business' or farm's privacy. And so to me, I am as
concerned about that as I am about the----
Mr. Johnson. Well, and you are right. So much of this
information is already known. It is even more problematic for
the information maybe that the lender doesn't know if the
person who is seeking this loan is being asked questions that
they think are invasive or inappropriate. Now, you are kind of
putting a wedge between this incredibly important relationship
between a producer and where they go to get the capital they
need to be successful. Am I right in thinking that way?
Mr. Hotchkiss. Absolutely. Which is also why, if we do
continue to move forward, it should be a level playing field,
and everyone that finances in agriculture should be required to
ask the same questions because if that doesn't happen, those
that don't have to ask those questions are going to have an
advantage because that is where the customers are going to go
because they don't want to answer.
Mr. Johnson. Yes, and I don't want to be blind to history
here. I mean, clearly, there have been times where capital has
not flown to all communities in this country like it should
have. But also, I get concerned when we divide this country
into smaller and smaller, more narrow demographic buckets and
view us not just as producers who are trying to feed the world,
clothe the world, power the American economy, but as subsets of
identity groups and this concern that all this data collection
is moving us in the wrong direction.
What about other regulatory overreach that this Committee
should be attentive to?
Mr. Hotchkiss. Well, nothing comes to mind specifically. I
know that there are some proposals regarding Basel III, and
that will continue to increase costs. It is the same type of
thing, more cost that will be passed on, and I think that will
hurt the American farmer.
Mr. Johnson. Well, that was the one I was sort of fishing
for. I should have directed you a little bit better rather than
make you, but, listen, you grabbed onto it delightfully. I do
think this Committee has talked a lot about how those new
margin standards could make it a lot harder to deploy capital
efficiently and effectively, not just for rural America, but
really across this country.
I think the Prudential Regulators need to seriously
consider the secondary and tertiary impacts of some of these
new much higher margin requirements, which, frankly, go way
beyond what the stress testing indicates would be reasonable
and appropriate in the marketplace. Anything else you want to
share before I yield back?
Mr. Hotchkiss. I would agree with that comment. That is all
I would say.
Mr. Johnson. Well, look at this. What a neighborly amount
of agreement we have today, Mr. Chairman.
Mr. Hotchkiss. Well, and I am your neighbor to the south
from Iowa, so hi, neighbor.
Mr. Johnson. Yes, I think both you guys need to do a better
job of taking care of your yard. The neighborhood is going to
hell. So with that, I yield back.
Mr. Finstad. I am just amazed that you gave this country 44
seconds back, so thank you.
We will go to the Member from Connecticut, Representative
Hayes.
Mrs. Hayes. Good afternoon, and thank you to all of our
witnesses for being here today.
Before I start my comments, and since the hearing opened
talking about the Farm, Food, and National Security Act, I will
just make a comment that the fact that we voted on that 2
months ago out of Committee and it has not gone to the floor
yet is an indication of how problematic that piece of
legislation is. We have 4 more weeks in session before the
funding runs out from the extension, so hopefully we can
continue to work until we come to agreement and pass a bill out
of the full House that the Senate can consider because everyone
on this Committee and here in the Congress wants a farm bill
that supports our farmers and feeds our families. That is
something that I think we all want.
But back to today's hearing, according to the 2022 Census
of Agriculture, Connecticut, where I am from, and my district,
the 5th District, has about 1,251 farms, a decrease from the
2017 Census, which counted about 1,404 farms. The average size
of a farm in my district is about 72 acres, more than six times
smaller than the national average. This trend holds across the
country. The number of farms is declining, and only the largest
are surviving. This Committee and the Congress as a whole must
work to preserve farms and grow American agriculture, not stand
by while more operations close their doors and go out of
business.
There are inherent risks in farming. I think we can all
agree on that. And the success of a farm is dependent on
national and international trends, increasingly extreme and
unpredictable climate conditions, and shifting priorities in
Federal support. The farm safety net is crucial to farmers
facing uncertainty, but its reach is also limited, as we well
know. In 2022, only 19 percent of farms in the United States
had crop insurance. In Connecticut, just five percent of those
farms had crop insurance.
Dr. Rainey, I appreciate the attention paid to crop
insurance in your testimony, specifically the lack of options
available to small farms and minority, underserved, and
specialty crop producers. In your work what have you identified
as the main barriers to access to crop insurance for small
farms?
Dr. Rainey. I appreciate that question. So I am currently
under a Risk Management Agency Pilot Project across the South
where we are actually trying to address that question and are
collecting data actively right now, trying to, one, understand
just the basic awareness of Federal crop insurance. One of the
things that we found out through that that program where we
have a cohort of program specialists talking to farmers and
ranchers--and I will preface it by saying we are focusing on
socially disadvantaged, marginalized farmers, small farmers--is
asking them are they familiar with what the Federal crop
insurance products are. Many of them are not.
The reason I mentioned that in my testimony about NAP is
because NAP is more disaster than it is crop insurance. And so
from a fundamental risk management perspective, many of our
small and minority farmers don't even understand the value of
how they can transfer and manage risk using Federal crop
insurance.
In terms of identifying issues, we have just found that
there is a lack of engagement in many places. Some of it I
think is the incentives of the structure. You can make a lot
more commissions if you are focusing on large-scale commodity
farmers. And from what I understand--I am not a crop insurance
expert--but the work and administrative workload of managing
those or carrying out those policies for micro farm and whole
farm is a little bit higher, so many agents will shy away from
that, or maybe their book of business is fine that they say I
am good for the year without trying to do that added program
chasing clients. But the bottom line is many of our farmers and
ranchers are outside of that safety net if you are looking at
crop insurance as a potential net catcher if you will.
Mrs. Hayes. Thank you. The USDA has consistently found that
smaller farms are at higher financial risk. However, on this
Committee, and most of our work historically has ignored the
needs of those really small farms that we are talking about,
farms like mine in New England. Over the past 2 years, New
England farmers have experienced extreme weather events from
droughts to late-season frost to torrential rains.
Last month, I introduced a piece of legislation called Save
Our Small Farms Act of 2024 (H.R. 8611) with the rest of the
Connecticut delegation, which would improve access to and
payouts from NAP, assist and incentivize farmers to purchase a
Whole Farm Revenue Protection policy, and direct the USDA to
study the feasibility of an index-based insurance policy for
extreme weather events.
Would you agree that expanding access to NAP and crop
insurance coverage would help small farmers stay in business?
Dr. Rainey. Absolutely. And what we have discovered is that
there is a knowledge gap there. Many of those farmers don't
understand Federal crop insurance, and many of them think that
it is only for the large-scale farmers. There have been some
new products, but that information has not made it for those
businesses to consider. So yes, I think it can help.
Mrs. Hayes. Thank you. My time has expired. And a focus on
technical assistance is another top priority for me and my work
on this Committee.
I am sorry for going over, Mr. Chairman. I yield back.
Mr. Finstad. All right. We will go to Chairman Lucas from
Oklahoma.
Mr. Lucas. Thank you, Mr. Chairman.
When I had the privilege, honor, and responsibility of
being Chairman of the Agriculture Committee in 2014, this
Committee created the ARC and PLC programs and set the
reference prices that producers are operating under today.
Input costs have risen significantly since 2014, and reference
prices are not accurately reflecting the cost of production
today.
Additionally, farm income is forecast to fall for the
second consecutive year, and optimism in my part of the country
is declining. So let me be clear, the time to make updates to
the farm safety net is now. And I want to thank Chairman
Thompson for producing a strong farm bill that includes
significant upgrades to reference prices across commodities.
Now, I want to begin my questions today by examining the
effects of rising input costs on producers. Mr. Dunlow, you
mentioned in your written testimony that the cost of production
for cotton has increased by 24 percent since 2018, and growers
are struggling to make ends meet. Can you please walk us
through the different factors that have made growing cotton
more expensive since 2018? And additionally, will you touch on
the real-world impacts of what will happen to producers if
Congress does not pass a farm bill this year?
Mr. Dunlow. Yes, thank you. And like I said, on our farm,
practically every input has gone up. It is labor, it is fuels,
equipment, land rent, all inputs. And, historically, in my 40
year career, those do not come down. Labor, equipment price,
certainly farm rent, those figures don't come down.
Occasionally, fertilizers will come down a little bit, but they
have gone up as much as 200 percent back during COVID, and it
has come back down a little bit, but still significantly higher
than it was in 2018. So these are the problems we are facing
with commodity prices still staying at the same level and not
kicking in the reference price, safety net part.
Mr. Lucas. We have touched on the importance of a strong
farm safety net that includes programs like ARC, PLC, and crop
insurance. This question is for the panel. Can you discuss how
crop insurance complements programs like ARC and PLC? Why is it
important that the producers have access to both price
protection and weather protection? And whoever would care to
step up and take a swing.
Dr. Allen-Tully. Thank you for the question. I can't work
my microphone, but thank you for the question.
Mr. Lucas. We are going to get you there. Pull it a little
closer, please, if you can.
Dr. Allen-Tully. I think that the ARC and PLC programs
really provides a great safety net, but I would put it more as
a put option. That would be the lowest point which we would be
subject to. But I wouldn't farm without insurance any more than
I would have a house without having homeowners insurance. If a
hailstorm comes through, I want my homeowners insurance to be
there to protect me, just like I want my crop insurance to be
there to protect me if the same thing happens. And so it
provides the flexibility for producers to engage in an
insurance program that fits their needs and fits their level of
risk.
Mr. Lucas. Anyone else care to touch on that? I think that
a good point has been made. It doesn't matter if you have price
protection if you have nothing to sell, which is what crop
insurance is about. By the same token, if you have a bountiful
crop and there is no price, you are in the same box.
All of you have experienced significant market volatility
in recent years, so as we move towards the end of this year,
what economic headwinds are you bracing for, and how will a
farm bill help mitigate those challenges? And let's start with
you, Dr. Allen-Tully. You got the last good one. You get to
finish out with me.
Dr. Allen-Tully. So I think that, for us, as we look
forward into the end of the year, we are not sure how our crop
is going to be. We have had some record rainfalls in Minnesota,
and we also have headwind pressure on prices. So we are
critically evaluating whatever capital purchases or investments
that we may be interested in making and holding off for another
year before we do anything more significant.
Mr. Lucas. So you have to have a complete safety net, and
it has got to be updated if you are going to survive.
Dr. Allen-Tully. We need to have a complete--absolutely.
Mr. Lucas. With that, I yield back, Mr. Chairman.
Mr. Finstad. All right. We will go to the weatherman from
Illinois, Mr. Sorensen.
Mr. Sorensen. Thank you, Mr. Chairman.
And thank you, Dr. Allen-Tully, for mentioning that.
Minnesota has seen so much rain, and we have seen the water
levels rise in the Mississippi River Valley. Our farmers are
dealing with that right now. But also the issue that we are
seeing now is our focus as the waters recede in these farm
fields, now we are looking toward increasing likelihood of
heat. So effective measures against extreme weather events like
this are vital to ensure that our producers can navigate the
fluctuations that we are seeing in our weather.
Financial tools like reference prices and crop insurance
are integral to helping farmers keep food on the table and grow
the energy that we need for uncertainty in economic times.
These safeguards must remain robust and crafted in a way that
benefits all producers fairly.
The farm bill right now is a critical risk management tool
for the heartland, and that is why it is imperative to ensure
that the final text has broad bipartisan support and is
financially sound. I will work toward that end because it not
only helps our family farmers endure the hard times today, but
it keeps them sustainable for generations to come.
And so I want to turn to Dr. Rainey first. As the only
meteorologist in this Committee or in Congress, we see these
extreme weather events happening more frequently. When we look
at this, the rate and frequency of these events makes the past
no longer the prologue when determining the future risks to
producers. These impacts affect productivity globally,
contributing to an already volatile commodity market. What
enhancements to existing risk management tools in the farm bill
do you believe will prepare farming communities to survive
future challenges?
Dr. Rainey. I think that crop insurance is definitely--as
my fellow panel members have stated, crop insurance is an
important part of that. To understand those that aren't
currently being served by Federal crop insurance, I think it is
important to look for ways to try to expand that, whether that
is through broader technical assistance to help farmers and
ranchers understand that risk mitigating factor because if they
don't have crop insurance, and if they are outside of the
safety net, then they are financing their risk on their balance
sheets. And that is a place that we really need more and more
businesses to truly understand that.
And so I think crop insurance and adjustments to expanding
that, looking at possibly subsidy levels, looking at ways of
possible technical assistance to enhance understanding and use
of it either from RMA or through education through the land-
grant systems, I think those are some avenues that would pay
dividends because I think the more that we can move from ad hoc
disaster assistance, the better off the farmers are, the better
off the system is because what we have always talked about is
the risk. And what the farm bill does is take some of that
uncertainty of the risk out, and it gives programs and avenues
for farmers to strategically engage.
I work a lot with extension risk management where we talk
about the full range of risk management tools, and there are
some things that I think we do in technical assistance there.
But the profit squeeze that we have right now where input
prices are above commodity prices, that is going to require
some intervention. And that is just the bottom line with this
current squeeze. Unless we can reverse that, it is difficult.
Mr. Sorensen. Thank you.
I appreciate that. I did want to talk briefly. The
Inflation Reduction Act (Pub. L. 117-169) provides tax credits
to promote the production of clean energy. And in my district
in the surrounding areas in northern Illinois, sustainable
aviation fuel is needed now more than ever. However, how can we
let it happen? Brazilian ethanol and used cooking oil from
China is coming into our country and it is allowed to use these
tax credits when our family farmers and our producers have the
ability to bring this to fruition.
I know my time is waning, but, Dr. Allen-Tully, I want to
turn this to you. How critical is it for the Treasury to craft
energy tax credits that prioritize our American farmers and our
domestic producers?
Dr. Allen-Tully. The sustainable aviation fuel space is one
of the most exciting things that we have coming as a corn
farmer. And right now, how the Treasury has their guidance
written, it would exclude us. And so it is almost insulting to
believe that we would bring in sugarcane ethanol into the U.S.
in place of homegrown ethanol grown here.
Mr. Sorensen. I appreciate that. I know my time is
expiring, but the decisions that we made with respect to
ethanol in the 1990s really helped our family farmers, and I
think sustainable aviation fuel is needed today.
Mr. Alford. [presiding.] The gentleman's time has expired.
Mr. Sorensen. Thank you.
Mr. Alford. The chair now recognizes the gentleman from
Indiana, Mr. Baird.
Mr. Baird. Thank you, Mr. Chairman. I appreciate having
this session on financial conditions in farm country. And any
of us that are involved in agriculture, you certainly recognize
how important the prices are, how important costs are
associated with trying to produce a crop. So I think it is very
appropriate to have the kind of expertise we have here today,
and I really want to thank you for being here.
I guess the first thing I am going to start off is with Mr.
Hotchkiss. You are from Evansville, Indiana, and you probably
know some of the folks at the Indiana Bankers Association like
Amber Van Til and Rex Betzner. Anyway, good to have you here.
Mr. Hotchkiss. Thank you.
Mr. Baird. I was really proud of them when we were going
through the PPP and how much contact they had with the local
community and their involvement. It is part of the fabric of
our rural community, so thank you for that.
Mr. Hotchkiss. Absolutely.
Mr. Baird. But what I wanted to start out with, in your
testimony, you mentioned the Farm, Food, and National Security
Act and those provisions that help meet the financial needs of
producers across the country. Can you expand further on how
important these changes will be to you and to other bankers and
keeping producers cash-flow during these times?
Mr. Hotchkiss. Well, thank you for the question. The
importance is being able to have the Act continue, one of the
items was increasing the guarantee limits. And what that does,
costs have come up. Entry to the industry is high, as I said
earlier, and separating the operating limit from the land limit
or the real estate limit is really important because what it
allows the farmers to do is to continue to expand their
operation, but it also allows whoever is financing them to
leverage those programs and those guarantee programs at a level
that makes more sense, that fits the current environment that
we are all working within so that they can expand and grow.
In terms of other farm bill issues, working on the
definition and changing who is a beginning farmer was critical
because, before, there were people that were beginning farmers
but didn't meet the definition because of the way it was
written. And so, having that done and the downpayment
assistance programs is going to help, especially the beginning
and young farmers. Those are just three that come to mind, and
it is really critical that we have those things in place so
that we can meet the needs of not only beginning farmers, but
all farmers.
Mr. Baird. Well, thank you very much.
Mr. Caldwell, can you elaborate from a retailer's
perspective the relevance of the farm safety net for affiliated
businesses? And how much of an impact do you think crop
insurance will have on your customers?
Mr. Caldwell. So as it has been mentioned by the other
panelists, the crop insurance program, I mean, it is the best
safety net tool that we have out there. Our businesses, I mean,
we are directly connected to the producers. We are in the same
communities. Our employee base, a lot of them still fortunately
come from the farm. They are embedded in those communities. And
in a lot of cases, agriculture is the primary employer in many
of these rural communities, so without that safety net--and we
talk about the safety net for producers. This safety net is for
those communities because without them, without their success,
then none of the rest of us succeed. So as you live and you
work in these rural communities, you see the so agriculture
goes, so our farmers go, so our communities go.
Mr. Baird. Thank you. Mr. Chairman, I would like to just
make a comment. I had another question, but I have enough time
to make this comment I think.
Mr. Alford. Without objection.
Mr. Baird. The Draft Herbicide Strategy proposed by the
Environmental Protection Agency would force growers to adopt
costly burdensome mitigation measures just to use important
tools like glyphosate, Dicamba, and atrazine. And so I am just
going to make sure I get this on the record that we are
concerned about some of the things and the overreach that EPA
has and their use of the Endangered Species Act and all that.
So I wanted to make sure we got that in the comments today. But
I thank all of you for being here.
Mr. Alford. Does the gentleman yield? Thank you.
We now recognize Mr. Soto from Florida.
Mr. Soto. Thank you, Mr. Chairman, so much.
Proud to represent the central Florida area. It is kind of
SEC country, so I guess it is pretty close with Gainesville and
Tallahassee, although we root for the Knights. And in our area,
we have blueberries, strawberries, obviously citrus, cattle,
huge commodities. We are proud to have many generations of
farmers in central Florida. And we know that through the farm
bill very important to increase the commodity reference prices
that has been discussed a couple of times today. We want to
make sure that every farmer, including young farmers, have a
future and that we have a future food supply.
We also know through the IRA, investments in resilience and
getting access to water has been something I have seen
firsthand in central Florida that has been really helpful.
Mr. Caldwell, you had mentioned the changing climate and
what we are facing in the Southeast with getting hit by
hurricanes every year almost. How important would it be to make
sure we codify disaster block grant authority right now? If we
don't put it in every disaster relief bill, then they are not
authorized necessarily. And then we saw in Florida and a couple
other states that it was very difficult to get the money out
there. So how important is it that we streamline disaster
relief for farmers after hurricanes who may not have
commodities covered by crop insurance, which is obviously also
a good tool?
Mr. Caldwell. So, obviously, we would rather have that
frontline, something you could depend on, so anything that we
can do to streamline that inefficiency. And when it happens and
the relief is there, it is great. I don't know how many bankers
want to finance on that. That is a challenge, so any
consistency we can get with any of those relief tools.
Now, I started in this business in 1980. The weather was, I
don't know how many in the room remember it, but it was not
good. It was not good. And so from there, I am a weather
watcher. It so ingrained if you are in agriculture. It is
something that you do. And yes, those hurricanes, the threat of
hurricanes, those are the things that keep you up at night. And
we have already started this year in Texas. We already had some
crops that have been damaged. Hopefully, the safety net is
there. But anything we can do to improve the consistency of
that and the transparency and the reliability is a good day.
Mr. Soto. One of the main things in the Inflation Reduction
Act for agriculture was to help with more resilience. What are
some of the different resiliency types of actions that local
farmers in the Southeast are taking to try to strengthen them
against the weather we are seeing?
Mr. Caldwell. So, I mean, we can have diversity in crops. I
mean, we can have all kinds of diversity there, but that
doesn't really protect us against the weather so to speak. I
mean, growers, obviously, they do things that they can, try to
get a crop in early. If you can get a crop in early, you can
harvest early. But there is not a whole lot they can do to
protect themselves against a hurricane.
Mr. Soto. And then, Mr. Hotchkiss, I know we have heard
Secretary Vilsack talk a lot about trying to protect small
farmers and trends in consolidation. Larger-scale efficiency
has been kind of a push in the industry that has kind of pushed
away from small farmers. From a lender perspective, how do we
keep it balanced to encourage more farmers to stay in the
business and be able to continue to grow?
Mr. Hotchkiss. Thank you for the question. I think to keep
more farmers engaged and in the business and to encourage
others to enter the industry, whether they are young farmers or
not, we have to have safety nets in place, and we have to have
programs in place that help protect them not only from price,
but also on the cost side. Our reference prices have to be
relevant every year so that there is a really high correlation
to the actual costs. And then there have to be programs,
whether through the USDA or direct, that help provide that
safety net because there are so many uncontrollable risks in
this business.
And, as people think about entering the business and
becoming a farmer, they are weighing all of those, and if those
safety nets aren't out there, they may and really have been
choosing not to enter it.
Mr. Soto. Thank you, Mr. Hotchkiss. We are seeing in
central Florida citrus has had a real challenge because of
greening as an example from changing weather and from pests
that we have. And while it is improving, there are a lot of
challenges we face in the Southeast. I appreciate your
perspective, and I yield back.
Mr. Alford. The chair now recognizes the Member from Iowa,
Mr. Feenstra.
Mr. Feenstra. Thank you, Mr. Chairman, and thank you,
Ranking Member Scott. Thank you for our witnesses.
I represent the second largest ag district in the country,
predominantly corn, soybeans, cattle, hogs, dairy, eggs,
turkeys, you name it, we have it all. And I am very passionate
about making sure that we continue to be the breadbasket to the
world. The problem is we have a beginning farmer and the next
generation of trying to take over, but it is problematic. I
mean, you think about, right now, nine percent of our farmers
are under the age of 35 where over 40 percent of them are over
the age of 65. So how can we make sure that that land and that
farm gets passed onto the next generation? We are already
seeing corporate companies and foreign lands buying our land
and no longer the American farmer. He doesn't have it.
So I want to first talk about crop insurance. Dr. Allen-
Tully, I want to talk to you. When you think about crop
insurance, that beginning farmer, it is a very significant
expense. I mean, it is probably the number one expense besides
seed when you have to buy crop insurance. I created a bill that
is in the farm bill to try to lower that cost. Can you talk a
little bit about that, of how important it is to make sure that
beginning farmer has incentives so they can operate in an
effective manner and to be profitable?
Dr. Allen-Tully. Absolutely. Thank you, Congressman
Feenstra, for your work on this legislation, along with
Congresswoman Craig. It would seem that the both of you truly
have an interest in making sure that we have future farmers
that are able to make it into the business. We also very much
appreciate that Chairman Thompson included it in the bill.
A little while ago, I was a beginning farmer. But having
tools that are specific to them, the capital requirements to
get into farming these days are too significant for someone who
is 25 or 30 to be able to go to their banker and take on that
debt and without a strong safety net and without them being
able to show that they would at least have a floor under their
crop if something happened out of their control is critical.
Mr. Feenstra. That is right.
It is absolutely critical. And you teed it up for me. When
you think of how it all works together for that the beginning
farmer and also you need the banker, you need that operational
loan, and you got to work with that bank, with that loan
officer saying, ``All right, not only do I got to pay my land
rent or pay land price, I also have to pay for that input.''
I worked on the ACRE Act of 2023 (H.R. 3139, Access to
Credit for our Rural Economy Act of 2023) or actually I am the
writer, the author of the ACRE Act. Mr. Hotchkiss, can you talk
a little bit about operational loans and what it does if we can
lower the interest rate just a little bit for not only the
beginning farmer, but also operational loans on farmers?
Mr. Hotchkiss. Yes, I can. First of all, thank you for the
question, and thank you for your work on the ACRE Act because,
as you know, the ABA has been very supportive of that. The ACRE
Act reduces the interest--first of all, it levels the playing
field with all financial competitors within the agricultural
industry so that we are all playing by the same rules, all
playing on the same field. But I believe that will make things
more competitive. It will force all providers of credit to
compete in the same field, and therefore, that will lower the
cost.
And interest cost is a huge item for whether it is a
beginning farmer or an existing farmer. And by doing that, you
are going to help stabilize, make more credit available, and
allow them to finance or maybe, if it is a young and beginning
farmer, actually get into the farming sector.
Mr. Feenstra. Absolutely.
Mr. Hotchkiss. And so we really appreciate you and all you
have done for the ACRE Act and hope that it moves forward.
Mr. Feenstra. Thanks. One other topic I want to talk about,
especially in Iowa, we have 60 farmer-owned cooperatives, and I
know, Mr. Caldwell, you are very involved in that. I sit on
Ways and Means also. 199A has to be extended, 20 percent pass-
through for co-ops, cooperatives. What does this mean, and why
is it so important? Can you just address this very, very
briefly? I got 30 seconds
Mr. Caldwell. I can. I have spent my whole career in the
cooperative system, the reverse ownership model. And, 199A
actually, it just gives the cooperative system a level playing
field. And I can just tell you, if we remove that, that will be
a direct cost to the member-owners.
Mr. Feenstra. It would be catastrophic, a massive problem,
absolutely.
Mr. Caldwell. Absolutely.
Mr. Feenstra. I am very passionate about it. I have created
a bill to make it permanent, but I will do it through
reconciliation next year.
Thank you very much, and I yield back.
Mr. Alford. Thank you. The chair now recognizes the
gentlelady from Ohio, Ms. Brown.
Ms. Brown. Thank you very much, Mr. Chairman.
And thank you to our panelists as well. Your comments have
been very insightful.
As this Committee continues our work on this year's farm
bill, we must remain committed to ensuring our hardworking
farmers have the resources and strong safety net they need to
thrive. In my home State of Ohio, agriculture was responsible
for contributing over $15 million to the 2022 economy. The
strength and resilience of our agriculture supply chain and
economy have a direct influence on our national security,
economic success, and Americans' access to nutritious foods.
And I want to emphasize the significance of ensuring that
this farm bill works for everyone, and importantly, that it
brings more farmers into the fold. A farm economy where the
rich and big keep getting richer and bigger is not sustainable
or successful. Our great existing programs like crop insurance
must intentionally include new, young, and socially
disadvantaged farmers, as well as those working in
nontraditional spaces like urban agriculture. Our strength is
rooted in our diversity, and now is the time to invest in that.
So, Dr. Rainey, you shared that you served as part of the
USDA's Equity Commission. What recommendations did the
Commission share that would impact minority and socially
disadvantaged farmers? And did you see those changes reflected
in the House farm bill?
Dr. Rainey. We saw a number of the recommendations
addressed in terms of trying to expand the safety net, in terms
of the reference to trying to update base acres, trying to get
more people to be able to benefit from that safety net process.
One of the things we were trying to do is we were trying to
very broadly serve all of agriculture as we lifted up the
systems and the programs. And what we were focused on was
trying to give recommendations that there was more
intentionality, to make sure that the historically underserved
had a seat at the table, that they could get access in terms of
how the programs were administered and in some ways how those
programs were written out. We also asked to see the data on the
participation so that we could actually see where there was
progress being made in terms of application rates and
acceptance rates to try to see if we could get to that data, to
actually show the data of how the farmers that were coming into
the USDA offices were being served.
It is an ongoing process. I think many of the
recommendations are still being worked on. We get briefings.
And I can't give you the line item by line item. I think that
progress is being made, but I think there is work that still
needs to be done, and I think this Committee can step in to
support some of those efforts.
Ms. Brown. Thank you. And, Dr. Rainey, can you share what
the impacts of bolstering programs focusing on new and socially
disadvantaged farmers would be on our farm economy?
Dr. Rainey. Absolutely. I think that agriculture is a very
important sector to our country. We talked about the national
security issues. But in many parts of our country, agriculture
drives those rural economies. And when those farmers suffer,
those economies suffer. And we see that in many high-poverty
areas across the country that have been longstanding because
agriculture is not equitably thrived.
I think that some of the programs that help our farmers,
our beginning farmers, we talked about the cost of entry, so
anything that we can do to help with financing, special
programs to help those farmers get some kind of a helping hand
as they start to move up, as they build into a high cost-of-
entry sector, with the recognition that there are different
models out there because sometimes there is a struggle with
those farmers getting financing because they are not the
traditional row crop farmer or rancher. They are coming onto a
different innovative model, and sometimes there is a lack of
understanding or appreciation of how that cash-flows, even
understanding how to get those financials on it. So some
expanded efforts in that space I think will be beneficial
because one of the things we talk about it, and you talk about
profitability, so the youngsters, even family members of many
farmers, the farmers that I work with it, many of them are
leaving agriculture. So if we want that next generation to stay
engaged, I think we have to give them some profitable options
because oftentimes, they are handling a lot of money, but they
are not being profitable.
Ms. Brown. Thank you. And as Ranking Member of the
Subcommittee on General Farm Commodities, Risk Management, and
Credit, I have heard firsthand about how strong up-front
investments in farm safety net and risk management programs
provide peace of mind and certainty for our farmers and
ranchers. So I only have a few seconds, but to any member of
our panel, what are the key benefits of crop insurance for the
farm economy, and how does it help mitigate risk to ensure
financial stability for farmers? If I might get a response from
one.
Mr. Alford. The gentlewoman's time has expired.
The chair now recognizes the gentleman from Kansas, Mr.
Mann.
Mr. Mann. I thank the gentleman from Missouri and
appreciate Chairman Thompson hosting today's hearing. Thank you
all for being here as we underscore the need for a
comprehensive 5 year farm bill. The title of this whole
hearing, let's just not forget the financial conditions in farm
country. I can tell you as the Congressman from the Big First
District in Kansas where we raise a lot of wheat, a lot of
sorghum, a lot of corn, a lot of beans, getting to be a lot of
cotton, the two words I would use to describe the financial
condition of the farm economy is concerning and worsening. And
I think we all see that. I think that is coming out here today.
About a year ago, Chairman Thompson and I hosted a farm
bill listening session in the middle of a wheat field right in
the middle of Kansas in my district. We heard from 150 Kansans
about their priorities for a farm bill. They were crystal clear
that day. We need a farm bill that gives them certainty as they
work day in and day out to feed, fuel, and clothe us all. We
need a farm bill that addresses record high inflation, risky
market volatility, and extreme conditions that we are seeing on
farms and ranches in Kansas and in every corner of the country.
We need a farm bill that prioritizes farm country and gets
input prices back under control, and we need a farm bill that
is long enough to provide certainty, yet short enough to adjust
and adapt and change with the time with market conditions, and
we need it now.
I have often said that my top priority in this farm bill is
to protect and strengthen crop insurance. And there will be
those that want to chip away, diminish, weaken, and I think we
need to be fortifying it, strengthening it, making it better.
In my view, crop insurance is the most successful public-
private partnership in the history of the country and is the
most cost-effective way to deliver a safe, robust, steady,
constant food supply, incredibly important.
A question for you to start with, Mr. Hotchkiss, and thank
you for being here. Your voice is really important in these
conversations. Please highlight the challenges that you as a
lender face when working with producers on ad hoc disaster
assistance versus working with producers on more certain
programs like crop insurance?
Mr. Hotchkiss. Thank you for the question. The challenge
when it is an ad hoc program like, say, a hurricane or a
derecho, the big buzzword now in weather, historically, there
have been bills passed to provide disaster assistance, but the
amount of time it takes to get the money to the end-user, to
the farmer has just been too long.
Mr. Mann. Yes.
Mr. Hotchkiss. There are examples that I could share where
it has taken up to 2 years in certain parts of the country for
that money to get to the producer. And it not only puts them in
an extremely tough position, but then they come to their
bankers, and the bankers are then put in a position to
hopefully have assets to leverage, but they are loaning against
that revenue source that they aren't really sure how much is
coming in. There is a bit of confidence that, okay, I know the
legislation passed, and there is a bill for so much money to
come into to help pay for this disaster, but you don't really
know how much is coming to that specific borrower or farmer.
And so from my perspective, when you have an ad hoc
disaster program, there needs to be timelines set within the
legislation that, after funding, once it gets to the FSA
office, they have so long to start taking an application, so
long to process an application, and then so long to write a
check. And that time frame needs to be condensed, maybe 4 to 6
months at the outside.
Mr. Mann. I completely agree. And also as a lender, you
don't know how much is coming in when it is coming in.
Mr. Hotchkiss. Yes, you don't know, exactly.
Mr. Mann. Other than that, you know everything you need to
know, right? I mean, the most important things you don't know,
but what do you do?
Mr. Hotchkiss. Versus the other programs--I will put them
all together--if it is crop insurance, what that program is and
how it is going to pay if this happens.
Mr. Mann. Certainly.
Mr. Hotchkiss. And so that certainty gives a bank comfort.
Mr. Mann. Yes, certainty, predictability, incredibly
important with all businesses, including our ag producers, who
I would argue are some of the most sophisticated businesspeople
in the entire country, given the risk that they take on and
what they do.
One more quick question for you, Mr. Caldwell. As a
business that relies so heavily on farmers and ranchers, you
also have to take steps to manage the risk. As margins become
tighter for them, of course that impacts your business. What
are the steps that you take as you are trying to manage risk
along with your producers?
Mr. Caldwell. So, the one that certainly comes to mind at
first--and you don't think about maybe that sector being in the
finance business, but about \1/3\ of our business is probably
extended terms. And so with that, with the high interest rates,
one thing that happens to us first, we get round 1 on the cost
to carry. Round 2, we are trying to figure out how do we cover
that increased cost? Because we really can't continue to----
Mr. Alford. The gentleman's time has expired.
The chair now recognizes the gentleman from Georgia, Mr.
Bishop.
Mr. Bishop. Thank you very much, Mr. Chairman.
According to the February 2024 farm income forecast,
government payments such as the conservation payments near a
margin curve, which are the farm bill commodity payments and
the supplemental disaster relief are forecast to fall $10.2
billion in 2024, which is a decrease of 15.9 percent from 2023.
The decline is expected largely because of lower supplemental
and ad hoc disaster assistance in 2024 relative to 2023. Of
course, government payments always bring up a heated discussion
here in Congress within the conversations regarding the farm
bill, and so I really want to avoid the controversy, but I do
have a few questions. Do you believe--and this is directed
specifically to the growers--that it is possible in the current
state of our farm economy to turn a profit without some form of
Federal help?
Mr. Dunlow. Thank you. And I would say absolutely not. We
run budgets each year on each different crops, and, as I
mentioned before, none of the crops show a profit on budgets.
Dr. Allen-Tully. I would agree with David Dunlow.
Mr. Bishop. Okay. Government subsidies, again, always
controversial, but in both of your written testimonies, you
potentially suggested farmers are going to need some kind of
economic assistance, given the current climate, even if they
did not suffer from a natural disaster. This would serve as
either a bridge until a successful farm bill is implemented or
in case of farm bill is not enacted.
I asked Secretary Vilsack about the potential for a one-
time payment back in February when he testified before the
Agriculture Subcommittee of Appropriations. Can you confirm
whether or not you would suggest that type of assistance? And
if so, how should that assistance be designed or allocated, and
which commodities should be eligible? And what should the
standard be for farmers to qualify?
Mr. Dunlow. Absolutely. If a farm bill was passed today, it
would go into law in 2025, and after the price discovery, if
you earned a payment, you would be receiving it in the fall of
2026. So you referred to it. That is a long time to get some
help. And as desperate as it is now on the farm, we need help
now. We are on the verge of a tremendous crisis, in my opinion.
Dr. Allen-Tully. And I would say up in Minnesota we have
had record rains this year, which is a stark difference from
last year when we had severe drought, and so I think right now,
we are all keeping our eye on how the next 4 weeks go. But
certainly with the price reduction on, if corn is around $4 a
bushel, maybe just from a price perspective, not in addition to
a yield.
Mr. Bishop. Can you perhaps give us some suggestions of how
we can convince our colleagues to provide funding for that
assistance, given the fact that they seem unwilling to fully
fund USDA in the annual appropriations bill or to provide
additional funding to the Agriculture Committee or even bless
the Chairman's ideas for funding for increased reference
prices? Can you give us some hints as to how we can possibly
make some additional arguments to try to carry that?
Mr. Dunlow. I guess my comment would be we desperately need
ad hoc in any form, shape, or fashion that we can get it. It is
that desperate on the turnrow now. That is the situation we are
in. And I truly think at the beginning of next year, if nothing
is done, we will be facing a crisis.
Dr. Allen-Tully. I think that the farm bill focuses on farm
and nutrition title, but in reality, the farm bill is really a
rural community bill, and so there are a lot of titles in the
farm bill that will help support our communities and our
auxiliary.
Mr. Bishop. Mr. Hotchkiss?
Mr. Hotchkiss. Yes, just real briefly, there has been
shared concern about not only the age of the farmers, but how
do we make it easier for young and beginning farmers to enter
this industry. If you are looking for an argument with your
colleagues, if farmers keep losing money, it is going to make
it real hard to talk people into coming into this industry.
Mr. Alford. The gentleman's time has expired.
The chair now recognizes the gentlewoman from Illinois, Ms.
Miller.
Mrs. Miller of Illinois. Thank you, Mr. Chairman. Thank you
all for being here today. I deeply appreciate your insights on
the farm economy, and I share your concerns about rising input
costs. Dr. Allen-Tully, I was old enough to remember the farm
crisis of 1980, and I am greatly concerned about the situation
we are in today. You mentioned in your testimony that we have a
record ag trade deficit of $32 billion a year. I hear from
constituents about their frustration and even fear about this
Administration's inability to negotiate new trade agreements.
How vital to the agriculture industry is it to have a President
who can negotiate trade agreements that benefit U.S. farmers?
Dr. Allen-Tully. In the farm bill that was passed out of
the House, we greatly appreciate the doubling of the MAP and
FMD programs. Trade is critical to any corn grower that we
have. We are the best in the world at growing our commodity,
and we want to be able to share that commodity with the rest of
the world for food security and safety.
Mrs. Miller of Illinois. Do you get the impression that our
trade policy has been lax or that they have been passive about
pursuing new trade agreements?
Dr. Allen-Tully. It would seem that it is not a priority.
Mrs. Miller of Illinois. Mr. Caldwell, in your testimony,
you mentioned the negative impacts Biden's climate policies
have had on input costs for farmers. Could you please explain
how these policies impact your customers and if they have had
to change the way they farm because of it?
Mr. Caldwell. Of course, energy is a big part of the input
cost from two perspectives. One, we just look at the fuel that
gets used not only in their equipment, but also in their power
plants to irrigate, and so that is certainly a huge impact. And
then the other is the impact on the fertilizer production
business. Natural gas is certainly a huge component that
contributes to that cost. And those are two of the biggest
input costs that most producers would have.
Mrs. Miller of Illinois. Yes, and it has become painful.
Under the Biden Administration, we have seen record
inflation, rising input costs, and a decrease of American
energy production. My fellow farmers are concerned that the
Biden supply chain crisis, inflation crisis, and energy crisis
threaten the very existence of the family farm. Farm income is
decreasing, while consumer prices hit record highs. China is
taking advantage of us, and we must unleash American energy,
including biofuels, to fight back.
With all the uncertainty farmers currently face, they need
the certainty of a 5 year farm bill. I appreciate our witnesses
coming today to advocate on behalf of production agriculture.
Thank you.
Thank you, Mr. Chairman, and I yield back.
Mr. Alford. The gentlewoman yields back.
The gentlewoman from Texas, Ms. Crockett, is now recognized
for 5 minutes.
Ms. Crockett. Thank you so much, Mr. Chairman.
And before I begin my official remarks, I am just curious
to know, are any of the witnesses of the opinion that inflation
is something that only hit the United States, or is it
something that was global? Does anyone know the answer to this
strict question? Anybody? Inflation global or limited to United
States?
No one knows. Interesting. I will give you the answer. It
was global because the pandemic was global. So this is going to
be an interesting time. Let me get to my official remarks. I
hope we can get some answers on some of these questions. We all
agree that a 5 year farm bill authorization has a significant
impact on the farm economy we are here to talk about today.
Unfortunately, in pursuing pointless partisan political
pandering policies for the Heritage Foundation types like
cruelly cutting SNAP, my Republican colleagues have forestalled
any kind of bipartisan deal needed to actually pass a bill in a
divided government.
Now, we all know that jumping from extension to extension
is hurting our farmers and ranchers who aren't able to pay or
plan for the future when they don't know what the policy will
be. That is why I thought we were all on the same page, that we
needed to get a bipartisan farm bill reauthorized as soon as
possible. Yet over the last few weeks, more and more of my
Republican colleagues are suggesting that it wouldn't be so bad
if we waited until 2025 to pass a farm bill. Well, I want to
nip that talk right in the bud and make sure everyone
understands just how devastating that could be for the farm
economy and in fact the entire economy.
You see, my Republican colleagues who think a 2025 Farm
Bill would be worth waiting for think that way because they
think a potential Trump Administration would be good for the
bill. Have any of you ever heard of Project 2025? This isn't a
trick question either. And no one has responded. So let me help
you.
Mr. Chairman, I ask unanimous consent to enter the Heritage
Foundation's, Mandate for Leadership: The Conservative Promise,
Project 2025, Chapter 10, Department of Agriculture, pages 289
through 318, into the record.
Mr. Alford. Without objection.
[The excerpt referred to is located on p. 79.]
Ms. Crockett. Thank you so much.
This action plan, written by Trump's closest advisors, has
a whole lot to say about the farm bill that I don't think my
colleagues on this Committee will like. It calls for the
elimination of the sugar program, which would destroy what is
left of our domestic sugar industry at a time when they are
already struggling. These Trump advisors also called to
eliminate the vital Conservation Reserve Program, pulling the
rug out from farmers and ranchers all across the country. And
that is just the tip of the iceberg. I encourage everyone
watching this to read what I just entered into the record.
Let me try to sum it up in just a couple of words. My
question for each member of the panel, in a word, what would be
the impact if the next farm bill completely eliminated ARC and
PLC payments if there is anyone that can answer?
No one? Okay. So no one knows. Well, I will tell you, the
unthinkable would happen. Trump's advisors and Project 2025
also call for the elimination of these vital programs. What we
on the Agriculture Committee know to be a vital support to
ensure our farmers and ranchers don't lose their land because
of the cyclical nature of production of agriculture, Trump's
advisors view as, and I quote, ``especially egregious examples
of what they think needs to be cut.''
Frankly, if you want to put more farm in the farm bill, we
need to get a farm bill reauthorized and out the gate before
these anti-farmer advisors have a chance to be in the White
House depending on how the November election goes. And for
those who think that a potential Trump Administration wouldn't
actually take steps to achieve these policies, let me remind
you of something many Americans have forgotten. In the waning
days of the Trump Administration, December 2020, the President
of the United States vetoed the National Defense Authorization
Act (Pub. L. 116-283, William M. (Mac) Thornberry National
Defense Authorization Act for Fiscal Year 2021) 2 days before
Christmas. Funding for our troops was jeopardized because
advisors wanted to show their support for Confederate traitors.
In an emboldened potential next Trump Administration, it is
sadly far too easy to imagine a veto of the farm bill that
doesn't have these terrible provisions. So to my Republican
colleagues gambling on a potential Trump Administration, I am
asking you to put our farmers and ranchers first, drop this
nonsensical, nonstarter SNAP cut, come back to the negotiating
table, and work with Democrats to get the farm bill passed this
year. Failing to do so by far is the biggest threat to our farm
economy.
With that, I yield back.
Mr. Alford. Thank you. The gentlewoman yields.
The chair now recognizes himself for 5 minutes.
Like most of my colleagues here, I recognize that
agriculture is the backbone of many of our states' economies
and communities. Missouri ag specifically generates more than
$93 billion annually, employing nearly 460,000 persons. We are
home to 87,000 farms, the second largest number in the U.S. Yet
producers in Missouri and across America are facing rising
inflation, growing input prices, decreasing commodity prices,
leading to declining farm income. This is why we passed a
bipartisan farm bill that supports the farmers who feed, fuel,
and clothe the world.
In fact, Ms. Crockett and I worked on a very important
amendment to the farm bill that ensures that not only fresh
fruits and vegetables are included in our SNAP programs, but
also frozen fruits and vegetables and canned fruits and
vegetables as well, proving that this is a bipartisan effort.
My first question is for Mr. Hotchkiss. In your testimony,
you point to the importance of a robust farm safety net and
highlight the House farm bill's enhancements that help
producers remain financially viable. In what ways would this
Committee's passed farm bill help those producers plant another
crop this spring?
Mr. Hotchkiss. Well, thank you for the question. First and
foremost, the increased guarantee limits will ensure in some
cases that farmers have the ability in challenged times to
obtain a guaranteed operating loan because the limits have been
increased, so that is tremendously important.
And, second, being able to have downpayment assistance when
needed for different producers that is part of the farm bill is
going to help them make sure that they can plant next year.
Maintaining crop insurance as well as appropriate reference
prices would be a third item that I would mention because, most
banks are asking and requiring as part of a loan deal that a
farmer get it, but it just brings assurance and helps manage
the risk.
Mr. Alford. Mr. Dunlow, thank you for being here. I very
much appreciate you sharing your challenges that you and your
family have faced. Folks who may not be familiar with ag often
underestimate the amount of capital that is put at risk. Can
you please paint a picture of how much capital you put at risk
year after year and how the impact of even a small change in
your profit margin can affect your ability to secure an
operating loan?
Mr. Dunlow. Yes, thank you. On my particular farm we have
an operating loan of $2.2 million, along with, as the gentleman
mentioned, we have a line of credit with our input company of
$800,000. So we are investing $3 million annually, and that has
to be paid back every year before you can go back and get
another operating loan. And the margins are very, very thin on
what we are working on typically under normal conditions. And
with the economy now, nothing cash-flows, and it is very
difficult to get those loans and to move on to the next year.
Mr. Alford. Are you aware we are losing 1,000 farms a month
in America?
Mr. Dunlow. I wasn't aware of that figure, but I was aware
we are certainly losing----
Mr. Alford. It is a staggering number when we consider that
our food security is our national security. I know we say that
a lot in here, but it is not a trite statement. When we are
facing potential war against China, the threats from Russia, we
have to maintain our food security.
I had one more question here for Dr. Rainey. For the
record, are any safety net programs currently provided by the
USDA in any way contingent upon race, ethnicity, gender,
political affiliation, or religion?
Dr. Rainey. Not to my knowledge.
Mr. Alford. Thank you. I appreciate that.
The gentlelady from Texas mentioned something about Project
2025 from the Heritage Foundation. I would just like to submit
for the record President Trump has not adopted the Heritage
Foundation 2025 project. He is standing by the officially
adopted 20 plank platform of the Republican National Committee.
It does not mention sugar subsidies one bit.
With that, I yield the balance of my time and recognize the
gentlelady from Illinois, Ms. Budzinski.
Ms. Budzinski. Thank you, Mr. Chairman. And thank you to
the panelists for being here today. I appreciate what each of
you have shared in your testimony about the challenges farmers
are facing. And much of what has been said are things that I
have heard from constituent farmers in my district in central
and southern Illinois.
Rising land costs and rent is something that is top of mind
as we have these conversations. In my district, agricultural
land has been valued at over $12,000 an acre, over three times
the national average last year. Access to capital is one of the
top challenges for young folks to get involved with farming,
which is why I introduced the bipartisan Increasing Land
Access, Security, and Opportunity Act (H.R. 3955) with
Congressman Zach Nunn as a first step to addressing this
important issue.
Beyond that, many of you have highlighted the importance of
the farm safety net. In my home State of Illinois, by and far
the most important aspect of the farm safety net is crop
insurance. My corn and soybean farmers do not reliably receive
Title I payments, so I will continue to be an advocate of a
strengthened Federal Crop Insurance Program.
And one final thing I hear a lot about is the need for
expanding market access, whether internationally or
domestically. I was very glad to see that our Chairman included
a doubling of MAP and FMD in his farm bill, for example. And I
am also a major advocate of increasing access to domestic
markets.
I have two questions. The first is for Dr. Allen-Tully. One
major market for growers in my district, both corn and soybean
growers, is biofuel production. Can you share what your
experience has been with market access for ethanol and what if
anything can be improved?
Dr. Allen-Tully. Well, there is a bill for unleaded 88 or
ethanol E15 to be across the country, and we would strongly
advocate for that bill to move forward. We believe that it is a
homegrown option to have cleaner air right now and also to
address some of the climate concerns that consumers have.
Ms. Budzinski. Yes, I very much agree with you around E15
for sure. And I often in my district talk about it as a win-
win-win, to your point, lowering carbon emissions but helping
our growers. It is a win-win, so I share that opinion. Yes.
Dr. Allen-Tully. Absolutely.
Ms. Budzinski. Can I ask another question? Mr. Hotchkiss,
one thing that many of my growers note is that the price of
land and to rent land is the most cost-prohibitive part of
farming. How do you think Congress can work constructively
beyond the ACRE Act with lending organizations to improve
outcomes and access for these growers?
Mr. Hotchkiss. Thank you for the question. You are
absolutely right. The cost of land and/or the cost of rent,
whether it is cash rent or some type of equitable crop share
rent is getting very, very high. And in addition to the ACRE
Act, as you mentioned, which will reduce the interest cost to
borrowers, I don't know that I have any solutions because land
is an open market. Obviously, there are a lot of investors,
some foreign investors, and I know that has been something
discussed. Potentially limiting foreign investment, all this
investment money has come in. And when you get bidders bidding
against land, and there is land that is a lot more than
$12,000, as you know, in different states. I think the record I
have heard is [above] $30,000. So it just continues to get
higher and higher, and it is because of the investment money
that has is bidding the price up.
Ms. Budzinski. We need to keep working on that issue. And I
guess with that, I will yield back the balance of my time.
Thanks.
Mr. Alford. Thank you. The gentlewoman yields back.
The chair now recognizes the gentleman from Minnesota, Mr.
Finstad.
Mr. Finstad. Thank you. And I want to thank Chairman
Thompson for holding this important hearing, and thank you for
the witnesses for your testimony today.
As we have heard today, farm country is facing significant
challenges from the weather-related disasters that we have seen
firsthand in southern Minnesota with the severe flooding that
we have had to the compounding effects of increase input costs,
interest rates, declining commodity prices, decreased net farm
income, and trade deficits. To address these challenges, the
House Agriculture Committee passed a very strong bipartisan
farm bill in May, and I am very proud of the work that the
Chairman and the Committee has done on that.
With that said, my first question is for Dr. Allen-Tully.
Dana, as you know, the farm safety net is the cornerstone of
the farm bill, and it provides tools for farmers that we need
to fuel and feed the world while ensuring that we can pass our
farms down to the next generation. Specifically, the counter-
cyclical safety net is intended to protect producers from
multiple years of significant downturn, and crop insurance is
farmers' number one risk management tool that we use everything
from when we begin our conversations with lenders to our
marketing decisions at the back end.
So my question is if we don't pass a 5 year farm bill this
year that improves the farm safety net, how do you see that
affecting your operation and the operations of your neighbors
in southern Minnesota?
Dr. Allen-Tully. Well, given the year that we are faced
with and the weather challenges that we have had, as well as
the reduction in commodity prices, I think there is going to be
quite a few hard conversations with lenders as we move into
next winter and spring and access to rental contracts as we are
renegotiating rental contracts with our landlords I think are
going to be more difficult, and there may be some really hard
decisions around the kitchen table as we move forward.
Mr. Finstad. Yes, I totally agree. I mean, we are seeing 30
to 40 percent un-marketed corn and soybeans sitting in bins
right now across this country. If I were to sell my corn right
now, I would get about $4 a bushel. Beans are about, what is
it, $11.19, $11.20? It all equals to being upside down pretty
severely, and that becomes hard to sustain year over year, let
alone have the conversation about how do we keep things going
in farm country for the next generation to prosper.
One of the things I want to talk about here is, again, very
proud of Chairman Thompson's work and the Committee's work on
the farm bill that we were able to pass out of Committee. I am
a little bit alarmed at the narrative around the support of the
framework that the Senate has. I just want to be crystal clear
to anybody that is listening. We have a 900 page farm bill that
we kind of put our money where our mouth is, and we showed the
American public where this Committee stands in a bipartisan
way.
The Senate right now is a framework. That is essentially
taking a napkin and jotting some ideas down and saying this is
what we are going to do. And so for us, again, we have shown
our plan. We have shown the bill to our country. And if we look
at some of the very serious things that we have talked about in
this hearing already and the severe economic challenges that we
face in farm country, it is so important that we get together
and we get this done.
Today, our break-even for corn is $4.85, and I just said,
right now, the market is giving you $4.04 a bushel in my
hometown. I am not great at math, but that math does not make
sense. That math is not sustainable. When you put the severe
trade deficits that we are in right now on top of the climbing
input costs that are out of our control that we have seen just
insurmountable pressure, global pressure from supply chain
disruptions to some of the unrest that we have seen, we have
felt it in farm country. USDA forecast marketing your average
is to be $4.30 and a statuary reference price is at $3.70.
Again, the $3.70 reference price is not a break-even price. It
is a hold on to our hat, can we make it one more year?
And so, I mean, I have 50 seconds left, so, Dana, just what
is your message to those that are unwilling to come to the
table or still caught in the talking points of some framework
versus actually getting to the point where we can get a farm
bill done? What is your message?
Dr. Allen-Tully. So the farm bill needs to be done this
year. It is a rural community farm bill. It is not just the
farm. There are different titles that affect all of us that
live in the rural United States, and now is the time before the
ball drops coming in the spring.
Mr. Finstad. Yes, and I would totally agree.
And, Mr. Chairman, I would just say, this is a farm bill
that is for the farmer, written by the farmer, but also it is
for our national security, so it is important now that we put
the R and the D, rip them off our chest, put the USA back on,
and we get a farm bill done. I yield back.
Mr. Alford. Thank you. The chair now recognizes my good
friend from California, Mr. Carbajal.
Mr. Carbajal. Thank you, Mr. Chairman. And thank you to all
the witnesses for being here today.
Dr. Allen-Tully, last year, two atmospheric storms hit my
district on the Central Coast of California, resulting in
billions of dollars in loss of revenue. Farmers and producers
in my district continue to feel the pain of natural disasters
and the lack of Congressional action. Without Congressional
action, can farmers and growers continue to stay economically
viable?
Dr. Allen-Tully. I am not so sure that all of them can. If
we are losing 1,000 farmers a day, it would seem like we need a
much stronger safety net in order to be able to have
conversations with our bankers.
Mr. Carbajal. Dr. Allen-Tully, when Secretary Vilsack was
here, we discussed the importance of passing a farm bill and
how most USDA disaster programs tend to be oversubscribed due
to the increase in natural disasters. Can you elaborate on the
consequences our farmers and growers can face should Congress
not act in passing a farm bill this year? Just beating that
drum a little bit more.
Dr. Allen-Tully. Could you repeat the question?
Mr. Carbajal. Can you elaborate on the consequences our
farmers and growers can face should Congress not act in passing
a farm bill this year?
Dr. Allen-Tully. I think the simple consequences that we
will not have operating loans renewed. There are some at that
point where they wouldn't be able to move forward in a 2025
growing season and maybe not pay back their input costs for
2024.
Mr. Carbajal. Thank you. Mr. Dunlow, as you may know, with
the recent House farm bill that was marked up by this
Committee, adjustments were made to eliminate the Secretary's
Commodity Credit Corporation's discretionary authority. In the
past, this authority has helped protect American farmers during
disasters and other emergencies during both Republican and
Democratic Administrations. In the previous Administration,
farmers and growers suffered great economic impact due to trade
wars. Should another trade war occur in the future, how will
the lack of the Secretary's authority play a role in assisting
American farmers during a disaster emergency?
Mr. Dunlow. Thank you. I refer back to a good farm bill
safety net helps with all of these to some point. And I can
give you my experience from the last 40 years. Things get bad,
prices go down, the safety net holds you there until things get
better.
Mr. Carbajal. So was the Credit Corporation's discretionary
authority important?
Mr. Dunlow. I think it is important, absolutely. It would
seem the USDA has used it several times, and it has helped in
those times for sure.
Mr. Carbajal. Well, we know how slow Congress can move, and
without that discretionary authority, I could see the disaster
it would have on not being able to act in a nimble fashion to
help our farmers.
But with that, thank you very much. Mr. Chairman, I yield
back.
Mr. Rose [presiding.] The gentleman yields. The chair now
recognizes himself for 5 minutes.
I want to thank Chairman Thompson for holding this
important hearing, and thanks to each of our witnesses for
taking time to be here with us today and share your expertise.
Since 2021, high input costs, inflation, labor shortages,
and other costs have crippled the agricultural industry and
threatened our national security. Compared to 2023, net farm
income is forecast to decrease by almost $40 billion this year,
while production expenses are estimated to increase by over $16
billion. The bipartisan farm bill passed out of this Committee
includes the tools needed to mitigate the financial crisis that
is threatening agriculture and rural communities.
I thank the Chairman for his diligent work on the
legislation, and I look forward to working with Republicans and
Democrats alike to get this bill across the finish line.
Mr. Caldwell, we have had the privilege of knowing each
other for a long time, and let's just say your hair color and
my hair color we were a little different when we first met back
a few decades ago. I am proud to have someone who considers
Tennessee to be their native home testifying before the
Committee today.
In your written testimony, you mentioned the need to fill
the agricultural worker shortage with H-2A temporary workers.
Can you elaborate on the challenges facing farmers who rely on
these temporary workers in light of the overwhelming annual
increases in the adverse effect wage rate?
Mr. Caldwell. Yes, I mean, it is a common issue across, and
I am working in a ten state area, but I know it is broader than
that. And when we talk to producers, the challenges for them to
be able to find skilled labor locally, it continues. The H-2A
program has allowed them to be able to access markets with
individuals that are skilled in areas where they need skills.
They need drivers, they need equipment operators, and they need
general labor. So that has become, I would say, not only an
important part of the labor force for them, I would say that it
is a critical part of the labor force for them.
Mr. Rose. Thank you. And that is what I am hearing from
producers in my district back in Tennessee as well.
And I will stick with you Mr. Caldwell. You also mentioned
how regulatory uncertainty can negatively impact producers and
retailers. Two weeks ago, this Committee held a hearing
highlighting the consequences of the Environmental Protection
Agency's recent actions. Disappointingly, but not surprisingly,
EPA, Administrator Regan in this Administration is refusing to
communicate with this Committee. Can you identify some of the
issues caused by gaps in EPA's methodology that you as a
retailer deal with and have a domino effect on farmers, and
finally, and ultimately, the consumer?
Mr. Caldwell. So, I will go back to the word uncertainty is
really the thing that comes to mind more than anything else. We
spend a lot of time with growers trying to plan and trying to
plan for their cropping plans well in advance, and the
uncertainty that comes with some of these regulatory issues
where, oftentimes, we have last-minute changes or we have
changes that are really critical to those operations, and in
some cases, maybe not even substitutes.
And then I would say a longer-term issue as we start
talking about the Endangered Species Act and what we have seen
is some of the first-run language and how we are going to
implement that in the farm community, and a lot of those are
just going to be really unreasonable for producers. And, in
many cases, we are talking about products that are really
critical for their production. Now, when you are squeezed for
cost already, that just adds to that uncertainty.
Mr. Rose. So I see my time is coming to an end, and so I
will just stay with you, Mr. Caldwell. And we both remember
back to the late 1970s, early 1980s when we were kids, the
challenges the farm economy was facing at that time that
farmers, producers were facing. How would you compare the
challenge right now to the challenge that farmers faced in the
early 1980s?
Mr. Caldwell. So I would say it feels eerily familiar.
Mr. Rose. I agree, and I think that it is something that we
need to take note of. And thank you again for your time.
And I see my time has expired, so I will yield. And next up
is Mr. Nunn from Iowa. You are recognized for 5 minutes.
Mr. Nunn. Thank you, Mr. Chairman, and thank you to the
Committee Members who are here today. Thank you for the panel
for spending some time with us.
I am from Iowa, second-largest ag state in the country.
Grateful for your expertise on ag. We lead in pork, we lead in
corn, we lead in eggs, we lead in biofuels. And like many of us
here, we have a real concern about what is happening to our ag
community because it is not just the family farm that is
impacted by this, it is every rural community, it is every city
in America, it is the security of our nation that is impacted
by decisions made by Members of this Committee.
For your testimony today, Dr. Allen-Tully, I want to begin
by saying thank you for sharing your story of how your family
has been impacted in Minnesota. It is something that I think
Americans across the country are feeling the same. A bushel of
corn today in my state runs about $3.96. For perspective, in
2022, that was at $6.54. Now, in order for that to be
successful--that is a 60 percent decrease over the course of
just about 24 months: $4.85 is where it has got to be to be
successful, so farmers are digging in their pocket to be able
to plant the crop that feeds and fuels this country at a
deficit to themselves.
I want to talk about the risk of continued price decline
and how that would impact the nation. Specifically, what steps,
Doctor, should Congress be taking, noting that the Senate has
moved no legislation forward on a farm bill, and this chamber
has moved forward a bipartisan piece of the farm bill to plan
for the next 5 years for America?
Dr. Allen-Tully. Well, we would hope that the Senate also
moves their bill forward with a similar safety net that this
body has passed out of Committee, the provisions in both the
Title I and crop insurance really do work towards making a much
stronger safety net than what we have currently. But it may not
be soon enough, considering the state at where we are at in
July of 2024. So a lot will be determined in terms of yield
losses in the next 4 weeks. I am from Minnesota, but Iowa has
faced similar challenges, North Dakota, Illinois, Indiana,
South Dakota, and so I think that there may be some significant
crop insurance claims that come about both from price and
yield.
Mr. Nunn. I would agree with you. It also begins the
conversation here on what we are trying to do to help grow the
family farm. In my district, 87,000 family farms. Now, in Iowa,
the average age of a farmer is 57. I imagine Minnesota, across
the country, that is not too different. In fact, more than
58,000 of those 85,000 farms are run by farmers who are well
over 65. So salute to their service. It is also an unfair
expectation that that generation of Americans continues to be
the best vanguard we have to feed and fuel the country.
It is one of the reasons that I am proud to work with my
colleague on the other side of the aisle here, Nikki Budzinski,
who I will note has more soybeans than we do. It is one of the
only areas Illinois is beating us. But over this course we have
introduced H.R. 3955, the Increasing Land Access, Security, and
Opportunities Act to really make sure that we have a good set
of incentives for that next generation of young and beginning
farmers to be successful, one, so we can save the family farm,
save rural communities, but also to make sure that everybody in
big cities has the opportunity to eat and that our country has
the ability to maintain energy independence.
I want to highlight here that this bill would specifically
provide credit for small and beginning farmers. Mr. Hotchkiss,
would you agree that these type of policies are not only
helpful for our farmers but essential for our country?
Mr. Hotchkiss. Absolutely. Thank you for the question, and
absolutely. We have to come together and help give incentives,
help give reasons for people that are younger than our current
average age--I will say it that way--to enter into the farming
sector, and we do that through having good, solid safety nets,
good programs at USDA, Acts like ACRE that I know you are
familiar with, ways to help them manage and control costs and
manage risks because, as I said earlier and I will say again,
if I am a 25 year old that has been farming or working on a
farm and wanting to start out on my own and I am seeing
everyone not having safety nets and not making money, I am not
going to be as encouraged to step out and try it on my own as I
would if those things existed.
Mr. Nunn. Let alone take out a mortgage that could
devastate you and your family for generations.
Mr. Hotchkiss. Absolutely.
Mr. Nunn. These are the things that are important. I am
glad that this Committee has moved a bipartisan bill forward to
help young and beginning farmers, to help provide the safety
net. I ask that we encourage our colleagues across the Rotunda
to do the same.
With that, I yield my time back, Mr. Chairman. Thank you.
Mr. Rose. The gentleman yields, and the chair recognizes
the gentleman from California, Mr. Duarte, for 5 minutes.
Mr. Duarte. Thank you, Mr. Chairman, and thank you to the
panelists today.
I am a farmer from California. I am taking on more debt
than I had last year, not digging out, digging in, and I hear
from many of my good friends, long-term farm families around
the Modesto, California, area in the central San Joaquin
Valley, as well as banks, that we have a crisis at hand. I
mean, I was not offended that we are talking about soybeans and
cotton and corn today because, move the numbers around, move
the words around, move the crops around, it is the same story.
In fact, Mr. Hotchkiss touched on almonds in his testimony.
So we have a banking crisis, and we have the Consumer
Financial Protection Bureau ratcheting down lending standards,
ratcheting down bank flexibility at a time when we can least
afford it. So I stand with all of the thoughts today and
comments on giving some banks flexibility. But at the end of
the day, if a bank is lending to customers who are losing money
and can't show a path towards making money, banking standards
aren't really the solution. Markets and prices are what we have
to look at.
So I would like to use an example for almonds right now.
This year in 2023, this last year, Australia exported 55,000
tons of almonds to China. That is up from 33,330 tons in 2018,
as our trade wars took place. Australia has a 0 percent tariffs
exporting almonds into China. We have a 25 percent retaliatory
ag tariff alone exporting almonds into China. Our retaliatory
agricultural tariffs against American exports, I believe, are
the main driver of our farm surpluses and our low prices here
in America.
In 2019, we put through a Market Facilitation Program out
of the Commodity Credit Corporation that was a $23 billion
program--it would be over $30 billion today with inflation--to
stabilize ag markets, but it didn't target exporters. It gave
money to all the farmers. So what do all farmers do when they
have more of government's money, their own money, or your
money? We planted more crops. We didn't incentivize exports.
So if we were to put together--a proposal I have put forth
to the Secretary of Agriculture, which is within his authority,
I call it the Market Facilitation Retaliatory Ag Tariff
Supplement, MFRATS. For about $6-$7 billion a year, we could
offset entirely the retaliatory ag tariffs imposed by our
trading partners since 2018 on an annual basis. This would be
cheap compared to the ag lending crisis that we are facing,
which will well go into the hundreds of billions of dollars if
we start to have a cascading of land values and foreclosures in
the next year, which is here.
And the farm bill will not be passed in time to rescue
this, I am sorry to say. It is a great bill. The Chairman did a
great job. We passed a great bill. It is not going to come to
save us in time. It just isn't.
So I am looking for support for the MFRATS, Market
Facilitation Retaliatory Ag Tariffs Supplement, and let's make
no question about this. We are taking the gloves off. We can't
attribute the trade wars we are in to one President. We have a
President currently who wants to put tariffs on every Chinese
electric vehicle sent to America. These trade wars aren't going
anywhere. We won a 5 year lawsuit in the World Trade
Organization against China's retaliatory ag tariffs this year,
and it has made no difference in their policy discriminating
against American agricultural production.
So I will leave it to the panel. I will open it up. I have
almost a minute left. Who is with me? Do we go down this road?
Do we take the gloves off, and do we do something that will
deliver immediate relief? Or do we wait for something else?
Gentlemen, ladies?
Mr. Dunlow. Well, I will just speak on--I have constantly
said it throughout this hearing. We desperately need help, and
we desperately need it now. We are on the verge of a crisis all
across the U.S., and waiting for farm bill, extending the farm
bill is not the answer.
Mr. Duarte. Mr. Hotchkiss, you know something about
almonds?
Mr. Hotchkiss. I know very little, but I would need to know
more about this specific topic. Then I could speak more.
Mr. Duarte. Thank you. Any other comments?
Dr. Allen-Tully. I would agree that we would be interested
in learning more about the proposal that you are putting
forward.
Mr. Duarte. My office has a letter prepared for the
Secretary of Agriculture, and we are looking for support on it.
I will yield back. Thank you, Mr. Chairman. Thank you to
the panel.
The Chairman [presiding.] The gentleman's time has expired.
I now recognize the gentleman from North Carolina, Mr.
Davis, for 5 minutes.
Mr. Davis of North Carolina. Thank you so much, Mr.
Chairman, always good to see you, and thank you and Ranking
Member Scott for organizing this really important hearing
today. And I want to thank the witnesses, and one in particular
there is no escaping me, Mr. Dunlow. Always good to see you and
to see an eastern North Carolinian here in Washington, D.C. You
are brave, sir.
The financial situation of our farmers is top of mind. In
eastern North Carolina, our top industry is agriculture. The
jobs tied to agriculture directly impacts our local grocery
stores, our local banks, even our local tractor store. And
Congress must do everything possible to help keep our farmers
in business and on good financial footing.
Farmers in eastern North Carolina and across the country
are caught between a rock and a hard place. They are taking on
more debt just trying to stay in business. Year after year, we
are faced with selling the farm. Mr. Dunlow, can you speak on
access to cash-flow and the challenges farm families are facing
as it relates to this?
Mr. Dunlow. Yes, sir. I will reiterate the fact of where we
are at with this 2018 Farm Bill does not provide support as
what I have been used to over the last 40 years. And I
referenced earlier the farm bill that was passed out of the
House Agriculture Committee, it meets most of our needs, but
even at that, if it was passed today, it would be 2025 for
discovery price, and it will be fall of 2026 receiving funds.
So with that being said--and I know it is kind of beating
the same drum, but we are on the verge of a crisis. I really
believe. And hearing testimonies today, I think we are on the
verge of crisis throughout the U.S. ag industry.
Mr. Davis of North Carolina. Have prices changed this year
in terms of input prices versus prices of commodities that you
are growing?
Mr. Dunlow. Well, just this year since January, most
commodity prices have fallen 12 to 15 percent just in the last
few months, and we are still at these prices not earning a
payment with the safety net that we currently have.
Mr. Davis of North Carolina. I think it is important that
everyone on this Committee understands the mood out there in
farm country. When you talk with other farmers back home, just
like I have and we have spoken to each other and them, what do
you hear at that country store or out on the farm just standing
talking to someone at the farm?
Mr. Dunlow. I will use this example. I am Chairman of the
American Cotton Producers. In my first meeting that I
conducted, I went out on a limb and kind of shared with them
some of my problems, my financial troubles, no cash flowing,
and we had members that represented all the cotton throughout
the U.S., 17 states. And I said if anyone else in here has
heard of anybody having these experiences, a little bit of
trouble with just show of hands, and every single producer in
there raised his hands. So that is what we are facing.
Mr. Davis of North Carolina. Well, I want to thank you for
being here again and just sharing a perspective. And I do
believe it is highly important for the Committee to engage, for
Congress to engage and understand the challenges that many are
facing out there--and I hear you loud and clear--short of a
crisis. So thank you.
Mr. Chairman, I yield back.
The Chairman. The gentleman yields back.
I am now pleased to recognize the gentlelady from Texas,
Congresswoman De la Cruz, for 5 minutes.
Ms. De La Cruz. Thank you, Mr. Chairman. And thank you to
the witnesses for being here today. We do appreciate this.
Technology plays a key role in connecting consumers with
the services that they desire. There are few industries where
this is more critical than financial services. While
relationships are the backbone of our community banks and
credit unions, technology enhances the capability of all
lenders to provide services to customers. It is a big
opportunity for smaller community banks and credit unions to
gain access to beneficial financial technologies like AI. And I
apologize because I am actually in the wrong committee right
now. I am in Agriculture Committee, and I apologize for that.
As we are talking about things that are pertaining to the
Agriculture Committee, I do want to talk about the agriculture
sector, which in my district, being mostly Hispanics sector and
a rural sector, agriculture plays nearly 20 percent of the
United States' economic activity. And that means that the
sector represents more than $9 trillion in output, yielding
over $181 billion in exports and accounts for more than 48
million jobs that pay nearly $3 trillion in wages.
However, lack of market expansion collapsing on-farm prices
and increasing input prices are making life for farmers very
difficult. On top of this, many farmers in my district in the
Rio Grande Valley are suffering from water shortages due to
Mexico not delivering water they owe under the 1944 water
treaty. The lack of consistent water deliveries on top of
increased costs and high interest rates puts Texas farmers and
Texas agriculture at risk.
So my question is this. High interest rates are a concern
for any small business, but perhaps none more so than our
farmers, many of whom rely on financing for annual operating
expenses. Does any witness want to share their perspective on
how big of an impact the doubling of interest rates over the
past couple of years has had on the ag sector for specifically
your area of expertise? We will start with corn.
Mr. Dunlow. I would speak to that a little bit. There
again, in my situation, in the last 2 or 3 years, as we have
come up short, the crops are not paying out, I have had to go
and refinance some farmland. So that in turn, you are paying
interest on back debt, along with interest on your loan next
year. And both of those interest rates have doubled. So it is
just a snowball effect. Once you get in trouble, it is very
difficult to get back on top.
Ms. De La Cruz. So thank you for that. And I would like to
expand on that for just a second because, as you know, I am on
the Financial Services Committee, and I came from that hearing
over to this hearing. And there is a lot of overlap. And we
have, on my side of the aisle, done a lot pushing back on the
Basel III proposal that could negatively impact our farmers.
Can any of you all explain how the impact of the Basel III will
have on the farming sector?
Mr. Hotchkiss. Thank you for the question. I had spoken to
that a little earlier. In its simplest form, the requirements
under Basel III will increase costs to banks, which will be
passed on to their producers, and that is just one more cost
that they are going to have to increase costs of what they will
have to manage, in addition to the interest rates, which you
have already brought up, and input costs, land costs, labor
costs, et cetera. So that increases costs as well as the--from
a banking perspective, the increased capital requirements that
Basel III brings is just something that we would support it
going back to the Prudential Regulators for reconsideration.
Ms. De La Cruz. Thank you. I yield back.
The Chairman. The gentlelady yields back.
I am now pleased to recognize gentlelady from Oregon,
Congresswoman Chavez-DeRemer for 5 minutes.
Mrs. Chavez-DeRemer. Thank you, Mr. Chairman.
Good afternoon. Thank you for being here, and thank you for
allowing me to be one of the last to ask questions and visiting
with you today.
My first question, Mr. Hotchkiss, in your testimony you
mentioned that over half of young farmers say they need access
to more land. Can you talk to me about the young farmers you
see entering bank branches? Are you seeing any trends toward
younger and first-generation farmers getting involved in
farming and thereby accessing credit?
Mr. Hotchkiss. Thank you for the question. We do see young
farmers. They come in. It is generally someone who is from a
farm, might have been farming with their father, their uncle,
their grandparents, and are wanting to break away and start
something, set their own legacy forward. And it is really a
struggle. It is hard for them to get started and to obtain the
credit they need without the programs that are available
through either USDA in the farm bill--I want to thank this
Committee again for proposing increased limits, separating
operating from real estate that allows enough access to credit
with a guarantee behind it that can help those young farmers.
The downpayment assistance program is something that is going
to aid those young farmers to get into the business.
But, as I have also said, one of the most difficult things
to deal with is they will come in and they will talk about
their operating budgets and their struggle to be able to
themselves put together a reasonable operating budget because
it just doesn't pencil out. The costs are so high. And so, to
me, that is why not only is the farm bill so important for this
year because it brings certainty not only to the farmer, but
brings certainty to the financing side, and it needs to be
passed. We don't need an extension. We need something that can
help now and go forward.
And then also, last, I would just say support for ACRE,
which is a way to reduce costs not only for young farmers, but
for all farmers.
Mrs. Chavez-DeRemer. Sure. Well, I am going to follow up a
little bit on interest rates since we are talking specific to
people accessing credit and what that looks like. We are
talking about homeownership, not only purchase of land, but
homeownership, a distant dream for many Americans and certainly
young Americans, as we are seeing across every sector. Coming
from a state with an affordable housing shortage and a
homelessness crisis, the issue is top of mind for me in Oregon.
Aside from those high interest rates, can you speak to the
obstacles that also stand in the way of rural Americans
purchasing homes?
Mr. Hotchkiss. It is availability and sometimes cost. But
once again, unfortunately, I will reference back to the ACRE
Act. It is not just ag real estate, it is residential mortgages
in rural communities of 2,500 or less, and that would help
reduce the interest cost and allow a lot more people to qualify
for mortgages.
Mrs. Chavez-DeRemer. Okay. Well, I am going to move on just
a little bit to Dr. Allen-Tully and Mr. Dunlow. Thank you both
for your passionate remarks earlier, and frankly, your honesty.
We are repeatedly told that conditions in farm country are not
great, but to hear your on-the-ground perspective as producers
who are seeing the effects of low commodity prices and rising
input prices, it really sends a message home. It has been noted
that as production expenses are forecast to remain the highest
in history, producers will be forced to rely on increasingly
more debt. With these added pressures, it seems all but
inevitable that the mental health of farmers and ranchers will
be strongly affected for an industry that already has high
suicide rates.
My question for you both is what can be done to improve
mental health for our farmers and reach them before it is too
late?
Dr. Allen-Tully. Thank you for the question. I certainly
think that, as we move through this fall and into the winter
and spring, we are going to need to be able to reach out to
farmers. In Minnesota, we actually have a dedicated line for
farmers to call into that are experiencing some mental health
concerns, and there are a series of counselors that they would
be able to access. And so I would say that something to that
effect is going to be important across the country.
Mrs. Chavez-DeRemer. We are seeing it more now.
Mr. Dunlow, do you have anything to add?
Mr. Dunlow. Yes, just a quick comment. Talking to one of my
friends who he had a friend that went out of farming because
the financial situation, and actually, he was helping talk him
out of doing something like that. So I would certainly
encourage this Committee to move forward to advertise the
resources that someone can call and get help with.
Mrs. Chavez-DeRemer. Yes. And for any farmer or rancher or
any industry as well, when things are tough, accessing credit
pain, your families are counting on you, and that pressure on
your shoulders is hard when you know that other families and
their children are counting on you as well.
So I am about out of time. I did want to bring up
Agricultural Labor Working Group that we recently had, and I
was proud to be a part of that effort. And while the
Agriculture Committee does not have jurisdiction over ag labor,
we are invested and interested in meaningful reform to the ag
labor workforce. So I will hold my last question, but just know
that that is on top of mind for me as well. And I thank you all
for being here today and sharing your perspectives.
With that, Mr. Chairman, I yield back.
The Chairman. The gentlelady yields back.
Seeing no other of our Members here for additional
questions, I will just proceed with some closing comments.
I want to say thank you to all five of our witnesses, you
know what, for bringing your experiences here to Washington
because we do our jobs better when we use what God has given
us, and that is two ears and one mouth, when we make the effort
to listen and to listen to the voices of rural America or what
I call an essential America today and, quite frankly, the
agriculture industry, which all of you represent in different
ways sitting at the table.
I think the points that you made were crystal clear, and I
think that they reinforced the need to get this farm bill
passed. Now, we have had a lot of naysayers in this process. We
had the naysayers who said we would never be able to put a farm
bill together. Well, we proved them wrong. They said we will
never be able to pass it out of Committee. Well, we proved them
wrong. They said we will never be able to do this in a
bipartisan way, and we proved them wrong.
And there are those who are saying we will never get to the
House floor, and I guarantee you, we will prove them wrong, and
the reason for that is the arguments that you have made of why
this is important to do now, to provide that certainty, to show
our farmers, our ranchers, our foresters, our processors, the
people of rural America, that we have their backs and that we
stand ready to provide them what they need. And that is what
the Farm, Food, and National Security Act of 2024 is. And so I
really, really appreciate your making the sacrifices you made
to be able to travel here and to be able to share your insights
and expertise.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Committee on Agriculture is adjourned.
[Whereupon, at 1:58 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania; on behalf of Todd Van Hoose, President and Chief
Executive Officer, Farm Credit Council
July 23, 2024
Hon. Glenn Thompson, Hon. David Scott,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.
Dear Chairman Thompson and Ranking Member Scott:
On behalf of our over 600,000 customers across all 50 states and
Puerto Rico, Farm Credit thanks you for holding today's hearing to
assess the financial conditions farmers, ranchers, and rural
communities currently face. As the leading lender to agriculture, Farm
Credit is committed to fulfilling our mission to serve our customers in
good times and bad.
As recent USDA reports have outlined, producers are facing a more
challenging economic environment, and those conditions are expected to
continue to deteriorate as we enter the 2025 growing season. Farm
Credit has also seen troubling signs of more difficult times to come.
Farmers' net cash income was significantly reduced from 2023 to 2024.
In addition, due to inflation, input costs remain high, and farmers'
working capital has been reduced. This has led to a slight increase in
borrowers facing financial stress. These headwinds are even more
detrimental to young and beginning farmers who already struggle to get
started. Farm Credit has robust programs to specifically support young,
beginning, and small (YBS) producers, which have resulted in year-over-
year increases in YBS customers. The certainty a farm bill brings is
crucial to the survival of these operations. Finally, if land values
were to falter in some parts of the country, the situation could become
increasingly dire for many producers.
Producers rely on the risk management programs included in the farm
bill when faced with adverse weather, trade uncertainty, disease
outbreaks, and economic environments like those we are beginning to see
now. It is more important than ever to pass the farm bill in 2024 to
provide farmers, ranchers and rural communities with the certainty they
will need to stay afloat if current economic conditions persist or
worsen.
As you will hear from today's witnesses, having access to vital
risk management tools like crop insurance, Title I programs, trade
promotion tools, and other strong farm policies will be an important
factor in whether farmers and ranchers are able to survive a downturn.
Your commitment to hearing from these producers is commendable, and it
is Farm Credit's hope that this hearing will help all Members of the
House Agriculture Committee become even more committed to passing the
farm bill this year.
Thank you again for holding this important hearing and for your
continued support of Farm Credit and our mission to support rural
communities and agriculture with reliable, consistent, credit and
related services today and tomorrow. Farm Credit stands ready to help
get the farm bill done this year.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Todd Van Hoose,]
[President and Chief Executive Officer,]
[Farm Credit Council]
______
Submitted Article by Hon. Austin Scott, a Representative in Congress
from Georgia
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[https://www.fox13seattle.com/news/john-deere-announces-mass-layoffs-
midwest-amid-production-shift-mexico]
John Deere announces mass layoffs in Midwest amid production shift to
Mexico
By Michael Dorgan
Published June 29, 2024, 11:16 a.m. PDT
Business,\1\ FOX Business \2\
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\1\ https://www.fox13seattle.com/tag/business.
\2\ Ahttps://www.foxbusiness.com/.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
File--A John Deere combine harvests grain corn and unloads
into a grain cart. (Photo by: Bill Barksdale/Design Pics
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Editorial/Universal Images Group via Getty Images)
John Deere, the world's largest seller of tractors and crop
harvesters,\3\ has announced another wave of layoffs Friday, telling
around 610 production staff at plants in Illinois and Iowa that they
will be out of a job by the end of the summer, according to reports.
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\3\ https://www.foxbusiness.com/category/fox-news-manufacturing.
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The company is slashing around 280 workers from a plant in East
Moline, Illinois, while another 230 employees are being let go at a
factory in Davenport, Iowa. About 100 production employees at the
company's Dubuque, Iowa, plant will also be impacted. All layoffs are
said to be effective from Aug. 30, per a press release cited by several
outlets.
According to the release, the layoffs are being made due to reduced
demand for John Deere's products \4\ from those factories.
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\4\ https://www.foxbusiness.com/category/john-deere.
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The company says it generated $10.166 billion in profits last year.
``We can confirm Deere leadership recently communicated that rising
operational costs and declining market demand requires enterprise-wide
changes in how work gets done to achieve our goals and best position
the company for the future,'' the statement reads.
Workers are to be offered Supplemental Unemployment Benefit (SUB)
which will cover about 95% of their weekly net pay for up to 26 weeks,
depending on their years of service. They are also being given profit-
sharing options and health benefits.
Deere, known for its iconic green and yellow colors and jumping
deer logo, is one of America's oldest companies, having been
established in 1837, nearly 25 years before the start of the Civil War.
Earlier this month, Deere announced it is moving the manufacturing
of skid steer loaders and compact track loaders from its Dubuque
facility to Mexico by the end of 2026.
The company said the decision was due to it evolving its business
model and to address rising manufacturing costs and improve operational
efficiencies.
``This includes optimizing our factories for future products,
making our operations more efficient and taking advantage of locations
in the U.S. and globally, with a growing labor force,'' a statement
from the company reads.
In October, John Deere announced its first wave of 225 layoffs at
its Harvester Works plant in East Moline. Another 34 production
employees were laid off in May at its Moline Cylinder Works factory,
while in March, company officials announced that they would lay off 150
more workers at a plant in Ankeny, Iowa, where sprayers and cotton
pickers are made.
About 500 employees have been let go at its Waterloo plant in Iowa,
per WQAD.
One longtime John Deere worker at the Harvester Works plant in East
Moline, blamed the latest announcement on greed.
``We get wind of more layoffs daily, it seems, and it's causing
uncertainty all over,'' said the worker, who wished to remain
anonymous. ``The only reason for Deere to do this is greed.''
Deere & Co's market capitalization \5\ stood around $102.81 billion
as of Friday evening. In mid-May, the company said it had generated
$27.42 billion in net sales and revenues over the first two quarters of
the year. Its net income for the same timeframe was $4.121 billion.
---------------------------------------------------------------------------
\5\ https://www.foxbusiness.com/quote?stockTicker=DE.
---------------------------------------------------------------------------
The company recently trimmed its annual profit forecast for the
second time and projected steeper declines in sales of large
agricultural equipment.
Lower crop prices are leaving agricultural equipment sellers with
an excess of unsold tractors and combines, leading some to offer
discounts and suspend new orders.
The Department of Agriculture has also forecast farm income would
slide 25.5% to $116.1 billion this year from 2023.
The news of layoffs comes amid a report on Wednesday \6\ that John
Deere CEO John May has put his 80 acre horse farm property up for sale.
Its asking price has been set at $3.925 million, according to its
listing.
---------------------------------------------------------------------------
\6\ https://www.foxbusiness.com/real-estate/john-deere-ceo-puts-80-
acre-horse-farm-up-sale.
Reuters contributed to this report.
______
Submitted Report by Hon. Jasmine Crockett, a Representative in Congress
from Texas
[excerpt]
Mandate for Leadership
The Conservative Promise
2025
Foreword by Kevin D. Roberts, PhD
Edited by Paul Dans and Steven Groves
2023 by The Heritage Foundation
214 Massachusetts Ave., NE
Washington, DC 20002
(202) 546-4400 D heritage.org
All rights reserved.
Printed in the United States of America.
ISBN: 978-0-89195-174-2
Contents
Acknowledgments
The Project 2025 Advisory Board
The 2025 Presidential Transition Project: A Note On ``Project
2025''
Authors
Contributors
Foreword: A Promise To America
Kevin D. Roberts, PhD
Section 1: Taking The Reins Of Government
1. White House Office
Rick Dearborn
2. Executive Office of the President of the United States
Russ Vought
3. Central Personnel Agencies: Managing the Bureaucracy
Donald Devine, Dennis Dean Kirk, and Paul Dans
Section 2: The Common Defense
4. Department of Defense
Christopher Miller
5. Department of Homeland Security
Ken Cuccinelli
6. Department of State
Kiron K. Skinner
7. Intelligence Community
Dustin J. Carmack
8. Media Agencies
U.S. Agency for Global Media
Mora Namdar
Corporation for Public Broadcasting
Mike Gonzalez
9. Agency for International Development
Max Primorac
Section 3: The General Welfare
10. Department of Agriculture
Daren Bakst
11. Department Of Education
Lindsey M. Burke
12. Department of Energy and Related Commissions
Bernard L. McNamee
13. Environmental Protection Agency
Mandy M. Gunasekara
14. Department of Health and Human Services
Roger Severino
15. Department of Housing and Urban Development
Benjamin S. Carson, Sr., MD
16. Department of the Interior
William Perry Pendley
17. Department of Justice
Gene Hamilton
18. Department of Labor and Related Agencies
Jonathan Berry
19. Department of Transportation
Diana Furchtgott-Roth
20. Department of Veterans Affairs
Brooks D. Tucker
Section 4: The Economy
21. Department of Commerce
Thomas F. Gilman
22. Department of the Treasury
William L. Walton, Stephen Moore, and David R. Burton
23. Export-Import
The Export-Import Bank Should Be Abolished
Veronique de Rugy
The Case For The Export-Import Bank
Jennifer Hazelton
24. Federal Reserve
Paul Winfree
25. Small Business Administration
Karen Kerrigan
26. Trade
The Case for Fair Trade
Peter Navarro
The Case for Free Trade
Kent Lassman
Section 5: Independent Regulatory Agencies
27. Financial Regulatory Agencies
Securities and Exchange Commission and Related Agencies
David R. Burton
Consumer Financial Protection Bureau
Robert Bowes
28. Federal Communications Commission
Brendan Carr
29. Federal Election Commission
Hans A. von Spakovsky
30. Federal Trade Commission
Adam Candeub
Onward!
Edwin J. Feulner
* * * * *
10. Department of Agriculture
Daren Bakst
American farmers efficiently and safely produce food to meet the
needs of individuals around the globe. Because of the innovation and
resilience of the nation's farmers, American agriculture is a model for
the world. If farmers are allowed to operate without unnecessary
government intervention, American agriculture will continue to
flourish, producing plentiful, safe, nutritious, and affordable food.
The U.S. Department of Agriculture (USDA) can and should play a
limited role, with much of its focus on removing governmental barriers
that hinder food production or otherwise undermine efforts to meet
consumer demand. The USDA should recognize what should be self-evident:
Agricultural production should first and foremost be focused on
efficiently producing safe food.
This chapter provides important background on the USDA and
identifies many of the USDA-specific issues that will be faced by an
incoming Administration. It provides specific recommendations for the
next Administration about how to address these issues and lays out a
conservative vision for what the USDA should look like in the future.
Mission Statement
The current mission statement as stated by the Biden Administration
highlights the broad scope of the USDA:
To serve all Americans by providing effective, innovative,
science-based public policy leadership in agriculture, food and
nutrition, natural resource protection and management, rural
development, and related issues with a commitment to delivering
equitable and climate smart opportunities that inspire and help
America thrive.\1\
---------------------------------------------------------------------------
\1\ U.S. Department of Agriculture, Fiscal Year 2023 Budget
Summary, p. 1, https://www.usda.gov/sites/default/files/documents/2023-
usda-budget-summary.pdf (accessed December 14, 2022).
The first part of the mission statement regarding the issues
covered is not new to the Biden Administration; it reflects the overly
broad nature of the USDA's work. However, the language bringing in
equity and climate change is new to the Biden Administration and part
of the USDA's express effort to transform agricultural production.\2\
---------------------------------------------------------------------------
\2\ See, for example, U.S. Department of Agriculture,
``Transforming the U.S. Food System,'' https://www.usda.gov/fst
(accessed December 14, 2022).
---------------------------------------------------------------------------
The USDA's new vision statement illuminates the focus of this
effort:
An equitable and climate smart food and agriculture economy
that protects and improves the health, nutrition and quality of
life of all Americans, yields healthy land, forests and clean
water, helps rural America thrive, and feeds the world.\3\
---------------------------------------------------------------------------
\3\ U.S. Department of Agriculture, Fiscal Year 2023 Budget
Summary, p. 1.
This effort is one of a Federal central plan to put climate change
and environmental issues ahead of the most important requirements of
agriculture--to efficiently produce safe food. The USDA would
apparently use its power to change the very nature of the food and
agriculture economy into one that is ``equitable and climate-smart.''
As an initial matter, the USDA should not try to control and shape the
economy, but should instead remove obstacles that hinder food
production. Further, it should not place ancillary issues, such as
environmental issues, ahead of agricultural production itself.
A Proper Mission Statement. Even before the Biden Administration's
radical effort to reshape the USDA's work, the USDA's mission was and
is too broad, including serving as a major welfare agency through
implementation of programs such as food stamps. This far-reaching
mission is not the fault of the USDA, but of Congress, which has given
the department its extensive power.
Congress must limit the USDA's role. A proper mission would clarify
that the department's primary focus is on agriculture and that the USDA
serves all Americans. The USDA's ``client'' is the American people in
general, not a subset of interests, such as farmers, meatpackers,
environmental groups, etc.
Within this agricultural focus, the USDA should develop and
disseminate information and research (the historical role of the USDA);
identify and address concrete threats to public health and safety
arising directly from food and agriculture; remove unjustified foreign
trade barriers blocking market access for American agricultural goods;
and generally remove government barriers that undermine access to safe
and affordable food across the food supply chain.
Core principles should be included within any mission statement,
including a recognition that farmers, and the food system in general,
should be free from unnecessary government intervention. Further, there
should be clear statements about the importance of sound science to
inform the USDA's work and respect for personal freedom and individual
dietary choices, private property rights, and the rule of law.
Taking these factors into account, below is a model USDA mission
statement:
To develop and disseminate agricultural information and
research, identify and address concrete public health and
safety threats directly connected to food and agriculture, and
remove both unjustified foreign trade barriers for U.S. goods
and domestic government barriers that undermine access to safe
and affordable food absent a compelling need--all based on the
importance of sound science, personal freedom, private
property, the rule of law, and service to all Americans.
Overview
In 1862, President Abraham Lincoln signed into law the legislation
that created the USDA.\4\ The department had a very narrow mission
focused on the dissemination of information connected to agriculture
and ``to procure, propagate and distribute among the people new
valuable seeds and plants.'' \5\ During the last 160 years, the scope
of the USDA's work has expanded well beyond that narrow mission--and
well beyond agriculture itself. In addition to being a distributor of
farm subsidies, the USDA runs the food stamp program and other food-
related welfare programs and covers issues including conservation,
biofuels, forestry, and rural programs.
---------------------------------------------------------------------------
\4\ U.S. Department of Agriculture, ``USDA Celebrates 150 Years,''
https://www.usda.gov/our-agency/about-usda/history (accessed December
16, 2022).
\5\ The law stated, ``[T]here is hereby established at the seat of
government of the United States a Department of Agriculture, the
general designs and duties of which shall be to acquire and to diffuse
among the people of the United States useful information on subjects
connected with agriculture in the most general and comprehensive sense
of that word, and to procure, propagate, and distribute among the
people new and valuable seeds and plants.'' Gladys L. Baker, et al.,
Century of Service: The First 100 Years of the United States Department
of Agriculture, (Washington, DC: U.S. Government Printing Office, 1963)
p. 13, https://babel.hathitrust.org/cgi/
pt?id=uc1.b4254098&view=1up&seq=33 (accessed December 16, 2022).
---------------------------------------------------------------------------
Based on the USDA's Fiscal Year (FY) 2023 budget summary, outlays
are estimated at $261 billion: $221 billion for mandatory programs and
$39 billion for discretionary programs.\6\ These outlays are broken
down as follows: nutrition assistance (70 percent); farm, conservation,
and commodity programs (14 percent); ``all other,'' which includes
rural development, research, food safety, marketing and regulatory, and
departmental management (11 percent); and forestry (5 percent).\7\
---------------------------------------------------------------------------
\6\ U.S. Department of Agriculture, Fiscal Year 2023 Budget
Summary, p. 2.
\7\ Ibid., p. 2.
---------------------------------------------------------------------------
The USDA has provided a summary of its size, explaining, ``Today,
USDA is comprised of 29 agencies organized under eight Mission Areas
and 16 Staff Offices, with nearly 100,000 employees serving the
American people at more than 6,000 locations across the country and
abroad.'' \8\
---------------------------------------------------------------------------
\8\ U.S. Department of Agriculture, Strategic Plan: Fiscal Years
2022-2026, p. 3, https://www.usda.gov/sites/default/files/documents/
usda-fy-2022-2026-strategic-plan.pdf (accessed December 14, 2022).
---------------------------------------------------------------------------
Major Priority Issues and Specific Recommendations
For an incoming Administration, there are numerous issues that
should be addressed at the USDA. This chapter identifies and discusses
many of the most important issues. The initial issues discussed should
be priority issues for the next Administration:
Defend American Agriculture. It is deeply unfortunate that the
first issue identified must be a willingness of the incoming
Administration to defend American agriculture, but this is precisely
what the top priority for that Administration should be. As previously
discussed, the Biden Administration is seeking to use the Federal
Government to transform the American food system.\9\ The USDA web site
explains:
---------------------------------------------------------------------------
\9\ News release, ``USDA Announces Framework for Shoring Up the
Food Supply Chain and Transforming the Food System to Be Fairer, More
Competitive, More Resilient,'' U.S. Department of Agriculture, June 1,
2022, https://www.usda.gov/media/press-releases/2022/06/01/usda-
announces-framework-shoring-food-supply-chain-and-transforming
(accessed December 14, 2022).
The U.S. Department of Agriculture (USDA), alongside Biden-
Harris Administration leadership and the people of this great
country, has embarked on another historic journey: transforming
the food system as we know it--from farm to fork, and at every
stage along the supply chain.\10\
---------------------------------------------------------------------------
\10\ U.S. Department of Agriculture, ``Transforming the U.S. Food
System.''
The Federal Government does not need to transform the food system
or develop a national plan to intervene across the supply chain.
Instead, it should respect American farmers, truckers, and everyone who
makes the food supply chain so resilient and successful. One of the
important lessons learned during the COVID-19 pandemic was how critical
it is to remove barriers in the food supply chain--not to increase
them.
The Biden Administration's centrally planned transformational
effort minimizes the importance of efficient agricultural production
and instead places issues such as climate change and equity front and
center. The USDA's Strategic Plan Fiscal Years 2022-2026 identifies six
strategic goals, the first three of which focus on issues such as
climate change, renewable energy, and systemic racism. In the Secretary
of Agriculture's message, there is only one mention of affordable
food--and nothing about efficient production and the incredible
innovation and respect for the environment that already exists within
the agricultural community.\11\
---------------------------------------------------------------------------
\11\ U.S. Department of Agriculture, Strategic Plan: Fiscal Years
2022-2026, pp. 1-2.
---------------------------------------------------------------------------
The Biden Administration's USDA strongly supported \12\ the recent
United Nations (U.N.) Food Systems Summit. According to the USDA:
---------------------------------------------------------------------------
\12\ U.S. Department of Agriculture, ``Background on the U.S.
Approach to the 2021 UN Food Systems Summit,'' August 4, 2021, https://
www.usda.gov/sites/default/files/documents/Background-on-US-approach-
2021-UN-Food-Systems-Summit.pdf (accessed December 14, 2022).
The stated goal of the Food Systems Summit was to transform
the way the world produces, consumes and thinks about foods
within the context of the 2030 Agenda for Sustainable
Development and to meet the challenges of poverty, food
security, malnutrition, population growth, climate change, and
natural resource degradation.\13\
---------------------------------------------------------------------------
\13\ U.S. Department of Agriculture, ``UN Food Systems Summit,''
https://www.usda.gov/oce/sustainability/un-summit (accessed December
14, 2022).
Not unlike those who oppose reliable and affordable energy
production, there is a disdain, especially by some on the Left, for
American agriculture and the food system.\14\ The Biden
Administration's vision of a Federal Government developing a plan that
``fixes'' agriculture and focuses on issues secondary to food
production is very disturbing.
---------------------------------------------------------------------------
\14\ Mark Bittman, et al., ``How a National Food Policy Could Save
Millions of American Lives,'' The Washington Post, November 7, 2014,
https://www.washingtonpost.com/opinions/how-a-national-food-policy-
could-save-millions-of-american-lives/2014/11/07/89c55e16-637f-11e4-
836c-83bc4f26eb67_story.html (accessed December 14, 2022); Daren Bakst
and Gabriella Beaumont-Smith, ``No, We Don't Need to Transform the
American Food System,'' The Daily Signal, February 26, 2021, https://
www.dailysignal.com/2021/02/26/no-we-dont-need-to-transform-the-
american-food-system/ (accessed December 14, 2022); and Daren Bakst,
``Biden's Food Conference Should Put People First, Not Environmental
Extremism,'' The Daily Signal, September 22, 2022, https://
www.dailysignal.com/2022/09/22/bidens-food-conference-should-put-
people-first-not-environmental-extremism/ (accessed December 14, 2022).
---------------------------------------------------------------------------
A recent USDA-created program captures both the disrespect for
American farmers and the Biden Administration's effort to dictate
agricultural practices. The USDA explained that it was concerned with
farmers not transitioning to organic farming, and therefore announced
that it will dedicate $300 million to induce farmers to adopt organic
farming.\15\ There was no recognition that farmers know how to farm
better than D.C. politicians \16\ or a that organic food is expensive
\17\ and land-intensive.\18\ The Biden Administration has also been
pushing so-called ``climate-smart'' \19\ agricultural practices which
received additional support in the partisan Inflation Reduction
Act.\20\
---------------------------------------------------------------------------
\15\ News release, ``USDA to Invest Up to $300 Million in New
Organic Transition Initiative,'' U.S. Department of Agriculture, August
22, 2022, https://www.usda.gov/media/press-releases/2022/08/22/usda-
invest-300-million-new-organic-transition-initiative (accessed December
14, 2022).
\16\ Gary Baise, ``Sri Lanka's Green New Deal Was a Disaster,''
Farm Futures, November 14, 2022, https://www.farmprogress.com/
commentary/sri-lankas-green-new-deal-was-disaster (accessed December
16, 2022).
\17\ See, for example, Catherine Greene, et al., ``Growing Organic
Demand Provides High-Value Opportunities for Many Types of Producers,''
Economic Research Service, U.S. Department of Agriculture, February 6,
2017, https://www.ers.usda.gov/amber-waves/2017/januaryfebruary/
growing-organic-demand-provides-high-value-opportunities-for-many-
types-of-producers/ (accessed December 14, 2022), and Andrea Carlson,
``Investigating Retail Price Premiums for Organic Foods,'' Economic
Research Service, U.S. Department of Agriculture, May 24, 2016, https:/
/www.ers.usda.gov/amber-waves/2016/may/investigating-retail-price-
premiums-for-organic-foods/ (accessed December 16, 2022). Further,
there are many myths, such as those regarding the alleged health
benefit of organic food. One meta study found that ``[t]he published
literature lacks strong evidence that organic foods are significantly
more nutritious than conventional foods.'' Crystal Smith-Spangler, et
al., ``Are Organic Foods Safer or Healthier Than Conventional
Alternatives,'' Annals of Internal Medicine, Vol. 157, No. 5 (September
4, 2012), pp. 348-366, https://www.acpjournals.org/doi/epdf/10.7326/
0003-4819-157-5-201209040-00007 (accessed December 16, 2022).
\18\ Steve Savage, ``USDA Data Confirm Organic Yields Significantly
Lower Than With Conventional Farming,'' Genetic Literacy Project,
February 16, 2018, https://geneticliteracyproject.org/2018/02/16/usda-
data-confirm-organic-yields-dramatically-lower-conventional-farming/
(accessed December 16, 2022).
\19\ See, for example, U.S. Department of Agriculture, ``Notice:
Climate-Smart Agriculture and Forestry Partnership Program, Request for
Comments,'' USDA-2021-0010, October 21, 2021, https://
www.regulations.gov/document/USDA-2021-0010-0001 (accessed December 16,
2022).
\20\ Inflation Reduction Act of 2022, Public Law 117-169.
---------------------------------------------------------------------------
American agriculture should not need defending. According to the
USDA's latest data, farm output nearly tripled (a 175 percent increase)
from 1948 to 2019, while the amount of land farmed decreased. In fact,
as farm output increased by 175 percent, all agricultural inputs
increased by only four percent.\21\
---------------------------------------------------------------------------
\21\ U.S. Department of Agriculture, Economic Research Service,
``Productivity Growth in U.S. Agriculture (1948-2019),'' https://
www.ers.usda.gov/data-products/agricultural-productivity-in-the-u-s/
productivity-growth-in-u-s-agriculture-1948-2019/ (accessed December
14, 2022).
---------------------------------------------------------------------------
In 2021, despite high food prices--a major problem and regressive--
American consumers spent an average of about ten percent of their
personal disposable income on food, which is close to historic lows.
For decades, this share has been in decline.\22\ America's farmers
efficiently produce food using fewer resources, making it possible for
food to be affordable. This reality is not only something that should
be defended but also touted as a prime example of what makes American
agriculture so successful. The connection between efficiency and
affordability seems lost in the Biden Administration's effort to
transform the food system.
---------------------------------------------------------------------------
\22\ U.S. Department of Agriculture, Economic Research Service,
``Total Food Budget Share Increased from 9.4 Percent of Disposable
Income to 10.3 Percent in 2021,'' July 15, 2022, https://
www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/
?chartId=76967 (accessed December 14, 2022).
---------------------------------------------------------------------------
Recommendations
Proactively Defend Agriculture. From the outset, the next
Administration should: Denounce efforts to place ancillary issues like
climate change ahead of food productivity and affordability when it
comes to agriculture.
Remove the U.S. from any association with U.N. and other
efforts to push sustainable-development schemes connected to
food production.
Defend American agriculture and advance the critical
importance of efficient and innovative food production,
especially to advance safe and affordable food.
Stress that ideal policy should remove obstacles imposed on
American farmers and individuals across the food supply chain
so that they can meet the food needs of Americans.
Clarify the critical importance of efficiency to food
affordability, and why a failure to recognize this fact
especially hurts low-income households who spend a
disproportionate share of after-tax income on food compared to
higher-income households.\23\
---------------------------------------------------------------------------
\23\ U.S. Department of Labor, Bureau of Labor Statistics,
``Quintiles of Income Before Taxes: Annual Expenditure Means, Shares,
and Standard Errors, and Coefficients of Variation, Consumer
Expenditure Surveys,'' 2021, Table 1101, https://www.bls.gov/cex/
tables/calendar-year/mean-item-share-average-standard-error/cu-income-
quintiles-before-taxes-2021.pdf (accessed December 16, 2022), and Daren
Bakst and Patrick Tyrrell, ``Big Government Policies That Hurt the Poor
and How to Address Them,'' Heritage Foundation Special Report No. 176,
April 5, 2017, p. 7, https://www.heritage.org/sites/default/files/2017-
04/SR176.pdf.
To accomplish these objectives, a new Administration should
announce its principles through an executive order, the USDA should
remove all references to transforming the food system on its web site
and other department-disseminated material, and it should expressly and
regularly communicate the principles informing the objectives listed
above, as well as promote these principles through legislative efforts.
The USDA should also carefully review existing efforts that involve
inappropriately imposing its preferred agricultural practices onto
farmers.
Address the Abuse of CCC Discretionary Authority. With the
exception of Federal crop insurance, the Commodity Credit Corporation
(CCC) is generally the means by which agricultural-related farm bill
programs are funded. The CCC is a funding mechanism, which, in simple
terms, has $30 billion a year at its disposal.\24\
---------------------------------------------------------------------------
\24\ Daren Bakst and Joshua Sewell, ``Congress Should Stop
Abrogating Its Spending Power and Rein in the USDA Slush Fund,''
Heritage Foundation Issue Brief No. 6052, February 19, 2021, p. 2,
https://www.heritage.org/budget-and-spending/report/congress-should-
stop-abrogating-its-spending-power-and-rein-the-usda.
---------------------------------------------------------------------------
Section 5 of the Commodity Credit Corporation Charter Act (Charter
Act) \25\ gives the Secretary of Agriculture broad discretionary
authority to spend ``unused'' CCC money. However, in general, past
Agriculture Secretaries have not used this power to any meaningful
extent. This changed dramatically during the Trump Administration, when
this discretionary authority was used to fund $28 billion in ``trade
aid'' to farmers, consisting primarily of the Market Facilitation
Program. In 2020, this authority was used for $20.5 billion in food
purchases and income subsidies in response to the COVID-19
pandemic.\26\
---------------------------------------------------------------------------
\25\ Commodity Credit Corporation Charter Act of 1948, Public Law
80-806.
\26\ Bakst and Sewall, ``Congress Should Stop Abrogating Its
Spending Power.''
---------------------------------------------------------------------------
At the time, critics warned that this use of the CCC, which in
effect created a USDA slush fund, would lead future Administrations to
abuse the CCC, such as by pushing climate-change policies.\27\
Predictably, this is precisely what the Biden Administration has done,
using the discretionary authority to create programs out of whole
cloth, arguably without statutory authority,\28\ for what it refers to
as climate-smart agricultural practices.\29\
---------------------------------------------------------------------------
\27\ Ibid., p. 3.
\28\ Daren Bakst, ``Comment from Bakst, Darren'' on ``Notice:
Climate-Smart Agriculture and Forestry Partnership Program, Request for
Comments,'' USDA-2021-0010, October 21, 2021, November 1, 2021, https:/
/www.regulations.gov/document/USDA-2021-0010-0001/comment?filter=bakst
(accessed December 16, 2022).
\29\ U.S. Department of Agriculture, ``Notice: Climate-Smart
Agriculture and Forestry Partnership Program.''
---------------------------------------------------------------------------
The merits of the various programs funded through the CCC
discretionary authority is not the focus of this discussion. The major
problem is that the Secretary of Agriculture is empowered to use a
slush fund. Billions of dollars are being used for programs that
Congress never envisioned or intended.
Concern about this type of abuse is not new. In fact, from 2012 to
2017, Congress expressly limited the Agriculture Secretary's
discretionary spending authority under the Charter Act.\30\ And this
was before the recent massive discretionary CCC spending occurred.
---------------------------------------------------------------------------
\30\ Megan Stubbs, ``The Commodity Credit Corporation (CCC),''
Congressional Research Service Report for Congress, updated January 14,
2021, https://crsreports.congress.gov/product/pdf/R/R44606 (accessed
December 16, 2022).
---------------------------------------------------------------------------
The use of the discretionary power is a separation of powers
problem, with Congress abrogating its spending power. This power is
ripe for abuse--as could be expected with any slush fund--and it is a
possible way to get around the farm bill process to achieve policy
goals not secured during the legislative process.
The next Administration should:
Refrain from using section 5 discretionary authority. The
USDA can address this abuse on its own by following the lead of
most Administrations and not using this discretionary
authority.
Promote legislative fixes to address abuse. Ideally,
Congress would repeal the Secretary's discretionary authority
under section 5 of the Charter Act. There is no reason to
maintain such authority. If Congress needs to spend money to
assist farmers, it has legislative tools, including the farm
bill and the annual appropriations process, to do so in a
timely fashion. While not an ideal solution, Congress could
also amend the Charter Act to require prior Congressional
approval through duly enacted legislation before any money is
spent.
At a minimum, Congress should amend the Charter Act to:
Limit spending to directly help farmers and ranchers address
issues due to unforeseen events not already covered by existing
programs and that constitute genuine emergencies that must be
addressed immediately.
Prohibit the CCC from being used to assist parties beyond
farmers and ranchers.
Clarify that spending is only to address problems that are
temporary in nature and ensure that funding is targeted to
address such problems.
Tighten the discretion within section 5 and identify ways
for improper application of the Charter Act to be challenged in
court.
Reform Farm Subsidies. Too often, agricultural policy becomes
synonymous with farm subsidy policy. This is unfortunate, because
making them synonymous fails to recognize that agricultural policy
covers a wide range of issues, including issues that are outside the
proper scope of the USDA, such as environmental regulation.
However, there is no question that farm subsidies are an important
issue within agricultural policy that should be addressed by any
incoming Administration. There are several principles that even subsidy
supporters would likely agree upon, including the need to reduce market
distortions. Subsidies should not influence planting decisions,
discourage proper risk management and innovation, incentivize planting
on environmentally sensitive land, or create barriers to entry for new
farmers. Farm subsidies can lead to these market distortions and
therefore, it would hardly be controversial to ensure that any subsidy
scheme should be designed to avoid such problems.
The overall goal should be to eliminate subsidy dependence. Despite
what might be conventional wisdom, many farmers receive few to no
subsidies,\31\ with most subsidies going to only a handful of
commodities. According to the Congressional Research Service (CRS),
from 2014 to 2016, 94 percent of farm program support went to just six
commodities--corn, cotton, peanuts, rice, soybeans, and wheat--that
together account for only 28 percent of farm receipts.\32\ Although
many farmers do not receive much in the way of subsidies, especially
those in the areas of livestock and specialty crops (fruit, vegetable,
and nuts),\33\ there are still a significant number of farmers growing
row crops like corn and cotton that do receive significant farm
subsidies.
---------------------------------------------------------------------------
\31\ ``Overall, 34 percent of all farms reported receiving some
type of government payment in 2021,'' and ``[o]verall, 14 percent of
U.S. farms participated in Federal crop insurance programs.'' Christine
Whitt, Noah Miller, and Ryan Olver, ``America's Farms and Ranches at a
Glance: 2022 Edition,'' U.S. Department of Agriculture, Economic
Research Service, pp. 24 and 26, https://www.ers.usda.gov/webdocs/
publications/105388/eib-247.pdf?v=527.4 (accessed March 18, 2023). This
data, which apparently does not cover crop insurance, included payments
beyond just commodity payments, such as conservation payments.
\32\ Randy Schnepf, ``Farm Safety-Net Payments Under the 2014 Farm
Bill: Comparison by Program Crop,'' Congressional Research Service
Report for Congress, August 11, 2017, https://fas.org/sgp/crs/misc/
R44914.pdf (accessed December 14, 2022).
\33\ Although livestock and specialty crop producers do receive
some subsidies, former American Farm Bureau Federation President Bob
Stallman captured the subsidy issue well. He ``dismisse[d] outright the
claim that farmers couldn't survive without subsidy money. `Why does
the livestock industry survive without subsidies?' he ask[ed]. `Why
does the specialty crop [fruit and vegetable] industry survive?' ''
Tamar Haspel, ``Why Do Taxpayers Subsidize Rich Farmers?'' The
Washington Post, March 15, 2018, https://www.washingtonpost.com/
lifestyle/food/why-do-taxpayers-subsidize-rich-farmers/2018/03/15/
50e89906-27b6-11e8-b79df3d931db7f68_ story.html (accessed March 18,
2023).
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The primary subsidy programs include the Agriculture Risk Coverage
(ARC) program,\34\ the Price Loss Coverage (PLC) program,\35\ and the
Federal crop insurance program.\36\ Farmers can participate on a crop-
by-crop basis in the ARC program or the PLC program. These programs
cover about 20 different crops.\37\ The ARC program protects farmers
from what are referred to as ``shallow'' losses, providing payments
when their actual revenues fall below 86 percent of the expected
revenues for their crops.\38\ The PLC program provides payments to
farmers when commodity prices fall below a fixed, statutorily
established reference price.\39\
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\34\ U.S. Department of Agriculture, Farm Service Agency, ``ARC/PLC
Program,'' https://www.fsa.usda.gov/programs-and-services/
arcplc_program/index (accessed December 16, 2022).
\35\ Ibid.
\36\ U.S. Department of Agriculture, Economic Research Service,
``Crop Insurance at a Glance,'' May 31, 2022, https://www.ers.usda.gov/
topics/farm-practices-management/risk-management/crop-insurance-at-a-
glance/ (accessed December 16, 2022).
\37\ U.S. Department of Agriculture, ``Agriculture Risk Coverage
(ALC) & Price Loss Coverage (PLC),'' Farm Service Agency Fact Sheet,
August 2019, https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/
FactSheets/2019/arc-plc_overview_fact_sheet-aug_2019.pdf (accessed
December 16, 2022).
\38\ See, for example, U.S Department of Agriculture, Farm Service
Agency, Agriculture Risk Coverage and PriceLoss Coverage Handbook, last
amended October 5, 2020, https://www.fsa.usda.gov/Internet/FSA_File/1-
arcplc_r01_a10.pdf (accessed March 18, 2023); Mesbah Motamed, ``Federal
Commodity Programs Price Loss Coverage and Agriculture Risk Coverage
Address Price Yield Risks Faced by Producers,'' U.S. Department of
Agriculture, Economic Research Service, August 6, 2018, https://
www.ers.usda.gov/amber-waves/2018/august/federal-commodity-programs-
price-loss-coverage-and-agriculture-risk-coverage-address-price-and-
yield-risks-faced-by-producers/ (accessed March 18, 2023); and
Taxpayers for Common Sense, ``Shallow Loss Agriculture Programs 101,''
https://www.taxpayer.net/agriculture/shallow-loss-agriculture-programs-
101/ (accessed March 18, 2023).
\39\ Ibid.
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The Federal crop insurance program is broader in scope than ARC and
PLC, and in crop year 2019 covered 124 commodities.\40\ Farmers pay a
portion of a premium to participate in the program. Taxpayers on
average pay about 60 percent \41\ of the premium. As explained by CRS,
``Revenue Protection was the most frequently purchased policy type in
2019, accounting for almost 70 [percent] of policies purchased.'' \42\
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\40\ Stephanie Rosch, ``Federal Crop Insurance: A Primer,''
Congressional Research Service Report for Congress, February 18, 2021,
p. 1, https://crsreports.congress.gov/product/pdf/R/R46686 (December
14, 2021).
\41\ Congressional Budget Office, Options for Reducing the Deficit,
2023 to 2032: Volume II; Smaller Reductions, December 2022, p. 6,
https://www.cbo.gov/system/files/2022-12/58163-budget-options-small-
effects.pdf (accessed December 14, 2022).
\42\ Rosch, ``Federal Crop Insurance: A Primer,'' p. 17.
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While there are certainly other subsidy programs besides ARC, PLC,
and Federal crop insurance, one program that deserves special mention
is the Federal sugar program. This program, unlike most other subsidy
programs, intentionally tries to restrict supply \43\ and thereby
drives up prices. The program costs consumers as much as $3.7 billion a
year.\44\
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\43\ ``Farm Bill Primer: Sugar Program,'' Congressional Research
Service In Focus, updated May 15, 2018, https://www.everycrsreport.com/
files/2018-05-15_IF10689_42900e56be67f5cfa17e409
53ad9acb54561d3db.pdf (accessed December 16, 2022).
\44\ See, for example, Agralytica, ``Economic Effects of the Sugar
Program Since the 2008 Farm Bill & Policy Implications for the 2013
Farm Bill,'' June 3, 2013, p. 1, https://fairsugarpolicy.org/wordpress/
wp-content/uploads/2018/03/AgralyticaEconomicEffectsPaper
June2013.pdf (accessed December 16, 2022).
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When it comes to reforming subsidy programs, the next
Administration will primarily have to look to legislative solutions.
The next Administration should champion legislation that would:
Repeal the Federal sugar program. The Federal Government
should not be in the central planning business, and the sugar
program is a prime example of harmful central planning. Its
very purpose is to limit the sugar supply in order to increase
prices. The program has a regressive effect, since lower-income
households spend more of their money to meet food needs
compared to higher income households.\45\
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\45\ U.S. Department of Labor, ``Quintiles of Income Before
Taxes,'' and Bakst and Tyrrell, ``Big Government Policies That Hurt the
Poor and How to Address Them.''
Ideally, repeal the ARC and PLC programs. Farmers eligible
to participate in ARC or PLC are generally already able to
purchase Federal crop insurance, policies that protect against
shortfalls in expected revenue whether caused by lower prices
or smaller harvests. The ARC program is especially egregious
because farmers are being protected from shallow losses, which
is another way of saying minor dips in expected revenue. This
is hardly consistent with the concept of providing a safety net
to help farmers when they fall on hard times. The Congressional
Budget Office (CBO), in one of its options to reduce the
Federal deficit, has once again identified repealing all Title
I farm programs, including ARC, PLC, and the Federal sugar
program.\46\
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\46\ Congressional Budget Office, Options for Reducing the Deficit,
2023 to 2032, p. 3. See also Congressional Budget Office, ``Reduce
Subsidies in the Crop Insurance Program,'' in Congressional Budget
Office, ``Options for Reducing the Deficit: 2021 to 2030,'' December 9,
2020, https://www.cbo.gov/budget-options/56815 (accessed December 14,
2022).
Stop paying farmers twice for price and revenue losses
during the same year. Farmers can receive support from the ARC
or PLC programs and the Federal crop insurance program to cover
price declines and revenue shortfalls during the same year.
Congress should prohibit this duplication by prohibiting
farmers from receiving an ARC or PLC payment the same year they
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receive a crop insurance indemnity.
Reduce the premium subsidy rate for crop insurance. On
average, taxpayers cover about 60 percent \47\ of the premium
cost for policies purchased in the Federal crop insurance
program. One of the most widely supported and bipartisan policy
reforms is to reduce the premium subsidy that taxpayers are
forced to pay.\48\ At a minimum, taxpayers should not pay more
than 50 percent of the premium. After all, taxpayers should not
have to pay more than the farmers who benefit from the crop
insurance policies.
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\47\ Congressional Budget Office, Options for Reducing the Deficit,
2023 to 2032, p. 6.
\48\ ``Reduce Premium Subsidies in the Federal Crop Insurance
Program,'' Budget Blueprint for Fiscal Year 2023, https://
www.heritage.org/budget/pages/recommendations/2.350.171.html.
CBO has found that reducing the premium subsidy to 47 percent
would save $8.1 billion over 10 years and have little impact on
crop insurance participation or on the number of covered
acres.\49\ In that analysis, there would be a reduction in
insured acres of just \1/2\ of 1 percent, and only 1.5 percent
of acres would have lower coverage levels.\50\ This reform is
basically all benefit with little to no cost. In its recently
released report identifying options to reduce the Federal
deficit, CBO found that reducing the premium subsidy to 40
percent would save $20.9 billion over 10 years.\51\
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\49\ Congressional Budget Office, ``Reduce Subsidies in the Crop
Insurance Program.''
\50\ Ibid.
\51\ Congressional Budget Office, Options for Reducing the Deficit,
2023 to 2032, p. 6.
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Beyond these legislative reforms, the next Administration should:
Communicate to Congress the necessity of transparency and a
genuine reform process. The White House and the USDA should
make it very clear that the farm bill process, including reform
of farm subsidies, must be conducted through an open process
with time for mark-up and the opportunity for changes to be
made outside the Agriculture Committee process.
The farm bill too often is developed behind closed doors and
without any chance for real reform. The White House, given the
power of the bully pulpit, must demand a genuine reform process
and express unwavering support for a USDA that shapes a safety
net that considers the interests of farmers, while also
remembering the interests of taxpayers and consumers. Any
safety net for farmers should be a true safety net--one that
helps farmers when they have experienced serious unforeseen
losses (preferably when there has been a disaster or unforeseen
natural event causing damage) and that exists to help them in
unusual situations.
Separate the agricultural provisions of the farm bill from
the nutrition provisions. To have genuine reform and proper
consideration of the issues, agricultural programs should be
considered in separate legislation distinct from food stamps
and the nutrition part of the farm bill, and reauthorization of
such programs should be fixed on different timelines to ensure
this separation. Agricultural and nutritional programs, which
are distinct from each other, have been combined together for
political reasons, something which is readily admitted by
proponents of this logrolling. When it comes to American
agriculture and welfare programs, they deserve sound policy
debates, not political tactics at the expense of thoughtful
discourse.
Move the Work of the Food and Nutrition Service. The USDA
implements many means-tested Federal support programs, including the
largest food assistance program, Supplemental Nutrition Assistance
Program (SNAP, also known as food stamps), and the Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC) Food Program.
The Food and Nutrition Service (FNS) oversees these programs and other
food and nutrition programs, including the Center for Nutrition Policy
and Promotion,\52\ which handles the USDA's work on the ``Dietary
Guidelines for Americans'' (Dietary Guidelines).\53\ Food nutrition
programs include: SNAP; WIC; the National School Lunch Program (NSLP);
the School Breakfast Program (SBP); the Child and Adult Care Food
Program; the Nutrition Program for the Elderly; Nutrition Service
Incentives; the Summer Food Service Program; the Commodity Supplemental
Food Program; the Temporary Emergency Food Program; the Farmers[']
Market Nutrition Program; and the Special Milk Program.
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\52\ U.S. Department of Agriculture, Food and Nutrition Service,
``Center for Nutrition Policy and Promotion (CNPP),'' https://
www.fns.usda.gov/cnpp (accessed December 16, 2022), and U.S. Department
of Agriculture, ``About CNPP,'' Food and Nutrition Service, https://
www.fns.usda.gov/about-cnpp (accessed December 16, 2022).
\53\ Dietary Guidelines for Americans, ``Purpose of the Dietary
Guidelines,'' https://www.dietaryguidelines.gov/about-dietary-
guidelines/purpose-dietary-guidelines (accessed December 16, 2022).
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The next Administration should:
Move the USDA food and nutrition programs to the Department
of Health and Human Services. There are more than 89 current
means-tested welfare programs, and total means-tested spending
has been estimated to surpass $1.2 trillion between Federal and
state resources.\54\ Because means-tested Federal programs are
siloed and administered in separate agencies, the effectiveness
and size of the welfare state remains largely hidden. There are
means-tested food-support programs in the USDA (specially FNS),
whereas most means-tested programs are at the Department of
Health and Human Services (HHS). All means-tested antipoverty
programs should be overseen by one department--specifically
HHS, which handles most welfare programs.
---------------------------------------------------------------------------
\54\ Robert Rector and Vijay Menon, ``Understanding the Hidden $1.1
Trillion Welfare System and How to Reform It,'' Heritage Foundation
Backgrounder No. 3294, April 5, 2018, https://www.heritage.org/welfare/
report/understanding-the-hidden-11-trillion-welfare-system-and-how-
reform-it.
Reform SNAP. Ostensibly, SNAP sends money through electronic-
benefit-transfer (EBT) cards to help ``low-income'' individuals buy
food. It is the largest of the Federal nutrition programs. Food stamps
are designed to be supplemented by other forms of income--whether
through paid employment or nonprofit support. SNAP serves 41.1 million
individuals--an increase of 4.3 million people during the Biden
years.\55\ In 2020, the food stamp program cost $79.1 billion. That
number continued to rise--by 2022, outlays hit $119.5 billion.\56\
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\55\ U.S. Department of Agriculture, ``SNAP Data Tables,'' Food and
Nutrition Service, December 9, 2022, https://www.fns.usda.gov/pd/
supplemental-nutrition-assistance-program-snap (accessed December 16,
2022).
\56\ Ibid.
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The next Administration should:
Re-implement work requirements. The statutory language
covering food stamps allows states to waive work requirements
that otherwise apply to work-capable individuals--that is,
adult beneficiaries between the ages 18 and 50 who are not
disabled and do not have any children or other dependents in
the home.\57\
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\57\ U.S. Department of Agriculture, Food and Nutrition Service,
``SNAP Work Requirements,'' May 2019, https://www.fns.usda.gov/snap/
work-requirements (accessed December 16, 2022).
Even in a strong economy, work expectations are fairly limited:
Individuals who are work-capable and without dependents are
required to work or prepare for work for 20 hours per week.\58\
The work requirements are then implemented unless the state
requests a waiver from the USDA's Food and Nutrition
Services.\59\ Waivers from statutory work requirements can be
approved in two instances: an unemployment rate of more than
ten percent or a lack of sufficient jobs.\60\
---------------------------------------------------------------------------
\58\ 7 U.S. Code 2015, https://www.law.cornell.edu/uscode/text/7/
2015 (accessed December 16, 2022).
\59\ Ibid.
\60\ 7 U.S. Code 2015(o)(4). The USDA has approved nearly all
waivers under the ``lack of sufficient jobs'' option.
---------------------------------------------------------------------------
The Trump Administration bolstered USDA work expectations in the
food stamp program. In February 2019, FNS issued a modest
regulatory change that applied only to able-bodied individuals
without dependents--beneficiaries aged 18 to 49, not elderly or
disabled, who did not have children or other dependents in the
home (ABAWD).\61\ The FNS rule changed when a state could
receive a waiver from implementing the ABAWD work requirement.
---------------------------------------------------------------------------
\61\ Federal Register, Vol. 84, No. 234 (December 5, 2019) p.
66782, https://www.govinfo.gov/content/pkg/FR-2019-12-05/pdf/2019-
26044.pdf (accessed December 14, 2022).
---------------------------------------------------------------------------
Under the new rule, in order to waive the work requirement, the
state's unemployment rate had to be above six percent for more
than 24 months. The rule also defined ``area'' in such a way
that states would be unable to combine non-contiguous counties
in order to maximize their waivers.\62\ Of the more than 40
million food stamp beneficiaries, the Trump rule would have
applied only to 688,000 individuals in Fiscal Year 2021.\63\
---------------------------------------------------------------------------
\62\ Ibid., p. 66795.
\63\ Ibid., pp. 66807-66810.
---------------------------------------------------------------------------
The Trump reform was scheduled to go into effect, but a D.C.
district court Federal judge enjoined the rule.\64\ The USDA
filed an appeal in late December 2020,\65\ but the Biden
Administration withdrew from defending the challenge, and the
rule was never implemented.\66\
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\64\ District of Columbia, et al. v. U.S. Department of
Agriculture, 496 F. Supp. 3d 213 (2020), https://oag.dc.gov/sites/
default/files/2020-10/SNAP-ABAWD-Opinion.pdf (accessed December 16,
2022).
\65\ Ibid. On December 16, 2020, the Trump Administration appealed
the District Court decision. See, for example, News release ``Fudge
Slams Administration for Appealing ABAWD Ruling,'' House Committee on
Agriculture, December 16, 2020, https://agriculture.house.gov/news/
documentsingle.aspx?DocumentID=2069 (accessed December 16, 2022).
\66\ News release, ``Statement by Agriculture Secretary Tom Vilsack
on D.C. Circuit Court's Decision Regarding ABAWDs Rule,'' U.S.
Department of Agriculture, March 24, 2021, https://www.usda.gov/media/
press-releases/2021/03/24/statement-agriculture-secretary-tom-vilsack-
dc-circuit-courts (accessed December 16, 2022).
---------------------------------------------------------------------------
Beyond the able-bodied work requirement, FNS should implement
better regulation to clarify options for states to implement
the general work requirement. This requirement is an option
states can apply to workcapable beneficiaries aged 16 to 59. If
beneficiaries' work hours are below 30 hours a week, states can
implement the general work requirements to oblige beneficiaries
to register for work or participate in SNAP Employment and
Training or workfare assigned by the state SNAP agency.\67\
Increased clarity for states would include items like states
being required to offer employment and training spots for those
that request them--not simply budgeting for every currently
enrolled able-bodied adult.
---------------------------------------------------------------------------
\67\ U.S. Department of Agriculture, ``SNAP Employment and Training
Screening and Referral Guidance,'' July 13, 2022, https://
www.fns.usda.gov/snap/et-screening-and-referral-guidance (accessed
December 16, 2022).
Reform broad-based categorical eligibility. Federal law
permits states to enroll individuals in food stamps if they
receive a benefit from another program, such as the Temporary
Assistance for Needy Families (TANF) program. However, under an
administrative option in TANF called broad-based categorical
eligibility (BBCE), ``benefit'' is defined so broadly that it
includes simply receiving distributed pamphlets and 1-800
numbers.\68\ This definition, with its low threshold to trigger
a ``benefit,'' allows individuals to bypass eligibility
limits--particularly the asset requirement (how much the
applicant has in resources, such as bank accounts or
property).\69\ Adopting the BBCE option has even allowed
millionaires to enroll in the food stamp program.\70\
---------------------------------------------------------------------------
\68\ U.S. Department of Agriculture, Food and Nutrition Service,
``Regulatory Reform at a Glance: Proposed Rule; Revision of SNAP
Categorical Eligibility,'' July 2019, https://www.usda.gov/sites/
default/files/documents/BBCE_Fact_Sheet_%28FINAL%29_72219-PR.pdf
(accessed December 14, 2022).
\69\ 7 Code of Federal Regulations 273.8 (1978), https://
www.law.cornell.edu/cfr/text/7/273.8 (accessed December 16, 2022).
\70\ Kristina Rasmussen, ``How Millionaires Collect Food Stamps,''
Wall Street Journal, January 15, 2018, https://www.wsj.com/articles/
how-millionaires-collect-food-stamps-1516044026 (accessed December 14,
2022).
The Trump Administration proposed to close the loophole with a
rule to ``increase program integrity and reduce fraud, waste,
and abuse.'' \71\ The regulation was not finalized before the
end of the Trump Administration.
---------------------------------------------------------------------------
\71\ Federal Register, Vol. 84, No. 142 (July 24, 2019), pp. 35570-
55581, https://www.federalregister.gov/documents/2019/07/24/2019-15670/
revision-of-categorical-eligibility-in-the-supplemental-nutrition-
assistance-program-snap (accessed December 14, 2022).
Re-evaluate the Thrifty Food Plan. In a dramatic overreach,
the Biden Administration unilaterally increased food stamp
benefits by at least 23 percent in October 2021.\72\ Through an
update to the Thrifty Food Plan, in which the USDA analyzes a
basket of foods intended to provide a nutritious diet, the USDA
increased food stamp outlays by between $250 billion and $300
billion over 10 years.\73\
---------------------------------------------------------------------------
\72\ News release, ``USDA Modernizes the Thrifty Food Plan, Updates
SNAP Benefits,'' U.S. Department of Agriculture, August 16, 2021,
https://www.usda.gov/media/press-releases/2021/08/16/usda-modernizes-
thrifty-food-plan-updates-snap- (accessed December 14, 2022).
\73\ Phillip L. Swagel, Director, Congressional Budget Office,
letter to Congressman Jason Smith, June 23, 2022, p. 2, https://
www.cbo.gov/system/files/2022-06/58231-Smith.pdf (accessed December 14,
2022).
Although the 2018 farm bill instructed FNS to update the Thrifty
Food Plan by 2023 and every 5 years thereafter, every previous
Thrifty Food Plan has been always cost-neutral (just an
inflation update)--exactly what CBO estimated as cost of the
2018 farm bill.\74\
---------------------------------------------------------------------------
\74\ Congressional Budget Office, ``H.R. 2, as Passed by the House
of Representatives and as Passed by the Senate,'' July 24, 2018,
https://www.cbo.gov/publication/54284 (accessed December 16, 2022).
---------------------------------------------------------------------------
The Biden Administration may have skirted regulations and
Congressional authority to increase the overall cost of the
program. In fact, Senate and House Republicans requested that
the Government Accountability Office investigate the legal
authorities and process that the USDA undertook to arrive at
such an unprecedented increase.\75\
---------------------------------------------------------------------------
\75\ News release, ``Republican AG Committee Leadership Urge GAO
Review of USDA Thrifty Food Plan Scheme,'' U.S. House Committee on
Agriculture, August 13, 2021, https://republicans-
agriculture.house.gov/news/documentsingle.aspx?DocumentID=7013
(accessed December 14, 2022).
Eliminate the heat-and-eat loophole. States can artificially
boost a household's food stamp benefit by using the heat-and-
eat loophole. The amount of food stamps a household receives is
based on its ``countable'' income (income minus certain
deductions). Households that receive benefits from the Low-
Income Heat and Energy Assistance Program (LIHEAP) are eligible
for a larger utility deduction. In order to make households
eligible for the higher deduction, and thus for greater food
stamp benefits, states have distributed LIHEAP checks for
---------------------------------------------------------------------------
amounts as small as $1 to food stamp recipients.
The 2014 Farm Bill tightened this loophole by requiring that a
household must receive more than $20 annually in LIHEAP payments to be
eligible for the larger utility deduction and subsequently higher food
stamp benefits.\76\ Nonetheless, states continue to inflate their
standard utility allowances. Under the Trump Administration, the USDA
proposed a rule, which was not finalized, that would have standardized
the utility allowance.\77\
---------------------------------------------------------------------------
\76\ ``The 2014 Farm Bill: Changing the Tradition of LIHEAP Receipt
in the Calculation of SNAP Benefits,'' updated February 12, 2014,
Congressional Research Service Report for Congress R42591, https://
crsreports.congress.gov/product/pdf/R/R42591/24 (accessed March 18,
2023).
\77\ Federal Register, Vol. 84, No. 192 (October 3, 2019), pp.
52809-52815, https://www.govinfo.gov/content/pkg/FR-2019-10-03/pdf/
2019-21287.pdf (accessed December 16, 2022).
---------------------------------------------------------------------------
Reform WIC. Turning to WIC, this program distributes money through
EBT cards to help low-income women, infants, and children under 6
purchase nutrition-rich foods and nutrition education (including
breastfeeding support). As of August 2022, approximately 6.3 million
people participated in WIC each month to purchase food.\78\ In 2021,
WIC Federal outlays were $5 billion.\79\
---------------------------------------------------------------------------
\78\ U.S. Department of Agriculture, ``Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC) Data Series,
2018 to 2022,'' https://www.fns.usda.gov/pd/wic-program (accessed
December 14, 2022).
\79\ U.S. Department of Agriculture, Food and Nutrition Service,
``WIC Data Tables,'' December 9, 2022, https://www.fns.usda.gov/pd/wic-
program (accessed December 16, 2022).
---------------------------------------------------------------------------
The next Administration should:
Reform the state voucher system. State agencies control WIC
costs by approving only one brand of infant formula through
competitive bidding for infant formula rebate contracts.
Because 50 percent of baby formula is purchased through the
Federal WIC program, it is vital that regulation for these
competitive bidding contracts does not unintentionally create
monopolies.
Re-evaluate excessive regulation. As for baby formula
regulations generally, labeling regulations and regulations
that unnecessarily delay the manufacture and sale of baby
formula should be re-evaluated.\80\ During the Biden
Administration, there have been devastating baby formula
shortages.
---------------------------------------------------------------------------
\80\ U.S. Food and Drug Administration, ``Regulations and
Information on the Manufacture and Distribution of Infant Formula,''
May 16, 2022, https://www.fda.gov/food/infant-formula-guidance-
documents-regulatory-information/regulations-and-information-
manufacture-and-distribution-infant-formula (accessed December 14,
2022).
Return to the Original Purpose of School Meals. Federal meal
programs for K-12 students were created to provide food to children
from low-income families while at school.\81\ Today, however, Federal
school meals increasingly resemble entitlement programs that have
strayed far from their original objective and represent an example of
the ever-expanding Federal footprint in local school operations.
---------------------------------------------------------------------------
\81\ U.S. Department of Agriculture, Food and Nutrition Service,
``History of the National School Lunch Program,'' January 17, 2008,
https://www.fns.usda.gov/nslp/program-history (accessed December 14,
2022).
---------------------------------------------------------------------------
The NSLP and SBP are the two largest K-12 meal programs provided by
Federal taxpayer money. The NSLP launched in 1946 and the SBP in 1966,
both as options specifically for children in poverty.\82\ During the
COVID-19 pandemic, Federal policymakers temporarily expanded access to
school meal programs, but some lawmakers and Federal officials have now
proposed making this expansion permanent.\83\ Yet even before the
pandemic, research found that Federal officials had already expanded
these programs to serve children from upper-income homes, and these
programs are rife with improper payments and inefficiencies.
---------------------------------------------------------------------------
\82\ U.S. Department of Agriculture, Food and Nutrition Service,
``School Breakfast Program History,'' July 24, 2013, https://
www.fns.usda.gov/sbp/program-history (accessed December 14, 2022), and
U.S. Department of Agriculture, Food and Nutrition Service, ``History
of the National School Lunch Program.''
\83\ Crystal FitzSimons, ``Free School Meals for All Is the Key to
Supporting Education and Health Outcomes,'' Journal of Policy Analysis
and Management, Vol. 41, No. 1 (2022), pp. 358-364, https://
econpapers.repec.org/article/wlyjpamgt/
v_3a41_3ay_3a2022_3ai_3a1_3ap_3a358-364.htm (accessed December 14,
2022).
---------------------------------------------------------------------------
Heritage Foundation research from 2019 found that after the
enactment of the Community Eligibility Provision (CEP) in 2010, the
share of students from middle- and upper-income homes receiving free
meals in states that participated in CEP doubled, and in some cases
tripled--all in a program meant for children from families with incomes
at or below 185 percent of the Federal poverty line (Children from
homes at or below 130 percent of the Federal poverty line are eligible
for free lunches, while students from families at or below 185 percent
of poverty are eligible for reduced-priced lunches).\84\
---------------------------------------------------------------------------
\84\ Jonathan Butcher and Vijay Menon, ``Returning to the Intent of
Government School Meals: Helping Students in Need,'' Heritage
Foundation Backgrounder No. 3399, March 22, 2019, https://
www.heritage.org/sites/default/files/2019-03/BG3399.pdf.
---------------------------------------------------------------------------
Under CEP, if 40 percent of students in a school or school district
are eligible for Federal meals, all students in that school or district
can receive free meals. However, the USDA has taken it even further,
improperly interpreting the law \85\ to allow a subset of schools
within a district to be grouped together to reach the 40 percent
threshold, As a result, a school with zero low-income students could be
grouped together with schools with high levels of low-income students,
and as a result all the students in the schools within that group (even
schools without a single low-income student) can receive free Federal
meals.\86\ Schools can direct resources meant for students in poverty
to children from wealthier families.
---------------------------------------------------------------------------
\85\ Daren Bakst and Jonathan Butcher, ``A Critical Fix to the
Federal Overreach on School Meals,'' Heritage Foundation Issue Brief
No. 4976, July 11, 2019, https://www.heritage.org/hunger-and-food-
programs/report/critical-fix-the-federal-overreach-school-meals.
\86\ Ibid., and U.S. Department of Agriculture, Food and Nutrition
Service, ``Community Eligibility Provision,'' April 19, 2019, https://
www.fns.usda.gov/cn/community-eligibility-provision (accessed December
16, 2022).
---------------------------------------------------------------------------
Furthermore, the NSLP and SBP are among the most inaccurate Federal
programs according to PaymentAccuracy.gov, a project of the U.S. Office
of Management and Budget and the Office of the Inspector General.\87\
Before Federal auditors reduced the rigor of annual reporting
requirements in 2018, the NSLP had wasted nearly $2 billion in taxpayer
resources through payments provided to ineligible recipients.\88\ Even
after the auditing changes, which the U.S. Government Accountability
Office said results in the USDA not ``regularly assess[ing] the
programs' fraud risks,'' the NSLP wasted nearly $500 million in FY
2021.\89\ The SBP now wastes nearly $200 million annually.\90\
---------------------------------------------------------------------------
\87\ See Payment Accuracy, https://www.paymentaccuracy.gov/
(accessed December 16, 2022).
\88\ Payment Accuracy, ``Payment Integrity Scorecard,'' https://
www.cfo.gov/wp-content/uploads/2022/Q3/
FNS%20National%20School%20Lunch%20Program%20(NSLP)%20Payments
%20Integrity%20Scorecard%20FY%202022%20Q3.pdf (accessed December 14,
2022).
\89\ U.S. Government Accountability Office, ``School Meals
Programs: USDA Has Reported Taking Some Steps to Reduce Improper
Payments But Should Comprehensively Assess Fraud Risks,'' GAO-19-389,
May 21, 2022, https://www.gao.gov/products/gao-19-389 (accessed
December 14, 2022).
\90\ Payment Accuracy, ``Payment Integrity Scorecard.''
---------------------------------------------------------------------------
Despite the ongoing effort to expand school meals under CEP and the
evidence of waste and inefficiency, left-of-center Members of Congress
and President Biden's Administration have nonetheless proposed further
expansions to extend Federal school meals to include every K-12
student--regardless of need.\91\ The Administration recently proposed
expanding Federal school meal programs offered during the school year
to be offered during the summer as part of the ``American Families
Plan,'' and also proposed expanding CEP. Other Federal officials,
including Senator Bernie Sanders (I-VT), have, in recent years,
proposed expanding the NSLP to all students.\92\
---------------------------------------------------------------------------
\91\ White House, ``Fact Sheet: The American Families Plan,'' April
28, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/
2021/04/28/fact-sheet-the-american-families-plan/ (accessed December
14, 2022).
\92\ Universal School Meals Program Act of 2021, S. 1530, 117th
Cong., 1st Sess., https://www.congress.gov/bill/117th-congress/senate-
bill/1530 (accessed December 14, 2022).
---------------------------------------------------------------------------
To serve students in need and prevent the misuse of taxpayer money,
the next Administration should focus on students in need and reject
efforts to transform Federal school meals into an entitlement program.
Specifically, the next Administration should:
Promulgate a rule properly interpreting CEP. The USDA should
issue a rule that clarifies that only an individual school or a
school district as a whole, not a subset of schools within a
district, must meet the 40 percent criteria to be eligible for
CEP. Education officials should be prohibited from grouping
schools together.
Work with lawmakers to eliminate CEP. The NSLP and SBP
should be directed to serve children in need, not become an
entitlement for students from middle- and upper-income homes.
Congress should eliminate CEP. Further, the USDA should not
provide meals to students during the summer unless students are
taking summer-school classes. Currently, students can get meals
from schools even if they are not in summer school, which has,
in effect, turned school meals into a Federal catering
program.\93\
---------------------------------------------------------------------------
\93\ See, for example, U.S. Department of Agriculture, ``Find Meals
for Kids When Schools Are Closed,'' Food and Nutrition Service,
September 22, 2022, https://www.fns.usda.gov/meals4kids (accessed
December 16, 2022), and U.S. Department of Agriculture, Food and
Nutrition Service, ``Seamless Summer and Other Options for School,''
July 16, 2013, https://www.fns.usda.gov/sfsp/seamless-summer-and-other-
options-schools (accessed December 16, 2022).
Restore programs to their original intent and reject efforts
to create universal free school meals. The USDA should work
with lawmakers to restore NSLP and SBP to their original goal
of providing food to K-12 students who otherwise would not have
---------------------------------------------------------------------------
food to eat while at school.
Federal school meals should be focused on children in need, and any
efforts to expand student eligibility for Federal school meals to
include all K-12 students should be soundly rejected. Such expansion
would allow an inefficient, wasteful program to grow, magnifying the
amount of wasted taxpayer resources.
Reform Conservation Programs. Farmers, in general, are excellent
stewards of the land, if not for moral or ethical considerations, then
out of self-interest to make sure their land and--by extension, their
livelihoods--remain intact. Farmers are often called the original
conservationists.\94\
---------------------------------------------------------------------------
\94\ Tom Driscoll, ``From the Field: Farmers Are the Original
Conservationists,'' National Farmers Union, August 30, 2017, https://
nfu.org/2017/08/30/from-the-field-farmers-are-the-original-
conservationists/ (accessed December 16, 2022).
---------------------------------------------------------------------------
When evaluating Federal conservation programs, it is important to
remember the importance of the land to farmers. In terms of USDA
Federal conservation programs, both the USDA's Farm Service Agency
(FSA) and Natural Resources Conservation Service (NRCS) oversee
numerous programs.\95\
---------------------------------------------------------------------------
\95\ U.S. Department of Agriculture, Farm Service Agency,
``Conservation Programs,'' https://www.fsa.usda.gov/programs-and-
services/conservation-programs/index (accessed December 16, 2022), and
U.S. Department of Agriculture, Natural Resources Conservation Service,
``Programs and Initiatives,'' https://www.nrcs.usda.gov/programs-
initiatives (accessed December 16, 2022).
---------------------------------------------------------------------------
As a general matter, the next Administration should ensure that
these programs address genuine and specific environmental concerns with
a focus on currently existing environmental problems, not those that
are speculative in nature. These conservation programs should have
clearly identifiable goals, with the success or failure of these
programs being directly measurable. Any assistance to farmers to take
specific actions should not be provided unless the assistance will
directly and clearly help to address a specific environmental problem.
Further, any assistance to encourage farmers to engage in certain
practices should only be provided if farmers would not have adopted the
practices in the first place.
There are specific issues that the next Administration should
address. The Conservation Reserve Program,\96\ which is run by FSA,
pays farmers to not farm some of their land. This program has recently
received attention, as agricultural groups rightfully seek to farm
without penalty voluntarily idled land, in light of the consequences to
food prices of Russia invading Ukraine.\97\
---------------------------------------------------------------------------
\96\ U.S. Department of Agriculture, Farm Service Agency,
``Conservation Reserve Program: About the Conservation Reserve Program
(CRP),'' https://www.fsa.usda.gov/programs-and-services/conservation-
programs/conservation-reserve-program/ (accessed December 16, 2022).
\97\ American Bakers Association, et al., letter to U.S. Department
of Agriculture Secretary Tom Vilsack, March 23, 2022, https://
www.dropbox.com/s/yfyv04ilkom11zd/USDA%20Letter%20to
%20Secretary%20Vilsack%20on%20Tools%20to%20Address%20Global%20Commodity%
20Supply
%20Challenges%203.23.22_.pdf?dl=0 (accessed December 15, 2022). It is
also necessary to increase food production to mitigate high food
inflation. Approximately 25 percent of idled land is considered prime
farmland. Therefore, \1/4\ of idled land is merely idling, not
producing food--and this does not include other land that may viably be
used for food production. The Conservation Reserve Program should be
eliminated. There are also two issues connected to property rights and
fairness that should be addressed: challenging NRCS determinations and
problems with USDA easements. To be eligible for many USDA programs,
farmers must comply with certain conservation provisions enforced by
NRCS. Conservation compliance of wetlands and highly erodible lands
consist of Federal restrictions that prevent farmers from using parts
of their property. If farmers plant crops or modify the areas Federal
officials deem protected, farmers can lose all access to USDA programs
and support. For farmers, there are real, practical concerns to
challenging NRCS determinations, including the time and costs of
challenging the Federal bureaucracy. NRCS is empowered to declare areas
wetlands and highly erodible areas, which are therefore off limits for
farming. If these wetland- or erodible-declared areas are used in a
manner deemed unacceptable by Federal officials, NRCS may revoke access
to Federal resources and subsidies by making technical determinations
that carry potential penalties. There must be a fair and reasonable
process for farmers to challenge such actions. See Daren Bakst, ``Food
Price Inflation Continues to Worsen. Here's What Should Be Done About
It,'' The Daily Signal, April 25, 2022, https://www.dailysignal.com/
2022/04/25/food-price-inflation-continuing-to-worsen-heres-what-should-
be-done-about-it/ (accessed December 15, 2022); American Bakers
Association et.al., letter to Vilsack; U.S. Department of Agriculture,
Natural Resources Conservation Service, ``Conservation Compliance
Appeals Process,'' https://www.nrcs.usda.gov/getting-assistance/
compliance/conservation-compliance-appeals-process (accessed December
15, 2022); and Chris Bennett, ``Regulatory Hell: Farmer and Veteran
Wins 10-Year Wetlands Fight With Government,'' AG Web, August 30, 2021,
https://www.agweb.com/news/crops/crop-production/regulatory-hell-
farmer-and-veteran-wins-10-year-wetlands-fight (accessed December 15,
2022).
---------------------------------------------------------------------------
There is also a need to reform USDA's conservation easements. These
easements are a powerful tool to incentivize long-term preservation of
ecosystems while still allowing farmers to benefit economically.
However, when farmers and ranchers sign conservation easements with the
USDA, they can be enforced in perpetuity. Future generations, be they
the descendants of the landowner or new residents, are bound by those
conditions.
Ecosystems and topography naturally change over time, but without
legislative change, easement requirements will not.
The next Administration should:
Champion the elimination of the Conservation Reserve
Program. Farmers should not be paid in such a sweeping way not
to farm their land. If there is a desire to ensure that
extremely sensitive land is not farmed, this should be
addressed through targeted efforts that are clearly connected
to addressing a specific and concrete environmental harm. The
USDA should work with Congress to eliminate this overbroad
program.
Reform NRCS wetlands and erodible land compliance and
appeals. Problematic NRCS overreach could be avoided entirely
by removing its authority to prescribe specific practices on a
particular farm operation in order to ensure continued
eligibility to participate in USDA farm programs, and to
require instead that each farm (as a function of eligibility)
must have created a general best practices plan. Such a plan
could be approved by the local county Soil and Water
Conservation District (SWCD). The local SWCD commissioners are
elected by their peers in each respective county and are better
suited than the NRCS to provide guidance for farm operations in
their respective jurisdictions.
At a minimum, a new Administration should support legislation to
divest more power to the states (and possibly local SWCDs)
regarding erodible land and wetlands conservation.\98\
---------------------------------------------------------------------------
\98\ Fortunately, there are already resources available to help
states establish their own wetlands conservation programs. One
particular example, the American Legislative Exchange Council's
Wetlands Mapping and Protection Act model policy, is available for
states to define the procedures, guidelines, and administration of
wetlands programs. American Legislative Exchange Council, ``Wetlands
Mapping and Protection Act,'' November 16, 2017, https://alec.org/
model-policy/wetlands-mapping-and-protection-act/ (accessed December
16, 2022). The new Administration should focus on best practices
instead of imposing prescriptive Federal practices. It should support
the policies contained within the ``NRCS Wetland Compliance and Appeals
Reform Act'' and modify NRCS compliance rules to protect farmers and
ranchers by adding protections against regulatory overreach--such as
banning the practice of re-engaging farmers in new technical
determinations appeals processes for the same areas of their farms. See
NRCS Wetland Compliance and Appeals Reform Act, S. 4931, 117th Cong.,
2nd Sess., https://www.congress.gov/bill/117th-congress/senate-bill/
4931?s=1&r=8 (accessed December 15, 2022).
Reform easements. The new Administration should, to the
extent authorized by law, limit the use of permanent easements
and collaborate with lawmakers to prohibit the USDA from
creating new permanent easements.\99\
---------------------------------------------------------------------------
\99\ Ibid.
Other Major Issues and Specific Recommendations. Although the
following issues have not been listed as ``priority,'' these issues are
still extremely important, and the next Administration should address
them.
Only meat and poultry from federally inspected facilities can be
sold in interstate commerce.\100\ Even meat and poultry from USDA-
approved state-inspected facilities may only be sold in intrastate
commerce, with limited exceptions.\101\ This is despite the fact that
states with USDA-approved inspection programs must meet and enforce
requirements that are ``at least equal to'' those imposed under the
Federal Meat and Poultry Products Inspection Acts and the Humane
Methods of Slaughter Act of 1978.\102\ This is an unnecessary
regulatory barrier that makes it difficult to get meat and poultry into
interstate commerce to create more options for consumers and farmers.
Legislation entitled the New Markets for State-Inspected Meat and
Poultry Act of 2021 would help to remove this obstacle.\103\
---------------------------------------------------------------------------
\100\ See, for example, Daren Bakst and Jeremy Dalrymple,
``Reducing Federal Barriers for the Sale of Meat,'' Heritage Foundation
Issue Brief No. 5078, June 1, 2020, https://www.heritage.org/
agriculture/report/reducing-federal-barriers-the-sale-meat, and U.S.
Department of Agriculture, Food Safety and Inspection Service, ``State
Inspection Programs,'' updated January 12, 2023, https://
www.fsis.usda.gov/inspection/state-inspection-programs (accessed
December 15, 2022).
\101\ U.S. Department of Agriculture, Food Safety and Inspection
Service, ``Cooperative Interstate Shipping Program,'' September 7,
2022, https://www.fsis.usda.gov/inspection/state-inspection-programs/
cooperative-interstate-shipping-program (accessed December 15, 2022).
\102\ U.S. Department of Agriculture, ``State Inspection
Programs.''
\103\ The Senate bill removes obstacles for both meat and poultry.
The House version does not appear to cover poultry. New Markets for
State-Inspected Meat and Poultry Act of 2021, S. 107, 117th Cong., 1st
Sess., https://www.congress.gov/bill/117th-congress/senate-bill/107
(accessed December 15, 2022), and Expanding Markets for State-Inspected
Meat Processors Act of 2021, H.R. 1998, 117th Cong., 1st Sess., https:/
/www.congress.gov/bill/117th-congress/house-bill/1998 (accessed
December 15, 2022).
---------------------------------------------------------------------------
The next Administration should:
Promote legislation that would allow state-inspected meat to
be sold in interstate commerce. These barriers to the sale of
meat and poultry from USDA-approved state-inspected facilities
should be removed.
Eliminate or Reform Marketing Orders and Checkoff Programs.
Marketing orders and checkoff programs for agricultural commodities are
similar in many ways. They both allow private actors within an industry
to collaborate with the Federal Government to compel other competitors
within an industry to fund the respective marketing order or checkoff
program. There are currently 22 checkoff programs,\104\ and they focus
on research and promotion of commodities such as beef and eggs.
Marketing orders cover research and promotion, but also cover issues
such as quality regulations and volume controls. The latter issue,
volume controls, is a means to restrict supply, which drives up prices
for consumers. Fortunately, there are few active volume controls.\105\
---------------------------------------------------------------------------
\104\ U.S. Department of Agriculture, Agricultural Marketing
Service, ``Specialty Crops Marketing Orders & Agreements,'' https://
www.ams.usda.gov/rules-regulations/moa/fv (accessed December 15, 2022).
\105\ See, for example, U.S. Department of Agriculture,
Agricultural Marketing Service, ``Commodities Covered by Marketing
Orders,'' https://www.ams.usda.gov/rules-regulations/moa/commodities
(accessed March 18, 2023), and Elayne Allen and Darren Bakst, ``How the
Government Is Mandating Food Waste,'' August 19, 2016, https://
www.dailysignal.com/2016/08/19/how-the-government-is-mandating-food-
waste/ (accessed March 18, 2023).
---------------------------------------------------------------------------
Marketing orders and checkoff programs are some of the most
egregious programs run by the USDA. They are, in effect, a tax--a means
to compel speech--and government-blessed cartels. Instead of getting
private cooperation, they are tools for industry actors to work with
government to force cooperation.
The next Administration should:
Reduce the number and scope of marketing orders and checkoff
programs. The USDA should reject any new requests for marketing
orders and checkoff programs to the extent authorized by law
and eliminate existing programs when possible. While the
programs work differently, there are often petition processes
and other ways that make it difficult for affected parties to
get rid of the marketing orders and checkoff programs,\106\ and
the USDA itself may not even be required to honor requests to
terminate a program.\107\ The USDA should make the process
easier. Further, the USDA should reject any effort to bring
back volume controls to limit supplies of commodities.
---------------------------------------------------------------------------
\106\ U.S. Department of Agriculture, Agricultural Marketing
Service, ``Frequently Asked Questions Regarding the Beef Checkoff
Program Petition Process,'' https://www.ams.usda.gov/rules-regulations/
research-promotion/beef/petition (accessed December 16, 2022); ``Beef
Producers: Do You Want to Vote on the Checkoff?'' Beef Magazine, July
28, 2020, https://www.beefmagazine.com/marketing/beef-producers-do-you-
want-vote-checkoff (accessed December 16, 2022); and Steve White,
``Group Seeking Beef Checkoff Referendum Asks for Access to Producer
Database,'' Nebraska TV, May 4, 2021, https://nebraska.tv/news/ntvs-
grow/group-seeking-beef-checkoff-referendum-asks-for-access-to-
producer-database (accessed December 16, 2022). As reported, ``There
has not been a referendum of the mandatory National Beef Checkoff
Program in 35 years.''
\107\ See, for example, Federal Register, Vol. 86, No. 213
(November 8, 2021), p. 61718, https://www.govinfo.gov/content/pkg/FR-
2021-11-08/pdf/2021-24301.pdf (accessed December 16, 2022).
Work with Congress to eliminate marketing orders and
checkoff programs. These programs should be eliminated, and if
industry actors want to collaborate, they should do so through
---------------------------------------------------------------------------
private means, not using the government to compel cooperation.
Promote legislation that would require regular votes. There
should be regular voting for parties subject to checkoff
programs and marketing orders. For example, the voting should
occur at least every 5 years, to determine whether a marketing
order or checkoff program should continue. The USDA should be
required to honor the results of such a vote. Through regular
voting, parties can demonstrate their support for a marketing
order or checkoff program and ensure that those administering
them will be held accountable.
Focus on Trade Policy, Not Trade Promotion. The USDA's Foreign
Agricultural Service (FAS) covers numerous issues, including ``trade
policy,'' which is a reference to removing trade barriers, among other
things, to ensure an environment conducive to trade.\108\ It also
covers trade promotion.\109\ This includes programs like the Market
Access Program \110\ that subsidizes trade associations, businesses,
and other private entities to market and promote their products
overseas. FAS should play a proactive and leading role to help open
upmarkets for American farmers and ranchers. There are numerous
barriers, such as sanitary and phytosanitary measures, blocking
American agricultural products from gaining access to foreign
markets.\111\ However, FAS should not help businesses and industries
promote their exports, something these businesses and industries can
and should do on their own.
---------------------------------------------------------------------------
\108\ U.S. Department of Agriculture, Foreign Agricultural Service,
``Topics,'' https://www.fas.usda.gov/topics (accessed December 15,
2022).
\109\ Ibid.
\110\ U.S. Department of Agriculture, Foreign Agricultural Service,
``Market Access Program (MAP),'' https://www.fas.usda.gov/programs/
market-access-program-map (accessed December 16, 2022).
\111\ To learn about trade barriers for food and agricultural
products, see, for example, News release, ``USTR Releases 2022 National
Trade Estimate Report on Foreign Trade Barriers,'' Office of the U.S.
Trade Representative, March 31, 2022, https://ustr.gov/about-us/policy-
offices/press-office/press-releases/2022/march/ustr-releases-2022-
national-trade-estimate-report-foreign-trade-barriers (accessed
December 16, 2022).
---------------------------------------------------------------------------
The next Administration should:
Push legislation to repeal export promotion programs. The
USDA should work with Congress to repeal market development
programs like the Market Access Program and similar programs.
Remove Obstacles for Agricultural Biotechnology. Innovation is
critical to agricultural production and the ability to meet future food
needs. The next Administration should embrace innovation and
technology, not hinder its use--especially because of scare tactics
that ignore sound science. One of the key innovations in agriculture is
genetic engineering. According to the USDA, ``[C]urrently, over 90
percent of U.S. corn, upland cotton, and soybeans are produced using GE
[genetically engineered] varieties.'' \112\
---------------------------------------------------------------------------
\112\ U.S. Department of Agriculture, Economic Research Service,
``Recent Trends in GE Adoption,'' September 14, 2022, https://
www.ers.usda.gov/data-products/adoption-of-genetically-engineered-
crops-in-the-u-s/recent-trends-in-ge-adoption/ (accessed December 15,
2022).
---------------------------------------------------------------------------
Despite the importance of agricultural biotechnology, in 2016,
Congress passed a Federal mandate to label genetically engineered
food.\113\ This legislation was arguably just a means to try to provide
a negative connotation to GE food. There are other challenges as well
for agricultural biotechnology. For example, Mexico plans to ban the
importation of U.S. genetically modified yellow corn.\114\
---------------------------------------------------------------------------
\113\ National Bioengineered Food Disclosure Standard, Public Law
114-216.
\114\ Noi Mahoney, ``Trade Dispute Arising Over Mexico's Plan to
Block Imports of Genetically Modified Corn,'' Freight Waves, November
22, 2022, https://www.freightwaves.com/news/trade-dispute-arising-over-
mexicos-plan-to-block-imports-of-gm-corn (accessed December 15, 2022),
and News release, ``Grassley, Ernst, Urge USTR to Intervene In Mexico's
Ban on American Corn,'' Office of Chuck Grassley, November 14, 2022,
https://www.grassley.senate.gov/news/news-releases/grassley-ernst-urge-
ustr-to-intervene-in-mexicos-banon-american-corn (accessed December 15,
2022).
---------------------------------------------------------------------------
The next Administration should:
Counter scare tactics and remove obstacles. The USDA should
strongly counter scare tactics regarding agricultural
biotechnology and adopt policies to remove unnecessary barriers
to approvals and the adoption of biotechnology.
Repeal the Federal labeling mandate. The USDA should work
with Congress to repeal the Federal labeling law, while
maintaining Federal preemption, and stress that voluntary
labeling is allowed.
Use all tools available to remove improper trade barriers
against agricultural biotechnology. The USDA should work
closely with the Office of the United States Trade
Representative to remove improper barriers imposed by other
countries to block U.S. agricultural goods.
Reform Forest Service Wildfire Management. The United States Forest
Service is one of four Federal Government land management agencies that
administer 606 million acres, or 95 percent of the 640 million acres of
surface land area managed by the Federal Government.\115\ Located
within the USDA, the Forest Service manages the National Forest System,
which is comprised of 193 million acres.\116\ As explained by the USDA,
``The USDA Forest Service's mission is to sustain the health,
diversity, and productivity of the nation's forests and grasslands to
meet the needs of present and future generations.'' \117\
---------------------------------------------------------------------------
\115\ ``The Federal Land Management Agencies,'' Congressional
Research Service In Focus, updated February 16, 2021, https://
sgp.fas.org/crs/misc/IF10585.pdf (accessed December 16, 2022).
\116\ Ibid.
\117\ U.S. Department of Agriculture, U.S. Forest Service, Fiscal
Year 2023: Budget Justification, March 2022, p. 1, https://
www.usda.gov/sites/default/files/documents/30a-2023-FS.pdf (accessed
December 16, 2022).
---------------------------------------------------------------------------
The Forest Service should focus on proactive management of the
forests and grasslands that does not depend heavily on burning. There
should be resilient forests and grasslands in the wake of management
actions. Wildfires have become a primary vegetation management regime
for national forests and grasslands.\118\ Recognizing the need for
vegetation management, the Forest Service has adopted ``pyro-
silviculture'' using ``unplanned'' fire,\119\ such as unplanned human-
caused fires, to otherwise accomplish vegetation management.\120\
---------------------------------------------------------------------------
\118\ Forests and Rangelands, The National Strategy: The Final
Phase in the Development of the National Cohesive Wildland Fire
Management Strategy, April 2014, https://www.forestsandrangelands.gov/
documents/strategy/strategy/CSPhaseIIINationalStrategyApr
2014.pdf (accessed December 16, 2022).
\119\ U.S. Department of Agriculture, U.S. Forest Service,
``Unplanned Fires,'' https://www.fs.usda.gov/detail/inyo/
landmanagement/resourcemanagement/?cid=stelprd3804071 (accessed
December 16, 2022).
\120\ See, for example, Sherry Devlin, ``A Conversation with Jim
Hubbard: Unplanned Wildfires Rule West's Forests,'' TreeSource, March
28, 2017, https://treesource.org/news/lands/jim-hubbard-forest-service-
wildfires/ (accessed December 16, 2022).
---------------------------------------------------------------------------
The Forest Service should instead be focusing on addressing the
precipitous annual amassing of biomass in the national forests that
drive the behavior of wildfires. By thinning trees, removing live fuels
and deadwood, and taking other preventive steps, the Forest Service can
help to minimize the consequencesof wildfires.
Increasing timber sales could also play an important role in the
effort to change the behavior of wildfire because there would be less
biomass. Timber sales and timber harvested in public forests dropped
precipitously in the early 1990s and still remain very low. For
example, in 1988, the volume of timber sold and harvested by volume was
about 11 billion and 12.6 billion board feet (BBF), respectively.\121\
In 2021, timber sold was 2.8 BBF and timber harvested was 2.4 BBF.
---------------------------------------------------------------------------
\121\ U.S. Department of Agriculture, U.S. Forest Service, ``FY
1905-2021 National Summary Cut and Sold Data Graphs,'' https://
www.fs.usda.gov/forestmanagement/documents/sold-harvest/documents/1905-
2021_Natl_Summary_Graph_wHarvestAcres.pdf (accessed December 16, 2022),
and U.S. Department of Agriculture, U.S. Forest Service, ``Forest
Products Cut and Sold from the National Forests and Grasslands,''
https://www.fs.usda.gov/forestmanagement/products/cut-sold/index.shtml
(accessed December 16, 2022).
---------------------------------------------------------------------------
In 2018, President Donald Trump issued Executive Order 13855 to,
among other things, promote active management of forests and reduce
wildfire risks.\122\ The executive order stated, ``Active management of
vegetation is needed to treat these dangerous conditions on Federal
lands but is often delayed due to challenges associated with regulatory
analysis and current consultation requirements.'' \123\ It further
explained the need to reduce regulatory obstacles to fuel reduction in
forests created by the National Environmental Policy Act and the
Endangered Species Act.\124\
---------------------------------------------------------------------------
\122\ Donald J. Trump, ``Promoting Active Management of America's
Forests, Rangelands, and Other Federal Lands to Improve Conditions and
Reduce Wildfire Risk,'' Executive Order 13855, December 21, 2018,
https://www.govinfo.gov/content/pkg/DCPD-201800866/pdf/DCPD-
201800866.pdf (accessed December 16, 2022).
\123\ Ibid.
\124\ Ibid.
---------------------------------------------------------------------------
The next Administration should:
Champion executive action, consistent with law, and
proactive legislation to reduce wildfires. This would involve
embracing Executive Order 13855, building upon it, and working
with lawmakers to promote active management of vegetation,
reduce regulatory obstacles to reducing fuel buildup, and
increase timber sales.
Eliminate or Reform the Dietary Guidelines. The USDA, in
collaboration with HHS, publishes the Dietary Guidelines every 5
years.\125\ For more than 40 years, the Federal Government has been
releasing Dietary Guidelines,\126\ and during this time, there has been
constant controversy due to questionable recommendations and claims
regarding the politicization of the process.
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\125\ Dietary Guidelines for Americans, https://
www.dietaryguidelines.gov/ (accessed December 16, 2022).
\126\ Dietary Guidelines for Americans, ``History of the Dietary
Guidelines,'' https://www.dietaryguidelines.gov/about-dietary-
guidelines/history-dietary-guidelines (accessed December 16, 2022).
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In the 2015 Dietary Guidelines process, the influential Dietary
Guidelines Advisory Committee veered off mission and attempted to
persuade the USDA and HHS to adopt nutritional advice that focused not
just on human health, but the health of the planet.\127\ Issues such as
climate change and sustainability infiltrated the process. Fortunately,
the 2020 process did not get diverted in this manner. However, the
Dietary Guidelines remain a potential tool to influence dietary choices
to achieve objectives unrelated to the nutritional and dietary well-
being of Americans.
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\127\ Daren Bakst, ``Extreme Environmental Agenda Hijacks Dietary
Guidelines: Comment to the Advisory Committee,'' The Daily Signal, July
17, 2014, https://www.dailysignal.com/2014/07/17/extreme-environmental-
agenda-hijacks-dietary-guidelines-comment-advisory-committee/ (accessed
December 16, 2022).
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There is no shortage of private-sector dietary advice for the
public, and nutrition and dietary choices are best left to individuals
to address their personal needs. This includes working with their own
health professionals. As it is, there is constantly changing advice
provided by the government, with insufficient qualifications on the
advice, oversimplification to the point of miscommunicating important
points, questionable use of science, and potential political influence.
The Dietary Guidelines have a major impact because they not only
can influence how private health providers offer nutritional advice,
but they also inform Federal programs. School meals are required to be
consistent with the guidelines.\128\
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\128\ Healthy, Hunger-Free Kids Act of 2010, S. 3307, 111th Cong.,
2nd Sess., https://www.congress.gov/bill/111th-congress/senate-bill/
3307/text (accessed December 16, 2022), and Dietary Guidelines for
Americans, ``Current Dietary Guidelines,'' https://
www.dietaryguidelines.gov/usda-hhs-development-dietary-guidelines
(accessed December 16, 2022).
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The next Administration should:
Work with lawmakers to repeal the Dietary Guidelines. The
USDA should help lead an effort to repeal the Dietary
Guidelines.
Minimally, the next Administration should reform the Dietary
Guidelines. The USDA, with HHS, should develop a more
transparent process that properly considers the underlying
science and does not overstate its findings. It should also
ensure that the Dietary Guidelines focus on nutritional issues
and do not veer off-mission by focusing on unrelated issues,
such as the environment, that have nothing to do with
nutritional advice. In fact, if environmental concerns
supersede or water down recommendations for human nutritional
advice, the public would be receiving misleading health
information. The USDA, working with lawmakers, should codify
these reforms into law.
Organizational Issues
Based on the recommended reforms identified as ideal solutions, the
USDA would look different in many respects. One of the biggest changes
would be a USDA that is not focused on welfare, given that means-tested
welfare programs would be moved to HHS. The Food and Nutrition Service
that administers the food and nutrition programs would be eliminated.
The Farm Service Agency, which administers many of the farm subsidy
programs, would be significantly smaller in size if the ideal farm
subsidy reforms were adopted.
Most important, a conservative USDA, as envisioned, would not be
used as a governmental tool to transform the nation's food system, but
instead would respect the importance of efficient agricultural
production and ensure that the government does not hinder farmers and
ranchers from producing an abundant supply of safe and affordable food.
For a conservative USDA to become a reality, and for it to stay on
course with the mission as outlined, the White House must strongly
support these reforms and install strong USDA leaders. These
individuals almost certainly will be faced with opposition from some in
the agricultural community who would fight changing subsidies in any
fashion, although many of the reforms would likely be embraced by those
in agriculture.
There would be strong opposition from environmental groups and
others who want the Federal Government to transform American
agriculture to meet their ideological objectives. Finally, there would
be opposition from left-of-center groups who do not want to reform SNAP
and would expand welfare and dependency--such as through universal free
school meals--as opposed to reducing dependency.
Reducing the scope of government and promoting individual freedom
may not always be easy, but it is something that conservatives
regularly should strive for. The listed reforms to the U.S. Department
of Agriculture would help to accomplish these objectives and are well
worth fighting for to achieve a freer and more prosperous nation.
Conclusion
This chapter started with a discussion of the incredible success of
American farmers and American agriculture in general. This is how the
chapter should close as well. Americans are blessed with an
agricultural sector, and a food system in general, which are worthy of
incredible respect. A conservative USDA should appreciate this while
recognizing that its role is to serve the interests of all Americans,
not special interests. By being a champion of unleashing the potential
of American agriculture, a conservative USDA would help to ensure a
future with an abundant supply of safe and affordable food for
individuals and families in the United States and across the globe.
Author's Note: The author would like to thank all the
contributors for their assistance, expertise, and insight into
the development of this chapter. In addition, special thanks
are due to Rachael Wilfong, who was instrumental in getting the
chapter ready for submission.
______
Submitted Question
Question Submitted by Hon. Alma S. Adams, a Representative in Congress
from North Carolina
Response from Ronald Rainey, Ph.D., Assistant Vice President,
Professor, Division of Agriculture, University of Arkansas
Question. As a member of the Equity Commission, you contributed to
a report that detailed various policy recommendations for the Secretary
of Agriculture to consider. Could you expand on Recommendation #20:
County Committees? The Equity Commission Report detailed many policy
recommendations to modernize the makeup of county committees. What do
you think are the top four (4) policy recommendations for county
committees that should be included in the next farm bill?
Answer. In the EC Final Report, the recommendation was changed to
#8:
#8. Address historical and present-day inequitable services by
making County Committees more equitable.
The core recommendation centers on improving access to USDA
programs and enhancing customer service for farmers and ranchers.
Historically, the role of county committees has shifted, especially
regarding farm loan decisions, and this has negatively impacted
minority farmers. Despite these changes, county committees still hold
significant power in determining access to USDA programs. The
Commission aims to address ongoing inequities in current interactions
between committees and farmers/ranchers. Key recommendations to be
considered for the next farm bill include:
1. Training:
Require diversity and multicultural training for county
committee members
to better understand the diverse backgrounds, production
systems, and
marketing channels of the farmers/ranchers they serve.
Address the issue of farmers feeling misunderstood by
committee members
who may not respect or grasp their business models or
scales.
2. Representation:
Ensure county committees reflect the diverse
agricultural production in
their respective counties. While there has been a push
for minority appoint-
ments, all members should have voting power to influence
committee deci-
sions.
Ensure committees understand the business models,
structures, and objec-
tives of all farmers/ranchers they serve.
3. Accountability:
Establish oversight for County Executive Directors at
district and state lev-
els, with consequences for unethical or questionable
decisions that raise
civil rights or ethical concerns.
Implement performance metrics evaluated through an
equity lens to ensure
consistent access to information, programs, and customer
service for farm-
ers.
Address the power imbalance farmers face in the appeals
process and cre-
ate a system that holds committees accountable for their
decisions.
4. Appeals Process:
Develop a transparent, timely, and well-monitored
appeals process that in-
cludes oversight beyond the county level. This will
ensure that decisions are
tracked, irregularities are identified, and any improper
behavior by commit-
tees is addressed.
These changes aim to improve the fairness, inclusivity, and
effectiveness of county committees in serving the diverse needs of
farmers and ranchers.
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