[Senate Hearing 118-478]
[From the U.S. Government Publishing Office]
S. Hrg. 118-478
COMMODITY PROGRAMS, CREDIT, AND CROP IN-
SURANCE_PART 1: PRODUCER PERSPECTIVES
ON THE FARM SAFETY NET
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HEARING
BEFORE THE
SUBCOMMITTEE ON
COMMODITIES, RISK MANAGEMENT, AND TRADE
OF THE
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
May 2, 2023
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on http://www.govinfo.gov/
__________
U.S. GOVERNMENT PUBLISHING OFFICE
55-132 PDF WASHINGTON : 2024
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
DEBBIE STABENOW, Michigan, Chairwoman
SHERROD BROWN, Ohio JOHN BOOZMAN, Arkansas
AMY KLOBUCHAR, Minnesota MITCH McCONNELL, Kentucky
MICHAEL F. BENNET, Colorado JOHN HOEVEN, North Dakota
KIRSTEN E. GILLIBRAND, New York JONI ERNST, Iowa
TINA SMITH, Minnesota CINDY HYDE-SMITH, Mississippi
RICHARD J. DURBIN, Illinois ROGER MARSHALL, Kansas
CORY BOOKER, New Jersey TOMMY TUBERVILLE, Alabama
BEN RAY LUJAN, New Mexico MIKE BRAUN, Indiana
RAPHAEL WARNOCK, Georgia CHARLES GRASSLEY, Iowa
PETER WELCH, Vermont JOHN THUNE, South Dakota
JOHN FETTERMAN, Pennsylvania DEB FISCHER, Nebraska
Erica Chabot, Majority Staff Director
Chu-Yuan Hwang, Majority Chief Counsel
Jessica L. Williams, Chief Clerk
Fitzhugh Elder IV, Minority Staff Director
Jackie Barber, Minority Chief Counsel
----------
Subcommittee on Commodities, Risk Management, and Trade
TINA SMITH, Minnesota, Chairwoman
KIRSTEN E. GILLIBRAND, New York CINDY HYDE-SMITH, Mississippi
RICHARD J. DURBIN, Illinois MITCH McCONNELL, Kentucky
CORY BOOKER, New Jersey JONI ERNST, Iowa
RAPHAEL WARNOCK, Georgia TOMMY TUBERVILLE, Alabama
JOHN FETTERMAN, Pennsylvania CHARLES GRASSLEY, Iowa
C O N T E N T S
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Tuesday, May 2, 2023
Page
Hearing:
Commodity Programs, Credit, and Crop Insurance--Part 1: Producer
Perspectives on the Farm Safety Net............................ 1
----------
STATEMENTS PRESENTED BY SENATORS
Smith, Hon. Tina, U.S. Senator from the State Minnesota.......... 1
Hyde-Smith, Hon. Cindy, U.S. Senator from the State of
Mississippi.................................................... 3
WITNESSES
Panel I
Duvall, Zippy, President, American Farm Bureau Federation,
Washington, DC................................................. 5
Larew, Rob, President, National Farmers Union, Washington, DC.... 6
Panel II
Ackerman, Greg, Past Chair of The Michigan Bean Commission;
Delegate to the U.S. Dry Bean Council, Vassar, MI.............. 25
Carson, Kody, Past Chairman, National Sorghum Producers, Lubbock,
TX............................................................. 27
Cheyne, Brent, President, National Association of Wheat Growers,
Klamath Falls, OR.............................................. 29
Gendebien, Blake, Vice Chair, Agri-Mark Family Dairy Farm Co-Op,
Ogdensburg, NY, Testifying on Behalf of The National Milk
Producers Federation........................................... 31
Hillman, Rich, Farmer, Hillman Farms, Carlisle, AR, Testifying on
Behalf of The USA Rice Federation.............................. 32
Johnson, Patrick, Producer and Director, National Cotton Council,
Tunica, MS..................................................... 34
Ragland, Caleb, Secretary, American Soybean Association,
Magnolia, KY................................................... 35
Rockstad, Neil, Vice President, American Sugarbeet Growers
Association, Hendrum, MN....................................... 37
Thompson, Karla Baker, Vice President, J.E.T. Farms And Georgia
Integrity Farmers, Camilla, GA Testifying on Behalf of The U.S.
Peanut Federation.............................................. 39
Wolle, Harold, First Vice President, National Corn Growers
Association, Madelia, MN....................................... 40
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APPENDIX
Prepared Statements:
Duvall, Zippy................................................ 58
Larew, Rob................................................... 65
Ackerman, Greg............................................... 77
Carson, Kody................................................. 80
Cheyne, Brent................................................ 86
Gendebien, Blake............................................. 98
Hillman, Rich................................................ 103
Johnson, Patrick............................................. 109
Ragland, Caleb............................................... 119
Rockstad, Neil............................................... 143
Thompson, Karla Baker........................................ 152
Wolle, Harold................................................ 165
Document(s) Submitted for the Record:
Booker, Hon. Cory:
Farm Action Reference Prices, letter for Record.............. 178
Question and Answer:
Duvall, Zippy:
Written response to questions from Hon. John Boozman......... 182
Written response to questions from Hon. Charles Grassley..... 182
Written response to questions from Hon. John Thune........... 184
Larew, Rob:
Written response to questions from Hon. John Fetterman....... 185
Written response to questions from Hon. Charles Grassley..... 186
Written response to questions from Hon. John Thune........... 188
Ackerman, Greg:
Written response to questions from Hon. John Boozman......... 189
Written response to questions from Hon. Charles Grassley..... 189
Carson, Kody:
Written response to questions from Hon. John Boozman......... 193
Written response to questions from Hon. Charles Grassley..... 194
Cheyne, Brent:
Written response to questions from Hon. John Boozman......... 196
Written response to questions from Hon. Charles Grassley..... 197
Gendebien, Blake:
Written response to questions from Hon. John Boozman......... 200
Written response to questions from Hon. Charles Grassley..... 200
Hillman, Rich:
Written response to questions from Hon. John Boozman......... 202
Written response to questions from Hon. Charles Grassley..... 203
Johnson, Patrick:
Written response to questions from Hon. John Boozman......... 206
Written response to questions from Hon. Charles Grassley..... 208
Ragland, Caleb:
Written response to questions from Hon. John Boozman......... 211
Written response to questions from Hon. Charles Grassley..... 212
Rockstad, Neil:
Written response to questions from Hon. John Boozman......... 215
Written response to questions from Hon. Charles Grassley..... 216
Thompson, Karla Baker:
Written response to questions from Hon. John Boozman......... 218
Written response to questions from Hon. Charles Grassley..... 219
Wolle, Harold:
Written response to questions from Hon. John Boozman......... 221
Written response to questions from Hon. Charles Grassley..... 222
COMMODITY PROGRAMS, CREDIT, AND CROP INSURANCE--PART 1: PRODUCER
PERSPECTIVES ON THE FARM SAFETY NET
----------
Tuesday, May 2, 2023
U.S. Senate
Subcommittee on Commodities, Risk Management, and Trade
Committee on Agriculture, Nutrition, and Forestry,
Washington, DC.
The subcommittee met, pursuant to notice, at 9 a.m., in
room 106, Dirksen Senate Office Building, Hon. Tina Smith,
Chairwoman of the Subcommittee, presiding.
Present: Senators Smith [presiding], Stabenow, Gillibrand,
Booker, Warnock, Fetterman, Hyde-Smith, Boozman, Ernst,
Tuberville, and Grassley.
Also present: Senators Klobuchar, Welch, Hoeven, Thune, and
Fischer.
STATEMENT OF HON. TINA SMITH, U.S. SENATOR FROM THE STATE OF
MINNESOTA
Senator Smith. Good morning. The Subcommittee on
Commodities, Risk Management, and Trade will come to order.
Welcome to all of our witnesses, and Senator Hyde-Smith, thank
you so much to you and your staff for working together with us
to organize this hearing today.
Chair Stabenow, and I believe Ranking Member Boozman, will
be with us shortly. I want to thank them for joining us, and
many thanks to the full Committee staff for all of your help
and support with this hearing and thank you to everyone for
attending.
This morning is going to be a two-part hearing. Today we
will focus on Title I of the farm bill, the commodities title,
and on Thursday we will take on Title X, the credit title, and
Title XI, the crop insurance title.
In February, the full Committee, the full Senate Ag
Congress, heard from USDA officials on their views about
commodity risk management and credit, and today we have the
opportunity to hear directly from farmers and producers and
stakeholder groups that work with farm safety net programs
every day. Hearing from you is extremely important. As the
people closest to the work, you know best what is working and
what can be improved.
We are especially grateful that you took time to be here
with us at such a busy time of the year. In Minnesota, the
weather is just starting to warm up and the fields are just
starting to dry out. My colleague, Senator Klobuchar, is here,
so we hear that it is actually spring in many parts of the
country, and we are looking forward to welcome that to
Minnesota as well.
I know that all members of this Committee share the goal of
passing a bipartisan farm bill reauthorization, a bill that
meets the needs of American farmers, ranchers, and producers in
every part of the country, and a bill that meets the moment.
Farmers, ranchers, dairy farmers, poultry and livestock
producers are at the center of our economy, our food system,
and our national security, and there is nothing more important
to our country than a stable, secure, healthy food supply. That
means that we need stable, secure producers that have the tools
that you need to weather the inevitable ups and downs of
agriculture.
My old friend, Dave Fredrickson, a farmer from Murdoch,
Minnesota, former Minnesota Ag Commissioner and former head of
the Minnesota Farmers Union, once told me that farmers are the
most optimistic people in the world, and also, he added, the
most in touch with the potential disaster lurking around the
corner. You have to be. That is where these farm safety net
programs come in. They are the tools to help farmers weather
the inevitable ups and downs that will always be a part of your
life and your life's work.
Today, although commodity prices are good, the ag sector
faces many challenges. Today too many producers are struggling
to cover their operating costs, and this is especially true for
small and medium-sized farms. According to the USDA, 50 percent
of farms have negative farm income. The high level of
concentration in the ag sector, combined with supply chain
disruptions has driven up input costs, which are now outpacing
commodity prices and putting farmers, especially small farmers,
in a real bind. Climate change and extreme weather events are
an increasing risk for farmers as they deal with droughts and
floods, wind and hail, and increased pests. Global disruption,
both wars and trade disputes, add to the uncertainty.
Farmers are incredibly creative and adaptable. You are
implementing smart climate practices. You are upgrading your
infrastructure to improve resilience. You are developing new
markets and deploying new technology. You need farm safety net
programs that work for you, to help mitigate losses and even
out those inevitable ups and downs.
In Minnesota, in 2022, almost 40,000 producers participate
in the Agriculture Risk Coverage (ARC) and the Price Loss
Coverage (PLC) programs. Minnesota dairy farmers relied on the
Dairy Margin Coverage Program (DMC), and Minnesota sugarbeet
farmers depended on the Sugar Program. Thanks to this
incredible public-private partnership, Minnesota's 67,000 farms
and ranches created more than $16 billion in value, and every
member of this Committee would have a similar story to tell
about their own States--of challenges, yes, but also innovation
and opportunity.
Over the last year, my staff and I have held dozens of farm
bill listening sessions around Minnesota, and what we have
learned is that for many producers the farm safety net is
working. It is definitely helping. We have also heard that
there are gaps. Not all risk management and safety net programs
are working for smaller operations, and especially crop
farmers, especially produce farmers. Some programs are a little
hard to use sometimes, and a tweak here or there could really
help. Farmers of color, and Indigenous farmers in particular,
struggle to find a safety net that works for them.
That is what today's hearing is all about. It is an
opportunity for this Subcommittee to hear directly from you
about what is working, what is not working, and what needs to
be improved.
Now there are a few issues that I am particularly looking
forward to hearing about. I am very interested in hearing from
all of you in both panels, what are your top one or two
priorities for farm bill safety net programs? What can we do to
make these programs work for small and beginning farmers and
nontraditional producers? How should the USDA support you? I
hear constantly about staffing shortages at local FSA offices,
and so I would like to hear about your experiences and what you
think that we should do.How does the consolidation in
agriculture, from everything from seed and fertilizer to
processing, affect the risks that you face as you run your
operations?
I look forward very much to hearing from all of today's
witnesses about these issues and more, and I look forward to a
very productive discussion.
Now I turn to Senator Hyde-Smith.
STATEMENT OF HON. CINDY HYDE-SMITH, U.S. SENATOR FROM THE STATE
OF MISSISSIPPI
Senator Hyde-Smith. Good morning, and thank you, Chairwoman
Smith and fellow Committee members, and I thank all of you for
being here today and the witnesses for being willing to testify
and serve. This is truly appreciated.
As the Ranking Member of the Commodities, Risk Management,
and Trade Subcommittee I am pleased that we are holding this
producer prospective on the farm safety net hearing. It is an
honor to serve on this Committee, and since its work is so
critical to America's hard-working farmers. I am also grateful
for Chairwoman Stabenow and Ranking Member Boozman's commitment
to these issues as well.
Today we have the privilege to hear from general farming
organizations and a wide array of producers who will provide
insight into the challenges facing producers in Mississippi as
well as across the country. As we discuss the farm safety net,
it is critical that we hear from producers directly to better
understand their unique perspective and their needs. Their
views can help us ensure that our policies and programs are
responsive and effective. I look forward to a productive
discussion.
As we all know, American agriculture is subject to a wide
range of challenges and uncertainties, from unpredictable
weather patterns to volatile market conditions to evolving
trade policies and regulations. These challenges can have a
significant impact on the viability of the American farmers,
many of which operate on thin profit margins. This is why the
farm safety net authorized in Titles I and XI of the farm bill
is so critical. This Committee must get this right in the 2023
Farm Bill. There is no room for error.
The farm safety net is the backbone of our Nation's
agricultural policy. It provides protection for producers who
may face unforeseen losses and setbacks that are beyond our
control. The farm safety net helps protect the long-term
viability of our rural communities, whose foundation is
agriculture. I want young Mississippians to view returning home
to take care of the family farm as a possibility and an
attractive option.
Congress has the opportunity to help make this a reality by
strengthening the farm safety net programs. When I visit with
Mississippi producers, I always tell them, ``Your priorities
are my priorities.'' Mississippi is home to many large and
small farm families. As my friend, Ranking Member Boozman says,
``This farm bill will not neglect the small nor punish the
large.''
Time after time, I hear from producers that the current
safety net is inadequate, especially for seed cotton and rice.
Statutory references price for the agricultural risk coverage,
the ARC and the PLC Programs were calculated in the 2014 Farm
Bill using data from 2012, more than a decade ago. We know that
a lot has changed since then.
The existing references prices do not reflect recent global
events that have disrupted the American agriculture industry,
including the China trade wars, the COVID pandemic, and the war
in Ukraine. Increasing input costs, many of which are thanks to
President Biden's war on American energy, have also contributed
to the inadequacies of our reference prices.
By listening to our producers and understanding their
experiences and challenges, we can identify these areas where
the safety net can be strengthened or improved to ensure that
it remains effective and efficient in supporting our
agricultural producers. This approach will help to ensure that
our policies and programs are responsive and effective and
ultimately support the long-term sustainability and prosperity
of our Nation's agriculture industry, which I think is all of
our goals.
In this hearing I will look forward to having the
opportunity to hear directly from Mr. Johnson of Mississippi,
and our other guests to gain insights into the challenges and
opportunities facing producers across the country. We will also
explore ways to improve and strengthen the safety net to ensure
that it is responsive to the needs of everyone.
President Eisenhower once said, ``Farming looks mighty easy
when your plow is a pencil, and you are 1,000 miles away from
the cornfield.'' That is why this farm bill will be developed
for producers, by producers. This hearing is critical as we
continue to engage with farmers to understand their unique
perspectives and needs and ensure that the safety net is
tailored to meet those needs.
I look forward to today's discussion. Thank you, Chairwoman
Smith, and I yield back the remainder of my time.
Senator Smith. Thank you so much, and welcome, Chair
Stabenow. We are very glad to have you with us this morning.
We are now going to begin our first panel. We have two
witnesses on our first panel. President of the American Farm
Bureau Federation, Zippy Duvall. Mr. Duvall, I know that
Senator Warnock was hoping to come and introduce you, but he is
not here yet, so I am going to plow forward.
Zippy Duvall has served as President of the American Farm
Bureau Federation since 2016. He is a third-generation farmer
from Georgia. He and his son operate a beef cow herd, raise
broiler chickens, and grow their own hay, all while continuing
to restore the farmland that has been in the family for more
than 90 years.
Welcome to the Committee.
I would also like to welcome President of the National
Farmers Union, Rob Larew. Rob is President of the national
Farmers Union, and prior to joining the National Farmers Union
he worked for over 22 years in Congress in developing
agriculture policy. Rob worked for both Representative Collin
Peterson from Minnesota and the late Senator Paul Wellstone,
whose seat I now hold. As President of the National Farmers
Union, Rob is a national advocate on behalf of farmers and
ranchers.
President Duvall and President Larew, you will each have
five minutes for your opening statement. You have a clock in
front of you, I think. Your full written statement will be made
part of the record.
President Duvall, you are recognized for your opening
statement.
STATEMENT OF ZIPPY DUVALL, PRESIDENT, AMERICAN FARM BUREAU
FEDERATION, WASHINGTON, D.C.
Mr. Duvall. Thank you so much, Chairwoman Smith and Ranking
Member Hyde-Smith. We really relish the opportunity to come and
speak to you.
One of the things you did not say in my bio is I spent 30
years dairying in Georgia, as a child, and then 30 years as an
adult, so I have a long history of continuing to farm there in
Georgia.
We want to thank you all for your work that you do for our
farmers and ranchers across our country each and every day, and
in your opening comments was almost ditto to my comments. You
are right on target with what you are hearing across your
region and the country.
As I have said before, a country that cannot feed itself
and its people is not secure, so a strong farm policy that
supports a strong food supply truly is part of a smart national
security strategy.
USDA's most recent Farm Sector Income Forecast sees a
decrease in net farm income in 2023 of 18 percent, when
adjusted to inflation. The same report estimates farm and ranch
production expenses, that you mentioned, Chairwoman, will
continue to increase by $18 billion. This follows a record
increase of $70 billion in 2022.
The short-and long-term interest rates that are high and
rising have doubled and tripled, in some cases, in the last few
years. High interest rates, caused by both high inflation and
the Fed's step to address inflation, led to the farm debt
crisis in the 1980's. We need to make sure that the doubling
and tripling of interest rates does not cause those similar
pressures on our farms and ranches because we already have some
mental health issue across the farm because of the stresses
they are going through.
Along with the challenges there are enormous opportunities
in American agriculture. Innovation and research are helping us
do more with less. Our advances in sustainability nothing short
of very impressive. In order to seize the opportunities and
continue the advancements we need strong farm policy. Much
uncertainty remains related to the ability for farmers and
ranchers to access affordable supplies and to manage volatile
markets, and deal with the regulation and weather-related
challenges.
Our growers need to have access to comprehensive risk
management options such as those in the commodity title of the
farm bill through crop insurance. In particular, we need to see
improvements in Title I that take into account the current
challenges facing production agriculture.
Farm Bureau supports the following principles to guide the
development of the programs in the next farm bill: increasing
the baseline funding commitments to farm programs. We already
talked about the cost of production, and it needs to reflect
what it costs us to produce these products.
To maintain a unified bill that includes nutrition programs
and farm programs together. Really and truly, the farm bill
should be named the Food and Farm Bill.
We need to prioritize funding for risk management tools,
which include both crop insurance and Title I commodity
programs.
Of course, there are important investments throughout the
farm bill, investments in critical research to fuel the
incredible innovation that has helped farmers and ranchers do
more with less. Investments in voluntary incentive-based
conservation programs that have helped farmers achieve
impressive sustainability gains and investments to ensure that
those facing hunger have access to nutritious food that our
farmers are dedicated to producing in more and more worthy
programs in the farm bill.
The 2023 Farm Bill presents an important opportunity for
you, the lawmakers of our great country, to rise above
partisanship. We urge you to work together, and again, to pass
the legislation that protects food security and all Americans
and ensure the future success of farmers and ranchers that will
also keep our national security intact.
Thank you for holding this hearing today. I look forward to
the questions.
[The prepared statement of Mr. Duvall can be found on page
58 in the appendix.]
Senator Smith. Thank you very much, President Duvall.
We now turn to President Larew.
STATEMENT OF ROB LAREW, PRESIDENT, NATIONAL FARMERS UNION,
WASHINGTON, D.C.
Mr. Larew. Thank you so much, Chair Smith, Ranking Member
Hyde-Smith, and members of the Subcommittee. Thank you for the
invitation to testify.
National Farmers Union is the second-largest general farm
organization, and we advocate for the economic prosperity of
family farmers, ranchers, and their communities through
education, cooperation, and legislation. We can all work
together to ensure that the next farm bill is as strong as it
can be through sound crop insurance and commodity programs. I
also want to emphasize the importance of diversified income
streams and opportunities as well as the need for fair and
competitive markets.
It has been an eventful five years since the 2018 Farm Bill
became law. We have seen a trade dispute with China,
increasingly frequent and severe weather disasters, rapid
shifts in supply and demand from the pandemic, and Russia's
invasion of Ukraine. USDA predicts, as Mr. Duvall mentioned, a
21 percent decline in net farm income in 2023. Farmers and
ranchers, on average, currently receive only 14.3 cents of
every dollar that consumers spend on food. The farm safety net
is being tested in new and unprecedented ways, and we are
learning many lessons on how to be prepared for the next five
years.
With that in mind, Farmers Union members have identified
the following priorities. We need a well-funded, permanent
disaster program to protect against losses from market
disruptions and extreme weather. Reference prices and loan
rates should be increased to offset higher costs of production.
Additional crop insurance options should be made accessible to
specialty crop producers and those with diversified farms.
We support farmers voluntarily removing marginal or
sensitive land from production on an annual basis in exchange
for crop insurance protections. We support a dual enrollment
option for ARC/PLC to safeguard against dramatic losses. We
support a voluntary update of base acres and want to find ways
to issue advance payments from ARC/PLC.
The Dairy Revitalization Plan should be enacted to better
serve family dairy farmers and stabilize milk prices. We
strongly support the Farm and Ranch Stress Assistance Network
and want to make sure it receives additional resources. We also
strongly support farm bill efforts that benefit beginning
farmer, veteran, and socially disadvantaged farmers and
ranchers.
Farm bill investments in conservation, climate, renewable
energy, and infrastructure can also help ensure the vitality of
our communities. We seek tools and assistance to make our farms
more resilient in the face of changing climate. We want to
continue to be a part of the solution with practices that are
voluntary, incentive-based, and rooted in science.
That is why we have partnered with Farm Bureau, the
National Council of Farmer Co-Ops, the Environmental Defense
Fund, and dozens of other organizations to form the Food and
Agriculture Climate Alliance. FACA issued policy
recommendations to Congress for the farm bill, and with our
input USDA is implementing the Partnerships for Climate-Smart
Commodities initiative. This project will create new market
opportunities for family farmers and ranchers through climate-
focused programs, and we are excited to see the effort get
underway this year.
The financial viability of our farms is dependent on a fair
market, so any conversation about the farm safety net should
also address competition. We must create fair and more
competitive markets in order to drive innovation, increase
choice, and decrease input costs and boost prices for crops and
livestock.
In this spirit, NFU launched the Fairness for Farmers
campaign to shed light on the devastating impact that
monopolies and near-monopolies have on family farmers,
ranchers, and our communities. That is why we are calling for a
competition title in the farm bill, to improve transparency and
price discovery in cattle markets, strengthen the Packers and
Stockyards Act, reinstatement mandatory country-of-origin
labeling, and underscore the effects of consolidation in the
food supply chain. By building fair and competitive markets we
address the root causes of financial instability for family
farmers.
Finally, we know that farm bill coalition gets stronger by
bringing in allies and supporters, and that a farm bill
coalition becomes weaker when it is divided. I want to
reiterate our willingness to work with other farmers and
ranchers, with our rural and urban neighbors, and with groups
who want to ensure that the farm bill includes strong policy
not only on the farm safety net but also for nutrition, energy,
forestry, research, and more.
I look forward to working with you to address these issues,
and thank you once again for the opportunity to testify.
[The prepared statement of Mr. Larew can be found on page
65 in the appendix.]
Senator Smith. Thank you very much to both of you. We will
now begin a round five-minute questions from members of the
Subcommittee. Let me start by asking both of you, folks on this
panel and on the Senate Ag Committee understand that the farm
bill touches nearly every part of life in America. As we have
all said, it is essential to our national security and to the
health and vitality of producers everywhere in the country.
Understanding that this is not exactly a fair question, I
am going to ask it anyway, if each of you could just briefly
talk about, just highlight the maybe two priorities that you
think this Subcommittee should keep in our minds as we move
toward reauthorizing the farm bill in 2023.
Mr. Duvall. I would have to say, as I travel, and I travel
a lot--I spend half my time here and half my time on the road,
speaking to our grassroots, and then on the weekends on the
farm, trying to catch up--but the first things you hear about
is we have got to make sure that crop insurance stays intact,
and we need to broaden it for those specialty crops that do not
have opportunity to use it.
The second thing is they talk about the cost of inputs, and
the Title I reference prices do not match up with the cost of
that production. It is really not a true safety net.
We do not like to use the word ``safety net.'' It assures
our American people that they are going to have their pantries
available, food to fill their pantries, at a reasonable cost,
and that is what the farm bill does for us. It assures that our
farmers can survive any disaster and get to the next year, and
that is why those updates need to be made.
Senator Smith. Thank you.
Mr. Larew. I predict that you are going to hear some themes
that are common among a lot of the groups represented here.
Certainly crop insurance is something that is always mentioned
as front and center, to make sure that it remains very strong,
but to build on the strength of that private and public
partnership and make it more available to perhaps specialty
crop growers who face very different markets, maybe much
thinner markets, and different marketing arrangements, looking
for ways to grow the success of those risk management tools to
a number of different diversified types of farms.
Beyond that, the rest of the safety net in Title I does
need to reflect the changing conditions out there. We need to
make sure that whether it is the reference prices in there or
other triggers that reflect today's circumstance, we need to
make sure that that is accommodated as well.
More broadly it is making sure that the farm bill
recognizes the dramatic shifts and changes and challenges that
we have had over the last five years and how to build more
resilience in that, whether that is also looking at permanent
disaster, et cetera.
Senator Smith. Thank you very much. A related question. We
know that the average age of farmers in this country is going
up, not down. In Minnesota I think it is about 60 years. Now I
am 65, so I am not----
I am very interested in hearing from both of you, as we
think about risk management strategies and the particular
challenges that beginning farmers, veteran farmers, socially
disadvantaged farmers have as they are getting into agriculture
and wanting to stay there, what particularly should we have in
our minds for risk management, crop insurance, and other
programs to support them. Mr. Larew?
Mr. Larew. First I would say certainly efforts that are
currently in place to help beginning farmers and those who are
traditionally, historically underserved need to be maintained
and even strengthened.
I think it goes beyond even the risk management tools that
we have. We need to make sure that we are developing markets
and that we are developing a marketplace that creates that
future for beginning farmers. There are a lot of new, potential
opportunities, and USDA is currently looking at building out
local and regional markets. I think that in addition to making
sure that we have risk management tools that meet the needs of
these emerging farmers and that next generation, that at the
same time that we are creating a marketplace that creates
option and potential and competition for their future.
Senator Smith. President Duvall.
Mr. Duvall. Yes. I would say the biggest challenge young
people have getting into agriculture is availability of land
and availability of credit. Of course, those risk management
tools are going to be a part of the piece of their business
plan, to be able to get the credit, to be able to get into
business and plant a crop. Making those programs more available
to young people, beginning farmers, socially underserved
farmers would be a huge help.
Young people ask me all the time, ``Where do I start?'' and
``What programs are in USDA that I can take advantage of?'' A
lot of those programs, like the microloans that young people
start with are capped, and they are capped at a level that none
of us could get in agriculture with, or even make enough money
with that investment to be able to justify doing that.
At the end of the day, we have brilliant young people, from
all backgrounds, coming out of our land grant colleges and
colleges all across this country, that want to be in
agriculture, but the financial sustainability of farming is not
there. Why would they want to come back to the farm and not
know that they would be able to provide a living their family?
We have got to find some way to make sure that we can draw
young people back to this industry, because you are exactly
right. I am 67, so I am over the age of the average farmer, and
I am very blessed to have a son and another young man working
with me. They have to have other jobs to be able to work with
me.
Senator Smith. Thank you. Thanks so much.
Senator Hyde-Smith.
Senator Hyde-Smith. Mr. Duvall, you and I know that the
farm bill commodity and crop insurance programs have a
significant return on investment, and they do keep our food
supply abundant and affordable. Please tell us more about why
any proposal to decrease farm safety net resources are
misguided and would not result in saving taxpayer dollars in
the long run.
Mr. Duvall. Well, if you take those programs away it brings
more uncertainty to the markets. Those programs, we have
already mentioned that it is a public-private investment in
agriculture, which keeps food at a more reasonable cost to all
the consumers across the country, and it also keeps farmers
opportunity to continue to farm after major disasters or
drought, whatever it might be they may be faced with.
For the interest of the whole country and all the consumers
and national security and everything, we need to make sure that
we have a farm bill that supports not only farmers but also the
people that are in a part of their life where they need a hand
up and a helping hand through the nutrition programs.
Senator Hyde-Smith. Thank you. Mr. Larew, as your testimony
indicates, you have an interest in preserving the long-term
viability of rural America, and I do too. Please expand on how
Congress should strengthen Title I and Title XI farm bill
programs to help preserve the long-term viability for rural
America.
Mr. Larew. Absolutely. I appreciate the question because it
is really at the heart of what a farm bill hopefully can
accomplish in rural America. This farm safety net, as has
already been mentioned, is really as much as anything centered
around providing reliability and certainty in the face of
really uncertain times--when we have trade wars, when we have
weather events--and farmers are used to trying to weather a lot
of those kind of market-and weather-related challenges. We need
a safety net in place to be that reliable underpin to make sure
that those farms cannot just farm this year but have the
opportunity to put a crop in the ground the next year and stay
on that land. That keeps, as everyone on this Committee
probably appreciates, that kind of effort also feeds into the
local communities, into the local schools, it makes our small
communities much more viable in the long run.
Whatever we can do to build on those successes in Title I,
making sure that we update the price triggers, the reference
prices, making sure that we broaden and strengthen and grow on
the success of crop insurance, I think we will go a long way
toward providing that certainty.
Senator Hyde-Smith. You also note in your testimony that
the latest farm income projections predict a 20.7 percent
decline in net farm income for 2023, when compared to 2022.
What should this mean for how this Committee crafts Titles I
and XI of the farm bill?
Mr. Larew. We cannot go backward. We have to go forwards,
and we have to build a bill that is reflective of the current
conditions and for the next five years. In that sense we need
to strengthen.
Senator Hyde-Smith. Thank you. Thank you, Madam Chairman.
Senator Smith. Thank you so much, Senator Hyde-Smith. Now I
will turn to the Chair of the Ag Committee. We are so glad to
have Senator Stabenow here and also welcome, Senator Boozman.
Thanks for coming to our Subcommittee.
Senator Stabenow, you have the floor. As the Chair of the
Committee, I think that you should feel free to take the time
that you need.
Senator Stabenow. Thank you. That is dangerous.
Senator Smith. The same courtesy will be offered to Senator
Boozman, to be fair.
Senator Stabenow. Thank you very much, and I am so glad,
Chairwoman Smith, that you are chairing this Subcommittee and
that you have a partner in Senator Hyde-Smith. Thank you so
much to both of you for your leadership, and, of course, my
partner right next to you there, Senator Boozman, good morning.
Good to see you.
I do appreciate a moment to just share a few thoughts and
then ask a couple of questions to my good friends. It is good
to see you, Mr. Duvall and Mr. Larew. Always good to see you,
and to everyone that is here today.
Let me just state the obvious. Farmers and ranchers across
the country have experienced a lot of difficult challenges in
the last few years, that is for sure, from the trade wars and
the pandemic to the droughts, to the floods, disasters because
of climate. I mean, everything has been coming at our farmers
and ranchers, and rural communities.
As we have talked about in other hearings, there has been
about $90 billion in ad hoc spending to respond to a variety of
events, in addition to the farm bill, as we look at this. A lot
of this emergency deficit spending, which weighs in on what you
are even talking about, even though we are not saying it, in
terms of resources or support that has been there.
I also want to say, though, that at this moment in the
discussions, literally right now here, I have serious concerns
about the potential of default that is hanging over our heads,
for all of us who care about this farm bill and agriculture.
Because I was here in 2011, first chairing the Agriculture
Committee, when there were calls to cut spending in exchange
for avoiding default, and ultimately that ended up in across-
the-board cuts to a variety of mandatory programs, including
ARC and PLC, which continues today, and will continue for
another eight years, regardless of the current debate, a 5.7
percent cut every year, right now.
I worry about the folks who have never done a farm bill. We
have 240 people, between the House and the Senate--most in the
House, as we know--who have never written a farm bill, never
voted on a farm bill, who do not understand what this means to
rural America and agriculture.
In fact, one of the ways to get more assistance to farmers
would be to repeal that 5.7 percent yearly cut, which I would
be happy to do. I would be very happy to do.
I know that all of you are calling for additional
resources. We want to do the best we can. We know the
importance of addressing the challenges. Ranking Member
Boozman, earlier this spring, asked the Budget Committee for
budget flexibility so we can adequately address the needs of
our producers. If we do not have additional funding in the
baseline we are going to need to focus on our top priorities,
and need your best thinking on how we do this together, to be
able to target this.
This leads me to my first question, which is crop
insurance, of which I am a strong supporter. Both of you have
talked about this. It is a core part of risk management, and
crop insurance has worked incredibly well for many producers to
respond to weather disasters, declines in revenue, new products
and options, and so on, we need to develop to make sure that
that continues.
I wonder if you each might speak more specifically. You
have talked about specialty crops, which, of course, is near
and dear to my heart in Michigan. I am glad we were able to get
coverage for specialty crops, but I know there is more that
needs to be done. I wonder if each of you would respond just to
more specific enhancements you would suggest in crop insurance,
in general or in specialty crops. Any additional thoughts on
that. Mr. Duvall?
Mr. Duvall. Well, of course the first thing at hand is to
make sure that it is funded correctly, and we also need to make
sure that we protect it to make sure that it does not dilute it
down to where it is not effective to everyone. To make it
better is to be able to make it easier for people to use. If
you talked about specialty crop people, I hear a lot of
specialty crop farmers say, ``You know, it is just too
difficult for me. I do not really understand it.'' Smaller
farmers, ``I do not really understand how to participate in
those programs.'' The difficulty, especially in small and
medium-sized farms, is a challenge to them.
You know, a lot of people look at American Farm Bureau. We
have got six million members across the country, and they look
at us as representing the large farmer, which is absolutely not
true. We surveyed our national committees, our voting
delegates, and actually, the majority of the people that
participate in our organization are small and medium-sized
farmers. We hear what I just told you all the time, that it is
difficult, hard to take advantage of, and sometimes cost
prohibitive, depending on what commodity they grow.
Senator Stabenow. Thank you. Mr. Larew?
Mr. Larew. Yes, a couple of things. No. 1, making sure that
we are taking full advantage of the 508(h) provision there to
be creative, whether that is tying in climate-smart ag
practices, looking at ways to incentivize some of those kinds
of practices. I think also looking at some of the programs that
Congress has put in place such as Whole Farm Revenue, intended
to try to address some of that diversified, multi-crop farm
risk management, and yet has struggled to really gain a lot of
traction out there because of certainly a perception that the
paperwork and the kind of cumbersome process of having that
coverage is ultimately not worth the effort in many farmers'
possibilities.
Then for specialty crops, the challenges are immense,
right? For some of these crops that are so thinly traded, or
are traded with direct contracts, how do we find ways to either
better market existing products that folks may not even be
aware of, and then certainly encourage the development of
additional products out there?
I would also just underscore all of this with making sure
that, first and foremost, we are not weakening that private-
public partnership.
Senator Stabenow. Thank you. One more question. We know
that the commodity title is essential. Crop insurance is
essential. We also know other parts of the farm bill are
incredibly important for our growers. We need all of it to make
this happen.
Since we have both of you, even though we are talking about
commodities and crop insurance I want to just ask each of you,
as national leaders, more broadly when we look at all the
components, whether it is research or infrastructure,
developing diversified income streams through exports or the
bioeconomy, I wonder if you might just speak about how all of
this fits together. Because it is all important, right? I mean,
we have got to make sure we have got all the pieces there.
Farmers want markets. You want to sell. At the same time, we
want to create more options, whether it is through more climate
practices, whether it is through the bioeconomy. All of this is
what will make our producers successful.
Mr. Larew, would you just speak more broadly, because I
assume it is all of it together.
Mr. Larew. Yes, absolutely. Farm bill coalitions are broad
and attract a broad range of support, for very good reasons,
because the farm bill is this tremendous asset to the entire
U.S. economy, whether it is even supporting hunger programs and
SNAP, which as farmers we recognize also create markets for us
and are also helping to feed our neighbors and even family
farmers when needed.
We also want to make sure that--I referenced competition-
related items--making sure that the markets that farmers do
have access to are truly fair and competitive out there,
building out local and regional market opportunities so that
there are diversified income streams there. You mentioned the
bioeconomy, looking at ways to incentivize, whether through
energy programs or elsewhere in the farm bill, ways to
encourage adaptation of new systems but also ways to generate
income from those efforts.
I think, broadly, it is about building out market space in
addition to a farm safety net, and creating opportunities for
farmers in the future.
Senator Stabenow. Thank you. Mr. Duvall?
Mr. Duvall. Two of the other areas that I harp on a lot is
research and development dollars. We are being outspent by
other countries, especially China, 3 to 1 in research and
development dollars, the statistics tell me, and research and
development is what keeps us on the cutting edge, it keeps us
more competitive across the world, it keeps us more
sustainable, it makes us more friendly to the environment, and
it makes our businesses more efficient in having that new
research coming down the pipe.
The other area is conservation and climate discussion. For
years, as I farm, the list of people is long of people waiting
to get funded for EQIP and many other programs that are offered
through conservation programs. Proper funding--and I understand
the funding that was recently added to that, and farmers very
much appreciate that.
What people do not really realize is if this market is
voluntary and science-based, farmers will step up and take
advantage of it and do all the right things because it is a
partnership. To the tune of 140 million acres across America,
farmers have stepped up in conservation programs. They will
continue to do that in conservation and in climate as long as
it is voluntary market based.
Those are two areas that we need to focus on so that those
research and development projects also blend in to climate and
conservation. You are exactly right--it all works together to
make for a secure food system for our country.
Senator Stabenow. Thank you. Thank you, Madam Chair.
Senator Smith. Thank you, Senator Stabenow.
We now turn to Senator Boozman. Welcome, Senator Boozman.
Senator Boozman. Thank you, Senator Smith, and Senator
Hyde-Smith, for holding this very, very important hearing.
I have had the opportunity to go around the country and
visit with folks, as has the Chairwoman, and again, I want to
compliment you all. I hear from your members. You all are very,
very well represented throughout the United States and always
bring so much to whatever gathering we have, whatever listening
session. Again, you do a very, very good job, so we appreciate
that.
Mr. Duvall, you mentioned Congress must protect agriculture
and production practices from undue burden and respect farmers'
ability to innovate and solve problems. Can you talk more about
the current farm safety net programs, how they afford producers
this flexibility, and any proposals that you have heard that
would jeopardize this?
Mr. Duvall. Risk management tools, just like us protecting
our homes and our cars and our lives with insurance policies,
and our farmers go to those risk management products to be able
to protect their farm for enough revenue to be able to get to
the next crop in the wake of a disaster, whatever that disaster
might look like.
It is absolutely crucial because we see the difficulty of
people trying to get into agriculture. It is availability,
land, and credit. It takes a lot of money to become a farmer
and stay in business a long time. It is necessary to have those
risk management tools there, to make sure.
The threat is what might be tied to that, required of a
farmer to be able to take advantage of those programs. Those
are real threats. We need not dilute the program. We need to
make it better, not more challenging. We need to make it
easier, not more challenging.
For example, we should never take and say to a farmer,
``You have got to do this to be able to get crop insurance.''
Crop insurance is a tool, and it is a risk management tool, and
it protects that crop and that farm. It should not be limited
by other factors that might be attached to it.
Senator Boozman. No, we appreciate that, and I agree. To
me, the farm bill, you know, one of the underlying themes, if
maybe not the underlying theme for the agriculture part are the
risk management tools, especially now in the very difficult
times that we are in regarding input costs, high interest
rates--the lists just go on and on. The uncertainty, even with
our banking community now, as things get tighter there.
I was going to ask you that, you and Mr. Duvall, about
tying using specific climate or conservation practices in order
to access the various risk management tools, what impact would
that have on these programs for farmers?
The other thing that I have learned in traveling across the
country is how different not only regions of the country are
but regions of farms. It cannot be a one-size-fits-all.
The other concern that I have, and this is something that
we can do that would not cost money--it would save money and
make us much more effective--is the paperwork and all that you
have to go through in order to participate. Mr. Larew?
Mr. Larew. Yes, no, you are absolutely right. I mean, with
this kind of diversity of not only type of farm, commodities
grown, but then you add on top of that parts of the country and
the climate conditions, you know, that is something that we
cannot just put blanket requirements over.
One of the aspects of the Food and Agriculture Climate
Alliance that I am particularly proud of is the fact that all
of the recommendations that FACA made were with the impediment
that they be voluntary, incentive-based, market-driven, and
also based on very sound science. That is why, as part of those
FACA recommendations related to risk management, making sure
that we study fully the impact that climate-smart practices
have on things like crop insurance so that decisions made to
either incentivize or to better manage risk on our operations
are based on the best available data and information. Then
also, as I mentioned earlier, encouraging the use of the 508(h)
authority within crop insurance to also kind of look at those
potential opportunities.
Also in risk management we want to make sure that the RMA
is not putting restrictions in place that limit farmers from
adopting climate practices that will also help better manage. I
think in a little way it goes both and forth, but very good
points about not tying the hands of farmers.
Senator Boozman. Good. Thank you, Madam Chair.
Senator Smith. Thank you, Senator Boozman.
We now turn to Senator Booker.
Senator Booker. Thank you, Madam Chairman and the Ranker as
well, thank you both.
There is a lot of talk today about strengthening the Title
I safety net for commodity crop growers, but we really have a
crisis with specialty crop folks. There is really no such
program for them. A lot of beginning farmers really do not have
an option and do not have any Federal safety net at all.
In the farm bill, we should be moving toward trying to
create a comparable safety net instead of incentives for
specialty crops. This is nutritionally what we say the majority
of our diet should be made up of.
Mr. Larew, can you please speak to me about the gaps in the
safety net for specialty crop farmers and what Congress can do
to provide more support for specialty crop farmers.
Mr. Larew. I appreciate the question because it really does
go to the heart of one of the things that Farmers Union is
pushing and that is making sure that we are building on the
success, as you made mention, of the risk management tools that
are currently there for many farmers, but we do have many
farmers who cannot access those, for a variety of reasons. Some
of the tools that I referenced earlier, whether it is Whole-
Farm Revenue coverage and so forth, which was intended to try
to capture some of that more diversified farming, specialty
crop growers who maybe brought in a range of different crops.
Unfortunately, it is not working, and we are not providing the
right incentives.
Looking for additional ways and flexibility, which may
require more direct input from RMA, if products are either not
being market properly and folks are not taking advantage of
them or may not know about them, or otherwise are an impediment
because the premiums are too costly.
I think that there are a number of ways there, but it
should be at the heart of what we work toward in this farm
bill, is to build out that opportunity for diversified farms
and specialty crop growers.
Senator Booker. Thanks, Mr. Larew. I also want to thank you
and folks from the NFU for their support of the OFF Act. I am
leading it Senator Mike Lee, which would reform our Federal
checkoff programs. You know this, that farmers are required to
pay into these checkoff programs, but ultimately too often they
see their own dollars being used in ways that really could hurt
them.
I just want to ask you a yes-or-no question. Do you agree
that it is important for Congress to include this checkoff
reform in the farm bill?
Mr. Larew. Very simply, yes. I would also just add that,
you know, we see a lot of success and a lot of good work being
done by checkoffs, and that is great, and we need to build on
that success. We also need to make sure, in any checkoff, that
farmers are center in that, and that is where I think there has
been a disconnect. Farmers Union, for a very long time, has
sought to improve checkoffs, and I think that there is lots of
room to do that, and we are happy to support.
Senator Booker. I really appreciate that, and transparency
as well.
Mr. Larew, finally, there has been a lot of focus on
Capitol Hill about the foreign ownership of farmland, which I
think is concerning. I also want to talk about what, in some
ways, in the immediate now, is a bigger threat, which is the
corporate ownership of farmland, the buying up of our farms by
big Wall Street hedge funds and pension funds.
Do you agree that this is a problem, and can you please
talk about the harm that this large-scale purchasing of
farmland by corporate investors is causing?
Mr. Larew. Oh, I think any time that farmland is out of
control of farmers we are headed in a very wrong path. Anything
that we can be doing to disincentive that and keep farmers
farming the land.
I would also add that in addition to corporate ownership,
or even foreign corporate ownership of land, that you also have
a growing trend, in some cases, where food companies and others
further down the chain acquiring land, renting it out to
farmers to then basically be a contract grower for that
particular land, using certain practices. This is a trend that,
again, takes farmers out of the center of farming, and Farmers
Union will be fighting that every step of the way.
Senator Booker. Yes. I mean, I have been stunned. I have
traveled from North Carolina to Alabama to the Midwest and then
across New Jersey, and some of the greatest Americans,
inspiring folk, who have been on land for generations, the math
is not working for them anymore because of these new kinds of
corporate ownerships, who often benefit from some of these
programs in ways that are intended to help farmers out. This,
to me, is a crisis in our country and one of the reasons why
farmers are getting less and less in terms of the percentage of
the consumer dollars.
Finding ways to recenter farmers and farm families that
have been on these farms for so long has got to be the key
spirit of the work that we do on the farm bill. Would you
agree?
Mr. Larew. Absolutely. It is one of the reasons why we are
pushing for our competition title, to make sure that fair and
competitive markets are there, because that is another piece of
this. When farmers have fair and competitive markets it allows
them to stay on the land much more easily and be able to be
farming into the future.
Senator Booker. Thank you very much. Thank you.
Senator Smith. Thank you, Senator Booker. Senator Ernst.
Senator Ernst. Yes. Thank you, Madam Chair and Ranking
Member, and thanks to all of our witnesses for being here today
and for your testimony.
While I travel across Iowa I visit all 99 counties every
single year in Iowa, and as I am out on that county tour, and
we have done a number of farm bill roundtables with various
stakeholders, our farmers, our ranchers, and what I am hearing
is that those farmers are really excited about the future. They
are consistently sharing with me about new science, technology,
innovations, and that is all great. They also tell me about the
challenges and uncertainty that farmers are facing with supply
chain disruptions. There is a lot of high input costs and
market volatility.
It is clear, and they mention this over and over again,
that risk management is their top priority for those farmers,
and we must continue to strengthen our farm safety net.
During the last farm bill I introduced legislation to
improve the ARC County Program, and we were successful in
passing several enhancements, including the use of crop
insurance yield data instead of NASS and making payments for
the physical location of the farm.
Mr. Duvall, we will start with you. How has ARC functioned
with those changes in place, and what suggestions do you and
your Farm Bureau members have to improve on that program?
Mr. Duvall. To ditto what you said, it is a very important
piece of the risk management tool that our farmers use, and I
have not found very many complaints on how it is operating. I
think our last farm bill has operated very well. We took a
change in how we developed the programs, and I think it has
worked very well.
Senator Ernst. Good. I appreciate that feedback because we
always want to make sure that if there is room for improvement
we are improving those programs, and we are glad that what we
were able to work on in the last farm bill is proving
successful.
Mr. Duvall, there are a lot of disasters that we see
happening across the United States that is impacting a lot of
our farmers and ranchers. In Iowa, for example, we had a
derecho just a couple of years ago that destroyed many Iowa
farms.
Can you explain your farmer members' experience with the
current ARC maximum payment rate and how it has limited
assistance?
Mr. Duvall. I am not sure I can speak to that.
Senator Ernst. Okay. Do you have any thoughts on that, Mr.
Larew?
Mr. Larew. I think that those maximums in there very simply
just limit the ability that those programs have to be helpful
when they are called upon to be the safety net. Without getting
any deeper than that, we certainly want to see those changed.
Senator Ernst. Yes. You would both also state, though, that
because of some of the weather events it is extremely important
to have these protections in place. Correct?
Mr. Larew. Yes.
Mr. Duvall. Very much, and crop insurance reacts a lot
faster than ad hoc. When farmers participate in that risk
management tool, the claims are made, and they get return on
their investment a lot quicker than they would through ad hoc.
Senator Ernst. Yes, absolutely. I appreciate that. I know
how important that crop insurance is, and again, hear that so
much from our farmers. That is one thing that I stress to
people that are not in ag country, because for some reason they
think the entirety of the farm bill is crop insurance. I always
have to make the point that it is such an insignificant--not
insignificant--but small amount within the farm bill is
actually crop insurance, and the vast majority of the farm bill
is actually the food bill. I really appreciate your comments
this morning, and I appreciate the folks on this Committee that
are working very hard to make sure that crop insurance stays
available to those who need it.
Thank you very much.
Senator Smith. Thank you. Senator Hoeven.
Senator Hoeven. Thank you, Madam Chair, and thanks for
holding this hearing, and thanks to both of the witnesses for
coming today.
My first question to both of you just picks up on something
that Senator Ernst just mentioned. Since less than 20 percent
of the farm bill now actually supports our producers, is it not
vitally important that we make sure that it is adequate to
support those producers that produce the highest quality,
lowest cost food supply, which not only benefits all the folks
that are on Supplemental Nutrition Assistance Payments but
everybody in America. Would you agree with that? It is very
important that we get the 20 percent that goes to farmers
right, and that it is adequately resourced. Would you agree
with that, each of you?
Mr. Duvall. We would.
Mr. Larew. Yes.
Senator Hoeven. Good. Along those lines, producers over and
over tell me, and I think others, that crop insurance is their
No. 1 risk management tool. Would you agree with that, and does
that not mean that we need to make sure that it is adequately
updated and resourced for them? Would you both agree with that?
Mr. Duvall. Yes.
Mr. Larew. Yes.
Senator Hoeven. How about the countercyclical safety net?
Right now we have ARC and PLC. Do you both believe it needs to
be updated, both ARC and PLC, so that it provides the necessary
support now? Would you both agree with that? Any
recommendations you would have to doing that, unless you do not
agree. Then I do not want to hear your recommendations.
[Laughter.]
Mr. Larew. I certainly agree, and we do think it is time to
increase the reference prices and those price triggers in both
programs, and certainly we would also advocate and encourage
the Committee to consider a dual enrollment option also of ARC
and PLC.
Senator Hoeven. The flexibility is important.
Mr. Larew. Absolutely.
Senator Hoeven. Mr. Duvall?
Mr. Duvall. I would agree. Also, it is vitally important
that we recognize what it really costs to grow a crop. On my
farm this year I paid 300 percent more for nitrogen than I did
last year, 300 percent. Who can absorb that in their budget and
continue to operate? No one can.
Senator Hoeven. Right. Both fuel and fertilizer inputs are,
yes, much higher for our producers.
Then along those lines, wouldn't you both agree that if we
get this right, that reduces the need for ad hoc disaster
assistance in the out years. Would you both agree with that?
Mr. Duvall. Yes.
Mr. Larew. We hope.
Senator Hoeven. Well, I understand. If we need it, I am
going to be there working with you. Getting this right should
help mitigate that need, should it not?
Mr. Larew. Absolutely.
Senator Hoeven. You both agree with that.
For our livestock producers, obviously we have got to work
on markets, on competition, on transparency. Would you both
agree with that?
Mr. Larew. Yes.
Mr. Duvall. Yes.
Senator Hoeven. Then also talk to me about both Livestock
Indemnity Program (LIP), and Emergency Livestock Assistance
Program (ELAP). Shouldn't we do more with those two programs so
that, for our livestock producers, they have some of that same
type of risk management that our farmers do, and do you have
recommendations on those livestock programs, specifically, LIP,
ELAP, or others? Mr. Duvall.
Mr. Duvall. I do not have the recommendations to give to
you today, but we can do that through staff. Yes, I think it is
just as important to make sure that our livestock producers
have the same risk management tools that we would in row crop
areas.
Senator Hoeven. Thank you. Mr. Larew?
Mr. Larew. Absolutely. The need is there. We ought to work
to address it.
Senator Hoeven. Okay. Let us talk about conservation
programs, I know programs that are very important to our
Chairman. In terms of these programs, it seems to me that for
these programs to work they need to be farmer friendly. They
need to be farmer friendly so that hit actually helps the
producer out there. They are the landowner, right? In terms of
these programs, I think it is very important that they are
voluntary, and it is not a one-size-fits-all.
Starting with you, Mr. Duvall, would you comment in regard
to those points?
Mr. Duvall. You know, we mentioned earlier that all regions
across the country are different, so conservation programs are
different from one region to the other. Climate projects are
different from one region to the other. One size does not fit
all. We have to have the research and development dollars being
spent to give us the right practices that we need to be in, in
conservation, and then we need to make sure that the moneys are
there, available.
I mentioned earlier that the list for EQIP, all my working
years have been long, long, long, and a lot of times I would
get into it, and a lot of times I would not get into it.
Senator Hoeven. Right. It is a big, diverse world out there
in agriculture, so voluntary and not one-size-fit-all is
vitally important for the success of these programs.
Mr. Duvall. That is exactly right.
Senator Hoeven. Mr. Larew?
Mr. Larew. Yes. I would just echo that I think the success
of that particular model of being voluntary and having that
flexibility in there is proven out by the fact that many of
these programs have historically been oversubscribed and
underfunded. Making sure that we have the resources in there to
serve as many as possible is really important.
Senator Hoeven. Thanks to both of you. Thank you, Madam
Chair.
Senator Smith. Thank you, Senator Hoeven. Senator Grassley.
Senator Grassley. Thank you, Madam Chairman.
First, I want to say my that long-held belief is that farm
policy should be a limited safety net that helps farmers
weather the storm of natural disasters and any unpredictable
thing that affects commodity markets, and there are plenty of
things like embargos and things like that, that can do great
damage.
Anyway, there is a lot of talk about the need to increase
reference prices because of falling farm income. According to
USDA data, we will see net farm income drop slightly this year,
but we will have to remember that in 2022, the United States
set a record in farm income. Farm safety is there to help
mitigate losses, not just increase producers' bottom lines,
during times of relatively high commodity prices.
As Ranking Member of the Budget Committee, I care about how
we are saddling future generations with our debt. The
fundamental problem that we have in the Federal budget is not
one of under-taxation but of overspending.
Mr. Duvall, I continue to hear that we need to improve and
strengthen the farm safety net. Do you have any idea of ways of
doing that without spending more money?
[Laughter.]
Mr. Duvall. I wish I did. I would get the prize of the day.
By the way, it is good to see you here and looking so healthy.
Senator Grassley. Thank you. Thank you.
Mr. Duvall. That is a tough question. How do you do it and
not spend more money. I think we have just got to make sure
that we determine what is going to keep our safety net strong
and determine what it is going to take to keep our farmers
strong, so that we can keep our national security strong. To
determine what that is, the amount of money it is going to take
to do that, is really up to Congress to do that. We are here to
help you in any way, to give you the information you need to do
that. To do it without any more money, I do not have any
suggestions in that area.
Senator Grassley. Well, let me suggestion to you, and you
come from southern agriculture that does like Grassley's idea
of limitation on what one farm can get out of the farm program.
For you and Mr. Larew I have this question, but before I
ask the question, rules that you must be actively engaged in
farming to be eligible for commodity price support programs
were intended by Congress to make sure that the farm subsidies
made it directly to the hands of our country's hardworking
farmers. However, in 2020, the USDA rules exempt all family
farms from the requirement, which we know that USDA defines as
98 percent of all farms.
To you two, is it fair to the taxpayer and smaller farms
that do not qualify that extended family members, including
siblings, cousins, nephews, nieces, can all receive the
$250,000 annual from the Federal Government, even though they
have not done a tick of farm work over the last year? In your
opinion, how many hours would be needed for someone to be
actively engaged in farming? Remember, this question comes from
the fact that 10 percent of the biggest farmers get 70 percent
of the benefits of the farm program.
Mr. Larew.
Mr. Larew. National Farmers Union strongly supports
actively engaged provisions that limit payments to those who
are truly invested in management and labor and provisions. We
certainly would be willing to work to look for ways to ensure
that those rules are being met, as intended by Congress.
Mr. Duvall. I would agree with that, but we need to make
sure that we understand that farm operations, family farm
operations do not look the same as they did 30, 40 years ago.
Just for the sake of efficiencies, we have family farm
operations that are made up of cousins and second cousins and
sisters and brothers, all farming together, using the same
equipment, overlapping work responsibilities, and we need to
make sure that those people that are actively working are able
to be able to participate in those programs.
Senator Grassley. Thank you, Madam Chairman.
Senator Smith. Thank you, Senator Grassley.
Senator Thune, I believe you are next.
Senator Thune. Well, I am not officially on this
Subcommittee, Madam Chair, but thank you for the opportunity to
be here to ask some questions. Thank you to our panelists here
today.
Obviously, agriculture is the No. 1 industry in South
Dakota, incredibly important to our State, and so the farm bill
is always an important conversation, and I hope as we move
forward we can enact policy that will be good for the
prosperity of agriculture and our rural economy in this
country. I would like to, just if I might, ask a couple of
questions with regard to Title I of the farm bill, the
commodity title, and what thoughts or suggestions you all might
have. I assume maybe you covered this already, but if you could
at least reiterate your thoughts about what we do with ARC and
PLC.
We know crop insurance is the cornerstone in terms of the
farm safety net, but those programs complement that, and a lot
has changed since we lived the last farm bill in 2018, with
respect to reference prices. Could you give us perhaps your
thoughts about what we might do to shore up that aspect of our
farm policy?
Mr. Larew. I appreciate the question because in terms of
the safety net, and ARC and PLC in particular, we think that
they are basically strong provisions providing support that we
feel needs to be updated to reflect kind of additional costs
out there. Raising reference prices is really critical in that.
I would also just highlight that in spite of the land grant
economist models of what farmers potentially should choose
between ARC and PLC, for many producers it still a little bit
of a guessing game out there about what is that year going to
look like, which program is going to provide the better support
for my operation. While the yearly kind of election is
important, Farmers Union would like the Committee to explore a
dual enrollment of ARC and PLC as one of the additional
operations that would be part of the suite.
Mr. Duvall. Mr. Larew has represented it very well, and I
would just reiterate the biggest change we have seen is in the
cost of production, the cost of us producing those products. To
make sure that that safety net is accurate it needs to be
updated as to what the real cost of production is.
Senator Thune. You continue to support annual election of
PLC and ARC?
Mr. Duvall. Yes, sir.
Senator Thune. Farmers Union is dual, basically, as opposed
to--okay. All right. Well, that was a provision that we had
included, that I worked to get included in the 2018 Farm Bill,
and it is available, of course, in 2022 and 2023, as well.
Mr. Larew, in your testimony you discussed the Soil Health
and Income Protection Program, which I authored for the 2018
Farm Bill. SHIP has provided producers in the Prairie Pothole
States with a short-term option to conserve their least-
productive land, which unlike the CRP program requires a
commitment of only three to five years.
Could you maybe describe how a SHIP reauthorization and
expansion could help producers enhance their operations?
Mr. Larew. Absolutely. First of all, we would just thank
you for the leadership and the vision in this provision. It has
enabled producers to have a great deal of flexibility in that
Prairie Pothole region for land that is marginal and should not
be in production. Providing the shorter-term contracts in
exchange for partial rental payment there has really enabled
producers to have that flexibility of production in a given
year or series of year.
We would certainly support authorization of that, and
possibly looking at expanding that model to allow that same
sort of flexibility of taking marginal land out of production
on a shorter-term basis to larger parts of the country.
Senator Thune. Mr. Duvall, you, I think, would acknowledge,
and I think most would, as I said earlier, that crop insurance
is a critically important tool to mitigate risks associated
with production agriculture, and maybe you could just briefly
describe the Farm Bureau's ideas to improve that program in the
next farm bill.
Mr. Duvall. Crop insurance?
Senator Thune. Yes.
Mr. Duvall. Well, like we said earlier, we need to make
sure we have the funding and support for it. We need to broaden
it and improve it, and by broaden it I mean making sure that
all commodities have access to affordable crop insurance. It
has to be funded at a level that it does not dilute it down to
where it is not an effective risk management tool.
Senator Thune. Okay. Thank you, Madam Chair. Thank for your
indulgence. My time has expired, but I would, to perhaps get
you both on the record, if I can, with regard to some of the
CRP changes that we are proposing, I, along with Senator
Klobuchar, are proposing to make in this bill, to make it a
more effective working lands-oriented program in our farm
policy. If I could get you--I have got a couple of questions
for the record that I will submit.
Thank you, Madam Chair.
Senator Smith. Thank you very much.
Seeing no further members joining the Committee for this
first panel, we will close down the first panel and welcome the
second panel to the table here.
Thank you very much, President Larew and President Duvall.
We greatly appreciated your testimony and you answering our
questions so ably.
[Pause.]
Senator Smith. Well, good morning, and welcome to our
second panel. We will start with witness introductions, and we
will begin with Mr. Ackerman, and Senator Stabenow is
introducing Mr. Ackerman today.
Senator Stabenow. Well, thank you so much. It is great to
see you, and thank you again, Chairwoman, for the opportunity
to introduce my constituent, Greg Ackerman. Mr. Ackerman, who
hails from Vassar, Michigan, has farmed for 38 years and grows
dry beans, wheat, sugarbeets, corn, and soybeans. Today he is
testifying in his capacity as the Past Chairman of the Michigan
Bean Commission and as a Michigan Delegate to the U.S. Dry Bean
Council.
Thank you so much for being here. We look forward to
hearing your testimony.
Senator Smith. Thank you. Next, we would like to welcome
Mr. Kody Carson, Past Chair of the National Sorghum Producers.
Kody and his wife, Kimbra, operate the family farm in Lamb and
Hale Counties, Texas, where they grow sorghum, cotton, wheat,
and produce cattle. Kody currently serves as Past Chair of the
National Sorghum Producers. Welcome.
Then I would like to welcome Mr. Brent Cheyne--am I saying
your name correctly? Thank you--President of the National
Association of Wheat Growers. Mr. Cheyne serves as the National
Association of Wheat Growers' president. He farms with his son
near Klamath Falls, in southern Oregon, where he raises wheat,
barley, oats, and alfalfa, and Angus cattle.
Next, welcome to Mr. Blake Gendebien, Vice Chair of Agri-
Mark Family Dairy Farms Co-op. Blake and his family operate a
500-cow dairy and farm 1,200 acres of alfalfa, corn, and
soybeans in New York. Blake currently serves as Vice Chair of
Agri-Mark, his dairy cooperative.
Next we have Mr. Rich Hillman, of Hillman Farms, on behalf
of USA Rice Federation, and Senator Boozman will introduce Mr.
Hillman.
Senator Boozman. Thank you, Madam Chair, and it is an honor
to introduce Mr. Rich Hillman. Rich would tell you, with pride,
that he is a sixth-generation farmer in Lonoke County,
Arkansas, where he grows rice, soybeans, and corn, and that the
main reason he could be here and testify today is because the
seventh generation is back home running the farm. We are
grateful that you could make it, Rich, because you are so well-
positioned to speak on issues affecting the broader needs of
farmers in Arkansas.
Rich serves on the USA Rice Farmers board of directors as
Vice Chairman of the Board for Riceland and Foods and
represents his State well as the President of the Arkansas Farm
Bureau.
I always tell people back in the State to grab me by the
lapels and let me know what Congress needs to be doing better.
Rich takes that literally, so we appreciate him very, very
much. We are lucky to have him in Arkansas and grateful he took
time away from the farm to be with us today.
Thank you, Madam Chair.
Senator Smith. Thank you so much.
Next, we would like to welcome Mr. Patrick Johnson, who
will be introduced by Senator Hyde-Smith.
Senator Hyde-Smith. Thank you, Madam Chairwoman, and it is
my pleasure to introduce Mr. Patrick Johnson, a cotton producer
from Tunica, Mississippi. Mr. Johnson serves on the National
Cotton Council board of directors and chairs the American
Cotton Producers Farm Policy Task Force.
Patrick wears a lot of hats. He is also currently a member
of the EPA Pesticide Policy Dialogue Committee, a director for
Tunica County Farm Bureau, and a Commissioner for the
Mississippi Department of Environmental Quality. He has held
previous roles in many other organizations, and recently
completed a term as President of Delta Council, which you will
be speaking at, Ranking Member Boozman, this year, an economic
development and agricultural organization in the Mississippi
Delta. We certainly appreciate Senator Boozman participating.
He is a graduate of the University of Mississippi and
joined his current farming operation in 1996. Mr. Johnson lives
in Tunica with his wife Emily.
Welcome, Mr. Johnson. I will certainly look forward to your
testimony today.
Senator Smith. Thank you so much.
Next, we would like to welcome Mr. Caleb Ragland, who is
Secretary of the American Soybean Association. Mr. Ragland is a
farmer from Magnolia, Kentucky, where he farms 4,000 acres of
soybeans, corn, and winter wheat. Welcome to the Committee.
Mr. Neil Rockstad, welcome to the Committee. Mr. Rockstad
is Vice President of the American Sugarbeet Growers
Association, a fellow Minnesotan. Mr. Rockstad and his wife
Elizabeth farm near Ada, Minnesota, where they raise wheat,
soybeans, corn, and sugarbeets on land that was once farmed by
three of their grandparents and three great-grandparents. Neil
currently serves as President of the Red River Valley Sugarbeet
Growers Association board of directors and serves as Vice
President on the American Sugarbeet Growers Association board
of directors. Welcome.
Ms. Karla Baker Thompson, welcome to the Subcommittee. She
is Vice President of J.E.T Farms and Georgia Integrity Farmers.
She is a farmer living in Georgia and attorney by training. She
previously practiced business and insurance law before moving
to southwest Georgia to work with her husband Aaron on his
family farm. Their farms are in Georgia and Florida, where they
grow peanuts, sweet corn, green beans, blueberries, and
sugarcane.
Last but certainly not least, my friend and fellow
Minnesotan, Mr. Harold Wolle, who is First Vice President of
the National Corn Growers Association. Harold is from Madelina,
Minnesota, where I have visited. He is transitioning his farm
to his son, Matt, who rents the tillable land of his ground,
which I think is about 1,700 acres. Mr. Wolle also has 200
acres enrolled in the CRP program. As NCGA First Vice
President, Harold serves as the First Vice President of the
National Corn Growers Association Foundation and on the Finance
Committee, and on the State level, Harold is a Past President
of Minnesota Corn Growers. Welcome so much to the Committee.
Now, you each have five minutes for your opening
statements. There is a clock in front of you to help guide you
through, and we will certainly take your full written statement
to be made a part of the record.
Mr. Ackerman, you are recognized for your opening
statement.
STATEMENT OF GREG ACKERMAN, PAST CHAIR OF THE MICHIGAN BEAN
COMMISSION; DELEGATE TO THE U.S. DRY BEAN COUNCIL, VASSAR, MI
Mr. Ackerman. Thank you for that introduction, Senator.
First off, I would like to take this opportunity to thank you
for being able to testify here today and to represent the dry
bean growers across the U.S.
As the Senator said, my name is Greg Ackerman, a farmer
from Vassar, Michigan, past Chairman of the Michigan Bean
Commission, and current Delegate to the U.S. Dry Bean Council.
On our family farm we currently grow soybeans, corn,
sugarbeets, wheat, and dry edible beans including navy beans,
black beans, and small red beans.
Dry bean production fits really well under our operation
and has a unique sustainability story to tell. They are a
short-season crop that does not need much water or fertilizer.
Dry beans typically grow between 90 and 100 days from plant to
harvest, meaning you can plant them the first of June and
harvest them the first week of September. With that short of a
season crop, it allows us to benefit by utilizing cover crops
in our rotation, which builds soil health.
In addition, we are proud to be producers of a very health,
nutrient dense, plant-based superfood. Many studies have shown
when dry beans are used in human diets it has proven to lower
the risk of cancer, improve gut health, and lower the risk of
obesity. I believe beans are part of the solution to solving
world hunger and are also a piece of the solution to climate
change.
Some of the farm bill Federal policy priorities for our
industry include, and what we talked quite a bit about already,
was maintain funding for crop insurance. This is the sole farm
safety net program for dry bean producers. This program should
be maintained and expanded, where possible. Federal support for
insurance premiums increases participation for coverage carried
by growers. The more participation and coverage provided
through crop insurance, the less need there is for ad hoc
disaster assistance. The fact that dry beans are not part of
the farm program authorized under Title I of the farm bill,
this makes the Federal crop insurance even more vital for our
growers.
Increased funding for MAP and FMD, something you have not
heard of yet here today. The U.S. Dry Bean Council, along with
70 other agricultural organizations receive MAP and FMD funds.
Both programs are authorized in the farm bill. The spending
level for MAP and FMD have been flat for 20 years.
Sequestration, inflation, administrative fees have all reduced
the real funding available to these organizations.
Continuation of the McGovern-Dole International Food for
Education and Child Nutrition Program. This program supports
education, child development, and food security in insecure
countries. The program authorized under the farm bill provides
for the donation of U.S. agriculture commodities, including dry
beans, as well as financial and technical assistance to support
school feeding and material and child nutrition programs.
Continuation of the sclerotinia initiative. U.S. Dry Bean
Council requests reauthorization of the National Sclerotinia
Initiative under the farm bill. The goal of the NSI is to
employ a coordinated research strategy to minimize the
devastating effects of sclerotinia, better known as white mold,
which causes serious economic loss by negatively impacting crop
quality and yields that impact our growers' bottom lines. This
also impacts the lines as a soybean producer as well.
Finally, trade. Since this Subcommittee jurisdiction
includes trade issues, we would like to take this opportunity
to urge you to renew support for expanded trade and new trade
agreements. With this competitive environment changing,
particularly in the post-pandemic world, the U.S. dry bean
industry needs competitive trade advantages around the world.
We continue to suffer from lost markets in the EU and the U.K.
as a result of years of retaliatory tariffs, also known as 232
tariffs. Prior to the tariffs, the EU was a large importer of
U.S. dry beans.
This topic personally hits home to me. As a representative
of the United States Dry Bean Council, I personally had the
opportunity to attend back-to-back trade missions to the EU and
the U.K., while the tariffs were in place. We met with
government officials such as the U.K. Department of
International Trade, USDA's Foreign Ag Service, Trade
Ambassador to the U.S., and the Director General for Trade of
the European Commission. We also met with many end users that
typically use our products. A couple of the larger ones you may
have heard of would be Kraft Heinz and Princess Foods.
Unfortunately, dry beans were just a victim that stemmed
from the retaliatory tariffs. When these tariffs were
eventually removed in June 2022, our industry was thinking this
region would be back in the U.S. market, but that has not been
the case today. Once you lose these markets and lets others in,
build those relationships and figure out how to compete, not
only on the production side but on the quality side of the
U.S., it is hard to earn those markets back.
Please consider these priorities as you move through the
complexities of this farm bill, and thank you again for the
opportunity to testify here today.
[The prepared statement of Mr. Ackerman can be found on
page 77 in the appendix.]
Senator Smith. Thank you very much.
Mr. Carson.
STATEMENT OF KODY CARSON, PAST CHAIRMAN, NATIONAL SORGHUM
PRODUCERS, LUBBOCK, TX
Mr. Carson. Well, good morning. Thank you, Chairwoman Smith
and Ranking Member Hyde-Smith, for the opportunity to be with
the Committee today.
As previously stated, my name is Kody Carson, and I farm
with my wife Kimber in Lamb and Hale Counties of Texas. I
served as the immediate Past Chairman of the National Sorghum
Producers Board of Directors, and I think that with the
exception of dairy and rice, I either grow or have grown every
crop that is represented here today. Very few of us farmers are
monocultures. I appreciate my colleagues being here.
It is an honor to be here today, and I hope that my
testimony on behalf of the National Sorghum Producers, but more
importantly as a farmer, will be helpful to you.
I would like to begin by giving a brief state of where the
sorghum industry currently is. Sorghum farmers across the
Plains States are facing an exceptional drought, and we have
been for several years now. Farmers in these States have been
hammered with intense drought conditions heading into the
harvests of last summer, and those conditions remain as we head
into this year's planting season. Out of the hundreds of
sorghum acres I planted last year, I literally harvested one
field. The national average sorghum yield was the lowest our
industry has seen since the 1960's.
In addition to historic drought impacting our operations,
market volatility, inflationary pressures, and higher expenses,
coupled with lower projections for crops cash receipts, are
only adding to the stress and uncertainty we face in
agricultural production today.
We are fortunate to have tools that can help sorghum
producers through these extreme events that are beyond our
control and in order to stay in business. Items such as Title
I, crop insurance, and congressionally authorized ad hoc
assistance programs have been invaluable in these stressful
times. Due to the increasing severity of these challenges we
face, we believe farmers and ranchers need a stronger farm
safety net to provide predictability and certainty for
producers and lenders.
It is also clear that more resources will be necessary to
enact a strong farm bill this year, as there is simply a major
shortfall in the safety net funding compared to our historic
levels. My cost of production has also increased, most on the
order of 50 percent, some 100. As Mr. Duvall stated, some
inputs are up to 300 percent higher.
While the changes in the 2018 Farm Bill have been helpful,
given the level and speed at which these costs have increased
statutory PLC reference prices are now far too low to provide
an effective support, in light of the many risk factors we are
currently facing. The same is true of marketing loans, which
remain an important cash-flow tool for farmers, but now they
are also low relative to our current risk.
Sorghum producers are grateful for the wisdom of this
Committee typing the reference price to the market with an
escalator in the 2018 Farm Bill, as it will create some
improvement to the level of certainty and confidence of sorghum
farmers. However, given spiraling input costs, there is room
for improvement in that as well.
Crop insurance is vital for sorghum producers, and the
tools has been critical in helping us manage the ongoing
drought conditions that are decimating the Sorghum Belt.
Availability of products and insurance ratings, however, can
have a very real, local impact on plantings, and we believe the
Committee can take measures to improve in this area.
Due to sorghum's ability to withstand short periods of
drought and heat better than most other crops, farmers do tend
to deploy sorghum more aggressively when our production outlook
is bleak. This fact exposes the crop to extra environmental
stress and high-risk situations, and as a result, sorghum
transitional yields suffer as do our insurance product ratings
and cost to participate, compared to some other crops.
Fortunately, RMA announced a new crop insurance option last
year for irrigated sorghum farmers that is now available in the
2023 growing season. This option benchmarks sorghum to corn for
a higher guarantee for less money, and will be available as a
pilot program to farmers in certain counties in Kansas,
Oklahoma, and Texas.
We continue to work closely with RMA and look forward to
working with this Committee to buildupon these efforts to
provide meaningful solutions to sorghum farmers. As we back out
to look at a bigger picture, sorghum is always competing for
acreage to supply our growing market. Most of that competition
is with soybeans and corn in the northern portion of the
Sorghum Belt, where their insurance rates are simply better
than those I just described. With respect to cotton in the
south, they have options of higher levels of coverage at higher
levels of premium cost share that we do not have, and we would
just ask for parity.
Sorghum needs the ability to buy insurance products at
similar high levels to compete for acres. We believe this will
serve all farmers and foster a better use of resources over
time to help address our parity and our acreage competition
concerns.
We appreciate what this Committee is looking at and ways to
address our weather disasters through improvements, and we
believe that a cost-share policy for sorghum is a worthwhile
pursuit. We look forward to working with this Committee and our
fellow commodity organizations.
I would like to personally thank this full Committee for
the letter that was sent on to the Budget Committee. It had
some very valuable information, and I appreciate all the
thought process that was sent into that.
With that, Madam Chairman, I just want to say thank you, as
a farmer member, and look forward to National Sorghum Producers
being able to assist you in any way we can.
[The prepared statement of Mr. Carson can be found on page
80 in the appendix.]
Senator Smith. Thank you so much.
Mr. Cheyne.
STATEMENT OF BRENT CHEYNE, PRESIDENT, NATIONAL ASSOCIATION OF
WHEAT GROWERS, KLAMATH FALLS, OR
Mr. Cheyne. I thank the Chair, Ranking Member, and members
of the Subcommittee for the opportunity to testify and provide
a wheat farmer perspective on the farm safety net. My name is
Brent Cheyne, a farmer from Klamath Falls, Oregon, where I
operated a certified Century Farm with my son. We pride
ourselves in creating a quality product, and my son is
committed to carrying on the family tradition and business of
working hard and being a good steward of the land.
I also currently serve as the President of the National
Association of Wheat Growers (NAWG). NAWG is a federation of
growers from 20 wheat States that represents wheat producers'
needs and interests in Washington, DC. Our members feel it is
essential to testify today.
With rising input costs, decreasing net farm income, and
the smallest winter wheat crop since the 1960's, it is very
important that we take this opportunity to enhance the farming
safety net. The commodity, crop insurance, and trade programs
play an important role in preserving rural economies, keeping
food supply stable, and keeping farmers on the family land.
NAWG's No. 1 priority is protecting crop insurance. Cuts
were made in previous farm bills in an effort to be more
fiscally conservative. This directly led to increased ad hoc
disaster programs as the farming safety net came up short. It
is imperative that we avoid similar cuts in the future. Not
only does crop insurance protect farmers, it protects the banks
and small businesses that help supply them and make rural
communities and economies thrive.
My farm utilizes a yield protection policy with a coverage
of 80 percent. We have a stake in the premiums, and it helps
protect us in the case of disaster or yield loss. While we
would like to insure the farm at a higher level, the policies
are too expensive. Congress should take a hard look at this
issue and make the program more affordable at higher levels of
coverage. In short, NAWG asks that Congress make a good program
better.
The PLC reference price has never changed, and prices have
risen to a point that it would take a 38 percent decrease
before triggering a payment. Any industry that loses over a
third of its price would struggle to survive. NAWG asks that
this Committee significantly increase the wheat PLC reference
price so that it better reflects the current state of the
agriculture economy.
Like everything else in the economy, funds for trade
promotion programs like MAP and FMD have lost their
effectiveness from inflation and sequestration. NAWG would like
to see the funding double for these programs, and thanks the
Senators here that sponsored the Expanding Agricultural Export
Act. These programs have excellent return on investment and
work to expand the markets for our products.
In a time when our competitors are investing in expanding
their markets, we need to be doing the same. While ad hoc
programs were needed to fill gaps left by cuts in the farm
safety net, these programs were after the fact and lacked long-
term certainty. Many times the programs led to stress at our
USDA office, were complicated, and took a long time to reach
the ones that needed it the most. Farmers cannot rely on these
programs to mitigate the risks. It is imperative that Congress
strengthen the farm safety net programs that are predictable
and effective.
NAWG knows that these requests require money. However, the
farm bill has received spending cuts in the past. The farming
safety net makes up only two-tenths of one percent of Federal
spending. It is essential to keep food supplies stable and
rural economies thriving. This is why we joined with over 400
other agricultural organizations in a letter to the Budget
Committees requesting more resources. It would be a waste of an
opportunity to not make these investments in the farm bill.
Wheat farmers across the country are experiencing high
prices, but at extreme risk. My written testimony shows the
impact that inflation, interest rates, and severe drought are
already having on the farmer's bottom line. High prices are
meaningless when there is nothing to harvest, which many
farmers in winter wheat-producing areas of the country are
experiencing this year. Congress must act now to enhance the
farm safety net.
Thank you for the opportunity to testify at this hearing. I
look forward to your questions, and I even more greatly look
forward to the opportunity to work with you on the upcoming
2023 Farm Bill.
[The prepared statement of Mr. Cheyne can be found on page
86 in the appendix.]
Senator Smith. Thank you so much.
Next we have Mr. Gendebien.
STATEMENT OF BLAKE GENDEBIEN, VICE CHAIR, AGRI-MARK FAMILY
DAIRY FARM CO-OP, OGDENSBURG, NY
TESTIFYING ON BEHALF OF NATIONAL MILK PRODUCERS FEDERATION
Mr. Gendebien. Chair Smith, Ranking Member Hyde-Smith,
thank you for the opportunity to testify today. My name is
Blake Gendebien. My family and I own and operate Twin Mill
Farms, a dairy in northern New York.
I am proud to be Vice Chairman of Agri-Mark, a dairy
cooperative owned by more than 500 dairy farm families in New
York and New England. I am testifying today on behalf of the
National Milk Producers Federation, of which Agri-Mark is a
member.
I am pleased to offer comments on dairy policy. When this
Committee began its work on the last farm bill, dairy policy
was much less effective than it is today. The previous Margin
Protection Program, while well-intended, fell short of
providing the protection required of a valuable farm safety
net. Further, unlike row crop farmers, dairy farmers lacked
access to the risk management options that can help meet their
unique needs.
Dairy farmers are grateful for the work this Committee did
to reform the dairy safety net in both the 2018 Farm Bill and
the Bipartisan Budget Act of 2018, and I am grateful to all of
you for advocating for producers nationwide.
The Dairy Margin Coverage Program is a major improvement
over MPP and has performed as a strong safety net for dairy
farmers during difficult times. Since the program was
implemented in 2019, my farm has consistently purchased the
maximum coverage.
The next farm bill provides another opportunity to make
improvements. DMC's underlying production history calculation
is outdated. Dairy farmers need the opportunity to update their
production history to reflect more current production levels.
We are grateful to this Committee for enacting supplemental
dairy margin coverage payments to compensate farmers for
incremental increases as of 2019. It is critical that this
adjustment be continued and enhanced in the farm bill.
National Milk's Economic Policy Committee is reviewing
other potential improvements to DMC. The program currently
allows producers to pay lower premiums for the first five
million pounds. I believe a modest increase to this threshold
would benefit many family dairy farmers in the Northeast and
nationwide.
We are also grateful that dairy farmers now have access to
crop insurance-like tools such as Dairy Revenue Protection
(DRP) and Livestock Gross Margin Dairy. These programs give all
farmers the ability to adapt their risk management to their
needs. Further improvement would make these programs more
affordable for all producers, and that would enhance
participation as well.
Beyond these programs, the Federal Milk Marketing Order
system provides significant value and safeguards to dairy
farmers, cooperatives, and processors. Federal Orders are
designed to assure consumers an adequate supply of fluid milk
and to promote orderly marketing conditions for farmers.
However, the industry has changed significantly since the last
major updates in 2000.
To help the system reflect today's dairy sector, National
Milk has worked extensively over the past year, through a
comprehensive process to modernize the Federal Order system.
After more than 150 meetings, including dairy farmers and
cooperative experts, National Milk's board of directors gave
unanimous approval in March to a comprehensive Federal Order
proposal, and yesterday we submitted our petition to USDA for a
national hearing.
National Milk's proposal addresses numerous issues,
including restoring the previous ``higher of'' Class I mover.
The current mover enacted in the last farm bill was intended to
be revenue-neutral but has cost dairy farmers nationwide more
than $900 million due to market dynamics in both 2020 and 2022.
We are grateful for the pandemic reimbursements USDA and
Congress provided, but dairy farmers do not want to have policy
in place that requires the government to spend hundreds of
millions of dollars every time the current mover underperforms.
Our petition also includes an essential update to make
allowances, which have not changed since 2008, while
manufacturing costs have increased clearly. Many dairy farmers
like myself are members of cooperatives who own dairy
processing plants, and therefore want to set the make allowance
at the right level. In this context, we hope to work with this
Committee in the next farm bill to require USDA to conduct
mandatory plant cost studies every two years, and to report the
results. This would provide us with the information needed to
consider requesting future make allowance updates.
My written testimony covers key issues beyond the dairy
subtitle, including conservation, trade, nutrition, and near
and dear to my heart, farm stress programs.
Thank you again for the opportunity to testify. Thank you,
my fellow farmers here, and I am happy to answer any questions
you may have.
[The prepared statement of Mr. Gendebien can be found on
page 98 in the appendix.]
Senator Smith. Thank you so much.
Next we will turn to Mr. Hillman.
STATEMENT OF RICH HILLMAN, FARMER, HILLMAN FARMS, CARLISLE, AR
TESTIFYING ON BEHALF OF USA RICE FEDERATION
Mr. Hillman. Good morning, Chairwoman Smith, Ranking Member
Hyde-Smith, Chairwoman Stabenow, and Ranking Member Boozman,
and members of the Subcommittee, thank you for the opportunity
to testify here this morning. Senator Boozman, thank you for
the warm introduction. I am honored to testify this morning on
behalf of USA Rice, a national trade organization representing
all rice farmers and segments of the rice industry.
Rice is grown on about three million acres across the U.S.
Half of that rice is consumed domestically while the other half
is exported to more than 120 countries around the world. On
average, each rice farmer contributes about $1 million to their
local economy and employs six people. The broader $34 billion
rice industry supports more than 125,000 jobs nationwide.
Rice fields, the fields themselves, provide critical
habitat for migratory waterfowl and other wildlife, and
contribute substantially to biodiversity. More than 3.5 billion
people worldwide depend on rice as a staple food--3.5 billion
people. U.S. rice grown is accessible, affordable, and
nutritious.
Rice is not as fortunate as other commodities that saw a
large run-up in the market prices during 2020 and 2021, all
while contending with an unprecedented increase in costs of
production.
A Texas A&M University study in 2022, predicted two-thirds
of rice farms would have negative net cash farm income in the
2022 crop year. USDA also reports more than 30 percent increase
in operating costs, which we talked about here this morning. On
our farm, it was even higher.
Thank you all, and in particular Senator Boozman, for
providing vital assistance to rice farmers in 2022 crop year in
the 2023 Omnibus Appropriation bill. It was truly critical for
rice farmers, Senator.
The current cost of production is extremely higher than the
2012 levels, when current PLC reference prices was calculated
and established in the 2014 Farm Bill. That makes the current
program not a true safety net for rice farmers today.
In 1986, a long time ago, I purchased my first combine for
$100,000, or thereabouts. The stress that debt caused lost
sleep and a lot of worry. Although I was fortunate to have my
father as a backstop, I was determined to make that payment,
and paid that machine off. My son, who is a seventh-generation
farmer, and my brother, and I all have greater pressures and
challenges today. That combine is now $750,000.
The importance of that story is the economies of scale that
we have, and they have only become more evident. To keep pace
with capital and other costs, we must farm more land and take
on a lot more risk. As a high-cost input crop subject to severe
global market distortions due to predatory trade practices of
foreign countries, U.S. rice farmers are more vulnerable to the
impacts of inflation and global events that have caused
increased costs of fuel, fertilizer, labor, as well as the
highest interest rates many of the farmers, especially our
young farmers, have ever experienced in their careers. A
strengthened safety net would ultimately be more cost effective
for farmers and taxpayers than continued ad hoc programs.
The PLC program has traditionally been our true safety net,
especially for rice farming. It has allowed us to better
compete on a lopsided global playing field impacted by foreign
subsidies, tariffs, and non-tariff trade barriers. India
subsidizes its rice producers by upwards of 90 percent--90
percent--and injected billions to offset escalating input
costs. This is only one example of many predatory trade
practices used by foreign competitors, and we continue to ask
the U.S. to address blatant WTO violations.
USA Rice strongly believes reference prices under PLC need
to be increased and indexed to provide a safety net that
remains relevant over the long haul to ensure the long-term
viability of U.S. rice.
The work that you all do in this Subcommittee and on the
Senate Ag Committee is extremely important to the families that
I represent. It is important to me and my family, and please,
never underestimate what you do here in our Nation's Capital,
because it is so critical to those family farmers. I appreciate
all of your hard work and thank you for the opportunity this
morning.
[The prepared statement of Mr. Hillman can be found on page
103 in the appendix.]
Senator Smith. Thank you so much, Mr. Hillman.
Mr. Johnson, you are next.
STATEMENT OF PATRICK JOHNSON, PRODUCER AND DIRECTOR, NATIONAL
COTTON COUNCIL, TUNICA, MS
Mr. Johnson. Chair Smith and Ranking Member Hyde-Smith,
thank you for this opportunity to testify.
My name is Patrick Johnson. I am a partner in Cypress Brake
Planting Company, a family farming operation in the Mississippi
Delta, located in Tunica, Mississippi. My farm produces cotton,
rice, corn, soybeans, and what. I currently serve on the
National Cotton Council board of directors and chair the
American Cotton Producers Farm Policy Task Force.
The general structure of the 2018 Farm Bill has served the
industry well and should be maintained. However, additional
funding is necessary to address challenges, both on the farm
and throughout the supply chain. A strong cotton safety net
must consist of two key components: an effective commodity
policy that provides either price or revenue protection to
address prolonged periods of low prices and depressed market
conditions, and a strong and fully accessible suite of crop
insurance products that producers can purchase to tailor their
risk management.
Supply chain disruptions and geopolitical challenges have
led to a dramatic increase in production costs, leading to
tighter margins and decreased profitability. Total production
costs now range between 90 cents and $1 per pound, which is
well above futures prices, in the low 80's. When calculated
based on seed cotton, the cost of production is almost 48
cents, far above the PLC reference price of 36.7 cents per
pound. Today's production costs are diminishing the
effectiveness of the current reference price, which should be
increased.
Additionally, cotton producers should not face limits to
their crop insurance options. Eliminating the prohibition on
simultaneous enrollment in PLC and the Stacked Income
Protection Plan (STAX), would allow a grower to better tailor
their risk management options while also decreasing their
reliance on ad hoc disaster programs.
On the topic of financing, the non-recourse marketing loan
program for upland cotton remains vital for the U.S. cotton
industry. However, despite higher production costs, the maximum
level of the loan rate has remained at 52 cents, since 2002,
and should be increased to better reflect costs of production
and recent market prices.
Furthermore, various loan repayment provisions should be
modernized to better reflect the global market and higher
storage and logistics costs. These improvements include
allowing storage credits to better reflect actually storage
charges; determining a globally competitive Adjusted World
Price based on the three lowest international prices; limiting
the amount of the annual decline in the costs-to-market values;
and creating a 30-day window for finalizing the AWP.
We should also remember that not all cotton is the same.
The 2018 Farm Bill continued important programs for Pima
cotton, which is grown in parts of the West. The 2023 Farm Bill
should increase the Pima loan rate to a more reflective level
of pricing and costs of production. To ensure this commodity
remains competitive abroad, the next farm bill should also add
marketing loan functionality to the Pima loan and maintain both
the Pima Cotton Competitiveness Payment Program and the Pima
Cotton Trust Fund.
On the domestic manufacturing front, the Economic
Adjustment Assistance for Textile Mills has allowed investments
in new equipment and technology, thereby reducing costs,
increasing efficiency, and allowing U.S. mills to be more
competitive. To support American manufacturing, we urge
Congress to restore the rate of 4 cents per pound, which was in
place prior to 2012.
Tarde is vital to our industry, which is why the Market
Access Program (MAP) and Foreign Market Development Program
(FMD) are so important. Our industry supports the Coalition to
Promote U.S. Agriculture Exports' proposal to double funding
for both MAP and FMD.
Finally, our industry is opposed to any further tightening
of payment limits and program eligibility requirements. We are
encouraged that Congress has recognized this reality in recent
disaster assistance by including increased payment limit levels
for producers who realize the majority of their income from
their farming operation. This same consideration should be
given to Title I program limits in the next farm bill.
In closing, I encourage the Committee to write a farm bill
that provides long-term stability for the future and addresses
the challenges that continue to be faced by our industry.
Thank you for this opportunity, and I look forward to
answering your questions.
[The prepared statement of Mr. Johnson can be found on page
109 in the appendix.]
Senator Smith. Thank you, Mr. Johnson.
Mr. Ragland.
STATEMENT OF CALEB RAGLAND, SECRETARY, AMERICAN SOYBEAN
ASSOCIATION, MAGNOLIA, KY
Mr. Ragland. Good morning, Chairwoman Smith, Ranking Member
Hyde-Smith, and distinguished members of the Subcommittee.
Thank you for the invitation to provide testimony as you
develop the 2023 Farm Bill.
My name is Caleb Ragland, and I am a ninth-generation
farmer from Magnolia, Kentucky. I farm soybeans, corn, and
wheat with my wife Leanne and our three sons--Charlie, Cory,
and Carter. I am testifying on behalf of the American Soybean
Association.
ASA represents more than 500,000 soybeans farmers across
the 30 primary soybean-producing States. Nationally, U.S.
soybean farmers produced over 4 billion bushels last year on
over 87 million planted acres.
It is a busy season across soybean country, with farmers
working hard to get this year's crop in the ground. We hope
that at this time next year we will have a new farm bill in
place that provides farmers a strong safety net that is
stronger than what we have now. An effective safety net is
vital. It should give us farmers confidence to put out a crop
and know that we can keep the lights on when hard times hit.
In the next farm bill we need help with two priorities with
the farm safety net. One is protecting crop insurance and the
other is improving Title I farm safety net for soybeans.
We must protect crop insurance. This is the most effective
and important component of the farm safety net for soybean
farmers. Without crop insurance, the risks would be more than
many farmers and lenders could stand. It certainly would be for
me and my family. ASA urges you to protect crop insurance from
harmful amendments that may arise.
We must improve the Title I farm safety net. A predictable,
effective farm safety net is needed for the duration of the
next farm bill. In a February report, USDA projected a nearly
21 percent decline in net cash farm income in 2023, relative to
2022. This is a major cause for concern for farmers.
Soybean growers have already experienced firsthand the
challenges of an ineffective safety net. I will share with you
my experience during the trade war with China in 2018 and 2019.
The largest importer of soybeans in the world is China. Even
with the ongoing efforts to diversify and open new markets,
almost a third of all soybeans grown in the U.S. are destined
for China.
During the height of the trade war with China in 2018, U.S.
soy stopped flowing to the Chinese market in our peak export
period that fall. Soybean prices dropped significantly, but we
received no PLC benefits and little from the ARC program. USDA
stepped in with ad hoc, temporary support to farmers.
If the trade war that shrunk soybean demand by over 30
percent hardly triggered the farm safety net provided in the
current farm bill, it is difficult to envision a scenario that
would provide meaningful assistance without significant
improvements to the current reference price and program
elements of ARC and PLC.
Another challenge impacting the accessibility and
effectiveness of the farm safety net is the significant
disparity in recent soybean planted acres compared to base
acres, on which the ARC and PLC benefits are provided.
In 2022, soybeans were planted nationally on over 87
million acres. By comparison, soybean base totals 53 million
acres. Over 34 million acres of soybeans were not protected by
the soybean provisions of the ARC and PLC programs in 2022.
Thanks to a recent purchase of cropland that has increased
my own base acres, a quarter of my farm is now protected by ARC
and PLC. Again, one quarter, or 25 percent of my acres. This
does not make me feel confident about the farm safety net
available to me and the next generation of farmers and my
family.
An option to voluntarily update program acres based on a
more recent historical time period, would provide soybean
farmers greater access to the soybean safety net, is needed.
ASA urges an option to update base acres combined with other
improvements to the ARC and PLC programs.
Making improvements to the Title I farm safety net will
require funding. We know that the budget challenges are real
and will be difficult to navigate. We appreciate the Committee
sending the strong bipartisan letter of support to the Budget
Committee requesting funding for a successful farm bill.
ASA also led a letter to the Budget Committee signed by 400
organizations regarding the need for sufficient resources to
write a meaningful farm bill. We ask that you keep agriculture
in mind as budget discussions move forward on multiple fronts.
Thank you for hearing from farmers today. We appreciate the
opportunity to share testimony and your work to develop the
2023 Farm Bill.
[The prepared statement of Mr. Ragland can be found on page
119 in the appendix.]
Senator Smith. Thank you, Mr. Ragland.
Mr. Rockstad.
STATEMENT OF NEIL ROCKSTAD, VICE PRESIDENT, AMERICAN SUGARBEET
GROWERS ASSOCIATION, HENDRUM, MN
Mr. Rockstad. Chairwoman Smith, Ranking Member Hyde-Smith,
and members of the Subcommittee, good morning. Thank you for
the opportunity to testify before you on behalf of the American
Sugar Alliance. My name is Neil Rockstad. I am a farmer along
with my wife Elizabeth. We farm in Ada, Minnesota, where we
raise wheat, soybeans, corn, and sugarbeets. We are the fourth
generation in our families to farm, and with any luck I hope
that my daughters, Nora and Hazel, will have the opportunity to
become the fifth.
My family has raised sugarbeets for 75 years. I serve as
Vice President of the American Sugarbeet Growers Association.
This hearing is important for sugarbeet and sugarcane
farmers because Title I of the farm bill represents a critical
safety net for our farming families and the employees of our
sugar processors throughout the country.
The U.S. sugar industry generates more than 151,000 jobs,
spanning 24 States, and introduces $23 billion annually to the
U.S. economy. American consumers also benefit from a high-
quality, safe, reliable, and affordable source of sugar. That
natural sugar is used as a sweetener, preservative, and bulking
agent in 70 percent of packaged foods.
Additionally, our industry meets some of the highest labor
and environmental standards in the world. Through continuous
improvement in best management practices, we have made huge
strides in efficiency and sustainability. In fact, we have
increased sugar production by 14 percent, using 8 percent fewer
acres in just 20 years.
I would like to make three points today. First, American
farmers are threatened by less-efficient, subsidized, dumped
foreign sugar that usually sells well below the exporter's cost
of production. This makes the world sugar market the most
distorted commodity market in the world. Due to existing trade
agreements, the United States is already the third-largest
importer of sugar, accounting for about 30 percent of the U.S.
need.
Yet, as global supply chain disruptions from the pandemic
and the war in Ukraine have taught us, we must not become even
more dependent on those foreign suppliers. This is why an
effective sugar policy, which maintains a strong domestic
industry, is essential to the food security of our Nation.
Second, sugar policy is structured to operate at zero cost
to the U.S. taxpayer. It has operated at zero cost for 19 of
the past 20 years, and the USDA projects that it will operate
at zero cost for the next 10. That said, the loan rates for raw
and refined sugar have not kept up with the rising production
costs. Operating margins for our producers are being squeezed
due to rising input costs. For example, farmers today are
paying 87 percent more for diesel fuel and 141 percent more for
fertilizer than they did compared with December 2018. The
bottom line is that the current loan rate values no longer
provide a realistic safety net for our producers.
Since the early 1980's, we have lost 68 processing
facilities. The most recent closure is happening just this year
in northeastern Montana. It is not weather or production that
is causing these closures. It is economics. Once a facility
closes down it does not reopen. Those communities, those
regions, and those people face drastic changes. We would
support examining how the farm safety net could be updated to
better match actual operating costs for our producers.
Third, our producers are exposed to severe weather
disruptions, and while our farmers do have some insurance
products available, those are not as well developed or
affordable as they are for some other commodities. For
sugarbeets, policies are limited to yield-based coverage, and
they do not benefit from a revenue-based product. For
sugarcane, the Hurricane Insurance Program has been an
invaluable addition, but a preventive planting provision is
needed. We would encourage the Committee to provide help to
improve insurance coverage options.
Additionally, our producers have participated in WHIP+ and
ERP in the past. We are thankful that the USDA is working with
Texas sugarcane farmers and beet farmers on disaster aid. We
are certainly receptive to new efforts to providing standing
disaster coverage in ways that do not undermine crop insurance.
Sugar policy can provide an adequate safety net for
American farmers at zero cost to the taxpayer. It is a critical
that a strong policy remain in place to counter heavily
subsidized and unreliable foreign suppliers whose environmental
and labor standards simply do not measure up to our own.
Members of the Committee, on behalf of more than the 11,000
sugarbeet and sugarcane farmers in the United States and the
employees of our processing facilities, I thank you for
supporting strong U.S. sugar policy, and I welcome your
questions.
[The prepared statement of Mr. Rockstad can be found on
page 143 in the appendix.]
Senator Smith. Thank you so much, Mr. Rockstad.
Next we will hear from Ms. Baker Thompson.
STATEMENT OF KARLA BAKER THOMPSON, VICE PRESIDENT, J.E.T. FARMS
AND GEORGIA INTEGRITY FARMERS, CAMILLA, GA
TESTIFYING ON BEHALF OF U.S. PEANUT FEDERATION
Ms. Thompson. Chair Smith, Ranking Member Hyde-Smith,
members of the Subcommittee, thank you for the opportunity to
appear before you today to provide the peanut producers'
perspective on the farm safety net.
My name is Karla Thompson. I current farm in a family
business with my husband and my extended family in southwest
Georgia. We have a diversified farming operation where we grow
peanuts, fruit, and vegetables.
My family has been through a lot over the course of our
time as American farmers, and the COVID-19 pandemic, in
particular, really triggered a series of events on our farm and
those like it. Since 2020, we have seen supply chain
disruptions, inflation on key farm inputs, and labor shortages.
Even prior to 2020, the peanut industry already faced
difficulties. We had low prices due to trade issues, a reduced
market in China, and a non-tariff trade barrier in Europe and
in the U.K.
In addition to the financial stress of low market prices
and increased input costs, we have had to spend significantly
on equipment. Peanut farming requires not only your traditional
farming equipment but also high-cost, very specialized
equipment that is extremely expensive to purchase and maintain.
Dr. Stanley Fletcher of Abraham Baldwin Agricultural
College and Professor Emeritus at the University of Georgia,
has developed and maintained peanut representative farms from
2000 all the way until today. We currently have 22
representative farms spread across the country. Dr. Fletcher
reviewed the peanut representative farms' 2021 cost of
production compared to 2022 costs, and he found a significant
increase. From 2021 to 2022, the total cost of production per
ton increased by 26 percent.
Prior to this 2021 representative farm update, the peanut
reference price of $535 per ton did provide an effective safety
net for growers. According to Dr. Fletcher, the reference price
has not been a functional safety net since the 2021 crop.
Total variable input costs have increased 33 percent from
2021 to 2022. Where our 2021 cost of production was $546 per
ton, Dr. Fletcher reports our 2022 cost of production at
approximately $668 per ton.
On our farm alone, many of our expenses have almost doubled
since 2018. For instance, you have heard about fertilizer
costs. Ours have absolutely skyrocketed. Supply shortages
directly translated to pricing increases, and so our fertilizer
expenses have as much as doubled.
Labor costs have also been particular challenging. We
really believe in taking care of our team, so labor costs are
always the primary focus of our financial planning. Since 2018,
it has become increasingly difficult to plan for and cover
those costs.
One of the reasons that I am really proud to be an American
peanut farmer is because I am helping to provide nutritious
food for consumers. Peanuts contain 19 essential vitamins and
minerals, and they are one of the most affordable protein
sources for consumers. In fact, not far from my farm is a
processing facility for MANA, or MANA nutrition. MANA is a
nonprofit organization that produces a ready-to-use therapeutic
food made with fortified peanut paste. MANA is a great example
of how my family and peanut growers across the country can be
part of the solution for hunger.
What do we need from the 2023 Farm Bill? First, the U.S.
Peanut Federation supports an increase in the reference price.
Growers, shellers, and buying points are unified in our support
of the Price Loss Coverage Program as included in the 2018 Farm
Bill, with a reference price increase.
While the 2018 Farm Bill's Price Loss Coverage Program has
worked for peanut growers, the rise in input costs and costs of
production necessitates a reference price increase if this
program is to remain relevant as a farm safety net.
Second, the U.S. Peanut Federation supports a voluntary
base update that includes growers with and without current
peanut base acres.
I would like to thank all of the Committee members for all
of the work that you are doing on the 2023 Farm Bill. The
importance of the farm safety net cannot be understated for my
family's work as American farmers. I thank you for allowing me
to testify today, and I look forward to any questions that you
might have.
[The prepared statement of Ms. Thompson can be found on
page 152 in the appendix.]
Senator Smith. Thank you so much.
Mr. Wolle.
STATEMENT OF HAROLD WOLLE, FIRST VICE PRESIDENT, NATIONAL CORN
GROWERS ASSOCIATION, MADELIA, MN
Mr. Wolle. Chair Tina Smith, Ranking Member Cindy Hyde-
Smith, members of the Committee, thank you for the invitation
to testify today. My name is Harold Wolle. I am a family farmer
in Medelia, Minnesota, where I am transitioning the farm to my
son, who raises corn and soybeans. I currently serve as First
Vice President of the National Corn Growers Association.
Farmers across the country are busy today planting seeds
and preparing for a strong crop and future harvest. The
Committee's continued outreach is laying critical groundwork
for a strong, bipartisan farm bill. Corn growers are as
optimistic for this process as we are for this year's harvest.
This morning I will focus my testimony on NCGA's top farm
bill recommendations for crop insurance and the commodity
titles. The areas of emphasis for corn growers are summarized
in our key principles: protecting Federal crop insurance,
strengthening the producer safety net, bolstering U.S.-
international market development efforts, and supporting
voluntary conservation programs. Our farm bill recommendations
seek to make USDA programs more effective and responsive
through strategic investments and policy enhancements.
Federal crop insurance has a proven track record of helping
producers quickly respond to natural disasters. Corn growers
consistently rank crop insurance as the most important program
and title of the farm bill. We strongly oppose any efforts to
restrict producer access to crop insurance products and oppose
harmful program cuts that would negatively impact crop
insurance products, their delivery, or the sound structure of
the program.
One area where crop insurance can be improved is the cost
of coverage to producers. NCGA broadly supports increasing the
affordability of crop insurance. Many corn growers purchase
endorsement policies and higher levels of buy-up coverage, but
for others, the individual costs of purchasing coverage can
discourage higher levels of coverage.
In the commodity title the Agriculture Risk Coverage, ARC,
program, provides important countercyclical revenue coverage
for farmers. Corn growers have identified two places to improve
the program's effectiveness. Currently ARC county payment rates
may not exceed 10 percent of the county benchmark revenue. This
maximum payment rate has limited the assistance provided to
producers.
NCGA supports increasing the maximum rate above 10 percent
in order to provide increased assistance to growers who
experience significant revenue losses. For example, in 2020,
growers across Iowa suffered major losses due to the derecho.
The yield losses were widespread and deep enough for ARC county
to trigger payments in multiple counties, but the program's
effectiveness was restricted due to this limitation.
NCGA also recommends increasing the coverage level for ARC
county above the current 86 percent of the county revenue
benchmark, to make the program more responsive to revenue
losses.
The Price Loss Coverage program, PLC, provides important
price protection for farmers. Corn growers value having the PLC
program as an option, particularly during periods of sustained,
lower-than-average prices. The current statutory reference
price for corn is $3.70 per bushel, well below current market
prices and long-term historical averages.
NCGA supports strengthening the effective reference price
escalator, which allows more responsive price protection. The
provision is capped at 115 percent of the statutory reference
price. For corn, the escalator is capped at $4.26. For corn
growers, the effective reference price is expected to trigger
higher levels of price protection starting for the 2024 crop.
NCGA supports strengthening this market-oriented mechanism by
raising the 115 percent cap or modifying the formula to be more
responsive to changes in market prices.
In the trade title, NCGA supports increasing funding for
the Market Access Program and the Foreign Market Development
Program.
In the conservation title, NCGA supports three initiatives
to make the existing working lands program more effective in
combatting weed resistance, reducing nutrient losses through
farmer-led collaborative watershed projects, and speeding the
development and adoption of innovative conservation practices
by strengthening the interim conservation practice standard
program.
In closing, corn growers stand ready to provide additional
feedback and support as the legislative process moves forward
toward a successful farm bill harvest this year.
[The prepared statement of Mr. Wolle can be found on page
165 in the appendix.]
Senator Smith. Thank you so much to Mr. Wolle and to all of
our panelists today. We are now going to begin a round of
questioning from members of the Subcommittee of about five
minutes each, and Harold, I will start back with you.
We have heard from many of the panelists today about how
increasingly severe weather events are having an impact on
contributing to the additional risks that farmers are
experiencing. I am thinking about our home State of Minnesota,
where we just had a slew of snow this year. One of the impacts
of all of this snow and rain is planting delays because of all
this weather.
Mr. Wolle, could you talk a little bit about how prevented
planting coverage under Federal crop insurance, how this works,
whether it is an important strategy and maybe just talk a
little bit about the importance of flexibility around planting
dates and acreage reporting.
Mr. Wolle. You are absolutely correct. Prevented planting
is a very important part of crop insurance. Several years ago,
Minnesota was--I believe it was 2019--was affected by very wet
soils. I am optimistic that that will not happen this year. In
that instance when farmers were unable to get in their field,
prevented planting provided them a level of coverage for those
acres that they were unable to plant. That was extremely
valuable. Flexibility around the plant dates, that would be
appreciated.
I think they work fairly well now, but it is a very
important part of the crop insurance program.
Senator Smith. Thank you so much.
Mr. Rockstad, would you like to join in on this? I think
you mentioned in your testimony briefly about prevented
planting provisions for sugar.
Mr. Rockstad. Sugarcane, specifically, is looking for a
prevented planting option in there. Sugarbeets are a little bit
different. We have prevented planting. However, since we are a
farmer-owned cooperative and we need to process our sugar, we
do everything we can, even to late dates, to make sure that
crop is in the ground so that we can adequately supply the
market.
Senator Smith. Thank you very much. Another question. In
the dozens of listening sessions that I have had with Minnesota
farmers and ranchers and producers, I have heard a lot about
how much they rely on FSA, local FSA offices, and also some of
the challenges around USDA filling vacancies in those offices.
I want to just give an opportunity to folks on the panel to
respond to that. Is that something that you are seeing, and any
comment that you want to make about the importance of those
local FSA offices? Mr. Gendebien?
Mr. Gendebien. The local FSA office is critically important
to dairy farmers and row crop farmers in getting the word out,
to help our cooperatives, help our board of directors, to help
everyone get the word out on how and when to sign up. It needs
to be within driving distance, so you can get there between
chores.
Senator Smith. Mr. Cheyne?
Mr. Cheyne. Well, I think one of the key things to me as a
producer that I would suggest to the Committee is keep the
county committee intact. The local hand at the helm gives a
very steadying effect. The local people know the problems, and
we cannot expect somebody from out of the area with no
understanding of our trials and tribulations to be able to
assess and make the correct decision.
Senator Smith. Right. Everybody has been saying today that
everything is local, and one size does not fit all, and those
FSA offices need to support that.
Mr. Ragland, did you want to jump in here?
Mr. Ragland. Yes. I actually serve on my local county
committee, but sadly I have never been able to attend that in
my own county. In my career of farming, we have never had our
own office because we lost it several years ago. I echo the
comments. The county committee is vitally important for that
local touch and understanding what is going on.
I would further echo we need to provide some help to FSA in
getting the word out better. When we do not have an office in
each county it is harder for some folks to truly understand the
options that are available. We have social media now. We have
lots of electronic ways we can get messages out, and we need to
do more than just letters and word of mouth, and so forth.
We also need good staffing. There is a shortage, and it is
difficult. That goes back to money.
Senator Smith. That is right. Thank you. Thank you so much.
Just one last question. I am going to go back to Mr. Wolle. You
mentioned, in your testimony, about how important the working
land conservation programs are. Would you just maybe say a bit
more about--my understanding is that those programs are
dramatically oversubscribed. We have many more people who want
to be participants than are able to. Could you just say a word
more about why you think that is important for farmers?
Mr. Wolle. You are absolutely correct. Our working lands
programs are oversubscribed. On my own farm I have 200 acres of
CRP, and it provides multiple benefits, as do the other working
lands programs. My CRP provides wildlife habitat, wind and
water erosion control, and it sequesters carbon, which is
increasingly important to our society. Conservation programs,
working lands programs are vitally important.
Senator Smith. Thank you. I think this is not exactly the
topic exactly of this Committee hearing, but the flexibilities
of especially, you know, CSP and EQIP to meet the needs that
farmers have on the ground I think is a real value, so thank
you.
Senator Hyde-Smith.
Senator Hyde-Smith. Thank you very much. I am going to
direct my first question to Mr. Johnson. You farm cotton and
other row crops in the fertile Mississippi Delta, but many who
are not so familiar with growing cotton in the Southeast may
think that people like you just have it made in the shade,
which could not be further from the truth, because raising
cotton is hard, it costs a lot of money, and the risks that you
take, year in and year out, should make anyone nervous.
Based on your testimony, in meetings with many farmers from
Mississippi and others from across the country over the past
year, I get the impression that U.S. ag producers feel strongly
that Congress should increase reference prices for the price
loss coverage program commodities in the next farm bill. Would
you please elaborate on the need for Congress to raise
reference prices and also share some of the personal challenges
that you have faced in recent years with respect to inflation,
the rising cost of production, and weed and pest threats that
Southern producers face?
Mr. Johnson. Sure. I appreciate those comments and the
question. You know, if we look back over the past several
years, we have seen a dramatic increase in cost of production,
in the neighborhood of $160 an acre, which that could vary
depending on where you are. It puts our production cost nearly
48 cents per pound of seed cotton, and the reference price is
36.7 cents per pound. You have a really wide gap where you
could enter into a prolonged period where production costs are
higher than what the market provides but there is still no
support provided by the PLC payment with the current reference
price.
We do feel like that is critical. The challenges that we
face in the field, where cotton grows well a lot of other
things thrive, and it is labor intensive and capital intensive.
It is a challenging crop to grow, and certainly we depend on
having the support of adequate PLC reference price.
Senator Hyde-Smith. Thank you very much for that.
Mr. Hillman, it is challenging and expensive to grow cotton
in the South, but I do not know which one is more difficult or
more expensive, is cotton or rice. Both of them are truly a
challenge.
Is it true that it could cost you well over $1,000 per acre
to grow rice in Arkansas, that the cost to produce one acre of
rice could cost you perhaps even $1,500?
Mr. Hillman. Senator, thank you for the question, and right
now the costs are out of control. Certainly fertilizer, a lot
of the inputs that rice and cotton have, have exceeded
anybody's guess. A lot of that depends certainly on input
costs. Labor cost is extremely high.
Also, when you talk about the difference between cotton,
and a lot of the cotton is irrigated, but rice is an aquatic
crop, and it requires a lot of water. We recapture that water,
recycle that water and very sustainable, but the cost of the
water can grow ever exceedingly through the year, and the cost
of diesel fuel or electricity to run those pumps can run the
cost up even higher than what we have talked about.
Senator Hyde-Smith. Could you share for the Subcommittee
some of the financial risks and challenges that you face on an
annual basis to justify the need for strengthening our support
programs for Title I?
Mr. Hillman. I am going to give you a complicated answer to
a simple question. Certainly, when we talk about rice, and
specifically in our area, with irrigated crops, crop insurance
is one of our tools in the box. Certainly my fellow farmers
here at the table, we need good crop insurance.
Title I, and specifically PLC, is a bigger tool for me, and
bigger tool for my fellow rice farmers not only in Arkansas but
across our Nation. That is for two reasons. I mentioned
irrigation. As far as a drought coming and affecting our crop,
more than likely it will not, but it will affect my bottom line
if I have to irrigate during a terribly dry season.
The second reason is--and I alluded to it in my testimony--
rice farmers across the United States are some of the best on
the face of this Earth. We can compete against any other
farmers across the globe. What we cannot compete against is
foreign governments that step in. Sometimes those governments
are not truly allies of the United States. When those
governments step in, I need a safety net that is above ground
level, and those two reasons are why the PLC is really one of
my strongest tools that I have.
Senator Hyde-Smith. Well put, and I am out of time.
Senator Smith. Thank you. Senator Stabenow.
Senator Stabenow. Well, thank you very much, Madam Chair,
and to all of you, I know it is not easy, the beginning of May,
to leave your operations and come here for a couple of days. We
very much appreciate your perspective. That is how we work hard
to get it right. We know we are always in a continuous
improvement mode to be able to support our farmers and
ranchers, so we really appreciate your perspective.
I note that Mr. Ragland, with the soybean perspective, as
well as others that you pointed out in testimony the critical
importance of our conservation program, and all of you have
talked about how the need has exceeded what we have been able
to do to support growers. Our programs have been
oversubscribed. I think that highlights the importance of the
recent conservation investments. Hopefully we will be much
better able to meet needs in this area of risk management, and
I think that is good news.
I think it is also important to remind ourselves again that
there is no consensus on how to address all of the programs,
because different regions have different responses. This is
always the challenge of the farm bill. I tell folks it is less
a partisan exercise and more of a regional exercise, based on
what you grow, where you are. Our challenge is always bringing
together all those needs to address the South, the North, the
Midwest, and so on.
That really is our challenge, and I think that also means
that it is not one size fits all for the commodity title or
crop insurance, just like every other part of the farm bill. We
need to be listening closely.
I did want to say, though, before asking a question, I
think it is important to acknowledge some good news. You have
been through so much that there are recent reports from the
Kansas City Federal Reserve and the U.S. Department of Energy
that despite 2022, which was horrible input costs, that prices
for several major inputs have actually dropped in 2023.
Hopefully you are experiencing that or are going to experience
that.
We know the Administration's strong response to Russia's
invasion of Ukraine has really contributed to stabilizing the
markets around fertilizer and diesel fuel. I am hopeful you
will feel what we are hearing in the reports of diesel fuel
being down 25 percent from last year, and projected to go down,
and fertilizer prices down 35 percent from last year. We are
going to watch it closely because hopefully 2022 was an
anomaly, and when we look over 10 years, hopefully this is just
something that happened because of a number of bad
circumstances coming together and not a trend. We are certainly
going to follow it closely and hope that these new numbers
reflect some support for all of you.
Mr. Ackerman, I did want to ask, as a diversified farmer,
if you could talk a little bit more about crop insurance on
your operation. I know you have talked about this. Others have
talked about how important it is. Talk more about the
recommendations for us to enhance the risk management options
available for the commodities you grow and why it is important
we focus on this.
Mr. Ackerman. Thank you for that question, Senator. On our
farm we buy crop insurance and we pray we do not need it,
right? I think all growers are in the same boat. Because if you
have to rely on crop insurance, really, you can never make
money on crop insurance. It basically keeps you in business,
right? For dry beans, in particular, they are not covered
anywhere else other than crop insurance, other than if we have
a complete disaster, then ad hoc kicks in.
I think the highest we can by is 85 percent. Eighty-5
percent crop insurance is going to cost us about $40 an acre, I
think, or $45 an acre. It gets to be pretty high. I would say
most growers buy in that 70 percent range. Remember, when you
buy at 70 percent, you have got to take a 30 percent hit before
it even starts kicking in, and that is where all your higher
end is.
In all commodities you have to make that decision, but we
try not to over-insure, just because it typically does not make
sense for us. We do need that in place. I mean, it is very
important for us because we, as dry bean growers, have no other
option.
Senator Stabenow. Thank you. I always tell folks that
criticize crop insurance that you are not getting a payout
unless you have a loss. This is insurance, and it is very, very
important.
One final question, Mr. Ragland and Mr. Wolle, you talked
about enhancing the Agricultural Risk Coverage program that we
developed, the ARC program, and of course we know it was
designed to address shallow losses, and it really moves with
the market different than PLC. I wondered if you might just,
given where we are with budget constraints and where commodity
prices are now, can you talk about the most important
improvements we could make when considering the ARC program.
Mr. Ragland?
Mr. Ragland. Specifically within the ARC program we just
need to see higher coverage levels that reflect the
inflationary cost of our inputs and cost of production, and
then taking a look where we can with what the cap is as well. I
realize it is designed for shallow losses, but as we look at
the inflationary cost, our farm gate receipts are up too, but
that is inflationary as well. We need to look at an expansion
of the cap along with that, just to reflect what has changed in
the whole picture.
Senator Stabenow. Thank you very much. Mr. Wolle?
Mr. Wolle. As I said in my testimony, expansion of that 10
percent cap, as in my example in Iowa, when those producers
qualified for the program their losses were far more than what
that 10 percent was. The 10 percent is the limiting factor, in
addition to the 86 percent payment rate. The combination of the
two really limits the effectiveness of the program when it is
trying to compensate for some of those disastrous losses.
Senator Stabenow. Thanks very much. Thank you, Madam Chair.
Senator Smith. Thank you, Senator Stabenow.
Senator Boozman.
Senator Boozman.
[Inaudible.]
Senator Smith. Senator Tuberville.
Senator Tuberville. Well thank you very much. Thanks for
being here today. My producers in Alabama--and we are not going
to beat a dead horse here--are very concerned, obviously, about
crop insurance and update reference prices.
Mr. Johnson, during 2022, in Alabama, there were over
221,000 acres enrolled in PLC, and nearly 100,000 acres
enrolled in STAX. Due to eligibility limitations, only 23
percent of my producers were enrolled in STAX. If producers
were permitted to enroll in ARC or PLC plus STAX, instead of
having to choose, do you think there would be significant
increase in STAX participation?
Mr. Johnson. Thank you for that question. The short answer
is yes. Before 2018, cotton was not a covered commodity. We had
the STAX program, which is an area-wide revenue insurance
program, and that works well. You know, there have been years
when I have purchased that, some years when I have not
purchased that. When seed cotton was added in 2018, there was a
prohibition of participating in STAX and ARC/PLC at the same
time. It would definitely be helpful if we could remove that
and give growers the flexibility to participate in both.
Senator Tuberville. Thank you.
Ms. Thompson, in my home State, over 558.9 million pounds
of peanuts are produced annually. If the peanut reference price
is too low and the cost of production is approximately $668 per
ton, why are some growers signing contracts for less than $600
per ton?
Ms. Thompson. Thank you for that question. Let me grab my
notes here and I will run through that with you. There are a
few reasons why. One of the reasons why is our crop rotation.
Crop rotation is vitally important for the health of our land,
and so a lot of our planting decisions are governed by that. We
may have to sign a contract for peanuts at a certain price that
we do not like in order to protect the health of our land,
because that is what we need to grow that year.
We have some farmers that may need to take an operating
loan to farm that year, and the bank will require a contract
before giving us the loan, so there is not a lot of negotiating
power there.
Then a lot of us just hope that high yields are going to
offset low prices. Of course, that does not always happen.
Finally, there are a lot of members, like myself, that are
members of grower-owned shelling co-ops, and we receive the
loan value of the peanuts at harvest, and we are hoping to
capture a profit on the peanuts as they are shelled and sold to
manufacturers later on.
Senator Tuberville. Thank you. Mr. Johnson, America's
cotton producers export over 80 percent of U.S.-grown cotton.
Yet the marketing assistance loan rate has not been increased
in over 20 years. I have been hearing a lot about this. Could
you explain how changes to the loan repayment rate calculation
would allow cotton to move more efficiently through markets?
Mr. Johnson. Sure. First, the fact that the payment rate
has not changed in such a long time, really, we would like to
see that raised a little bit, even though it is nowhere close
to production costs, that would be helpful from a cash-flow
standpoint.
The other provisions that we are suggesting, in regard to
the marketing loan, really create a little more value for the
producer when prices fall below the loan price and ensure that
cotton moves smoothly and efficiently through the supply chain
and that we do not give any incentive for cotton to stagnate in
the loan. That is the goal of the changes that we are proposing
there.
Senator Tuberville. Anybody else like to chime in on that?
No volunteers?
Thank you, Mr. Chairman.
Senator Smith. Thank you, Senator Tuberville.
Next, Senator Gillibrand.
Senator Gillibrand. Thank you, Madam Chairwoman. Mr.
Gendebien, in your testimony you referenced the asymmetric risk
facing producers under the existing Class I mover formula. Will
you talk a little bit more about this?
Mr. Gendebien. Yes. The new mover was well intended, but it
has a ceiling of 74 cents when Class III and IV are identical.
What we would like to do--but it has no floor, so it really
causes a problem, and in 2020 and in 2022, the divergence in
III and IV cost the farmers about $900 million. Really, we
would like to go back to the original higher of, which would
eliminate those massive losses.
Senator Gillibrand. Yes, I could not agree more. In your
testimony you also discussed the mental health and stress
hardships faced by members in our rural community. I am
actively working on legislation to make mental health resources
more widely available to our farming, ranching, and rural
communities. My legislation would aim to expand beyond the
regional scope of the Farm and Ranch Stress Assistance Network
to create a national hotline.
Would a national hotline for distressed farmers and
ranchers help us start to address this complicated problem?
Mr. Gendebien. Yes, I believe it would. We need to reduce
the stigma around mental health. All of us here are under a lot
of stress. Some of us are seventh-generation farmers, and when
things are going tough, who wants to be the farmer after seven
generations that could not make it? There is an incredible
amount of weight on our shoulders, and depression is a real
thing. We need to talk about it, and we need to have resources
to help us get through it.
Senator Gillibrand. Thank you. I have been working on
legislation, particularly the Dairy Pricing Opportunity Act, to
return to the higher of for Class I pricing. Can you please
talk about how returning to the higher of would help you?
Mr. Gendebien. Returning to the higher of would have
increased my pay price over 2020 and 2022, and it would have
reduced the need for special payments or unique payments to
farmers, which we are very grateful for, but we do not want to
ask for millions of dollars every time Class III and IV
diverge. It just does not need to be that way. It would
stabilize my milk price.
Senator Gillibrand. Can you also talk a little bit about
how the disruption in our supply chains over the last few years
has affected your business, and any recommendations you would
have to this Committee about hardening our supply chains or
improving our supply chain infrastructure?
Mr. Gendebien. Okay. I do have to comment that the supply
chains are resilient in agriculture, and I am so impressed
because we all work so hard to do the right thing. However, I
saw it more at the cooperative level, trying to find film for
wrapping our cheese and supplies for getting our product to
market. That is where it really struck home. It increased cost
to our cooperative, and therefore reduced payments to members
and increased costs to members of our co-op. Supply chain
management is absolutely critical. It would be a national
security issue, and it would help our farms locally.
Senator Gillibrand. Thank you. Thank you, Madam Chairwoman.
Senator Stabenow. [Presiding.] Thank you very much. In the
absence of our Chair and Ranking Member of the Subcommittee,
who have both gone to vote and will be coming right back, but I
will turn to our Ranking Member of the full Committee, Senator
Boozman.
Senator Boozman. Thank you, Madam Chair, as always. Again,
we so appreciate you being here. This has been a great hearing.
I apologize for running out. We all have like three or four
important hearings going on, and that is why you are seeing the
coming and the going.
One of the things I feel very strongly about, and I think
the first panel, you know, also came forward with this, is that
the world is very different now than it was five years ago when
we wrote the last farm bill. Things were very stable then. Now
the world is very different than it was two or three years ago.
We need to make sure that the risk management tools that
you use--and you have a variety of risk management tools, all
of you, they are all different--but making sure that those are
updated so that you can be in a situation where you can go
forward for the next five years. To me it does not make any
sense--a lot of this data goes back to 2012. The world is truly
very different now than it was then. Again, trying to forecast,
you know, going up and down. The escalators do go up and down.
To me this is just a fundamental thing.
The other thing that is fundamental is making sure that as
we go forward with these programs that you are not mandated by
certain practices in order to participate. Okay? Does anybody
disagree with that, on the panel? Yes.
Mr. Carson. I certainly do not disagree. We keep talking
about our reference and our loan prices being out of date, and
I know it takes a tremendous amount of money to get those where
they need to be. We keep calling them a safety net, and I am
not sure when that net is 2 inches above the concrete that it
is doing the American farmer a lot of good. I do not have the
answer, but I think that they are so far out of touch.
We have talked about bringing young farmers in and
incentivizing new farmers. With the loan and reference prices
where they are, it does not give a beginning farmer or an
underserved farmer stability from the lender, from their
supplier. They are just so out of touch.
Another thing that we have all constantly addressed is the
RMA issue and how vital crop insurance is. I kind of have a
unique perspective where I am at. I have experienced four years
of a drought. I have dealt more with crop insurance in the last
four or five years than I have the 30 previous. While I would
not be sitting here today if it was not in place, one
shortcoming I have found is that I cannot insure myself out of
a disaster. Every year I have a disaster my APHs are lowered,
my costs are increased. Can we buy coverage? Yes, but if those
APHs drop I am almost paying $1 for $1.01 of coverage.
There are some shortcomings in our RMA system that can
definitely be improved, even though all of us have thought
adamantly that we would not be here today without those. With
our budget restrictions and what you are trying to do to
balance with the Administration in a bipartisan, bicameral bill
that we need desperately, we have got to find funding. I do not
think there are enough creative ways to bring our reference and
our loan prices up and shore up our RMA insurance without
additional funding.
Senator Boozman. Very good. Anybody else want to comment?
Yes, sir--especially as a young farmer.
Mr. Ragland. Thank you. My comments would be regarding
soybeans. Our current reference price is $8.40. I looked
yesterday at the close, November soybeans for the crop that we
are planting now, we are at $12.75 on futures. The University
of Illinois says the average cost of production is $12.53 for
the 2023 crop. We are looking at roughly 66, 67 percent of the
reference price compared what it actually costs to produce the
crop, and that is a wide gap.
I would also bring to light that the Black Swan events as
farmers that we have no control over have a huge bearing on our
prices. We have weather risks, and we also have all the risk of
economic situations that we cannot control, and crop insurance
is a vital tool for both.
As a young farmer, I could not function without a strong
crop insurance program and strong Title I as well.
Senator Boozman. Very good. Anybody else? Oops, I am out of
time. The Chairwoman will yell at me, so I will yield back.
Senator Stabenow. Thank you. Before turning to Senator
Warnock I did just want to underscore something, Mr. Carson.
You said you cannot insure your way out of a disaster. That is
why it is so important that we be supporting these efforts to
deal with the disasters, which means stopping the pollution
going in the air, and that is why farmers and ranchers are so
critical in all of this. That is why we have additional money
that has been put into ways that you can keep carbon in the
soil instead of having it going into the atmosphere and
creating all these storms and so on.
That is the reason we have been focused on that.
Mr. Carson. Thank you for those comments. I truly believe
in my heart that the farm bill is not for farmers. It is for
the hungry children and the underserved, that our U.S.
population has a safe and steady supply of food. We have got to
work hand in hand. The farm bill is not for the farmers. It is
for the American population.
Senator Stabenow. For the country. It is for our national
security, for a lot of things.
Thank you. Senator Warnock.
Senator Warnock. Thank you so very much, Madam Chair.
Georgia accounts for almost half of the peanuts produced
annually in the United States. We are proud of that. That is
more than two billion pounds a year. Producers of peanuts and
other designated crops are eligible for the Marketing
Assistance Loan Program. This program provides interim
financing to producers so that commodities can be stored after
the harvest, when market prices are typically low, and then
sold later on when the market picks back up. If the producers
are not able to sell their crops at that higher price, they
have to forfeit their crops as collateral. The stakes are
always high for this program working right.
Mrs. Thompson, does this happen to peanut farmers often,
and are we seeing a lot of peanut crop forfeitures?
Ms. Thompson. No. Historically, forfeitures have been very
low. They are typically under five percent, and just to run
through the past few years, in 2017 and 2018, they were around
three percent, but those years' crops had some unusual
production and quality issues. Then in 2019, there were zero
forfeitures, in 2020, it was 0.17 percent. In 2021, as of
January of this year, there have not been any forfeitures on
record. That is the last data that we have.
Senator Warnock. Thank you. I take that to mean that this
is evidence that the Marketing Assistance Loan Program is
working well for peanut farmers.
Ms. Thompson. Yes.
Senator Warnock. That is good to hear, which is why I look
forward to supporting this program in this year's farm bill.
nationwide, the cotton industry employs over 115,000 people,
and it contributes more than $22 billion to the United States
economy. Cotton is also a major economic driver in Georgia,
with an estimated overall economic impact of $3 billion. The
2018 Farm Bill originally authorized the Economic Adjustment
Assistance for Textile Mills program. Currently, EAATM provides
3 cents per pound of cotton to domestic cotton mills for
capital improvements like new technology and equipment to help
keep them competitive with foreign mills.
Mr. Johnson, has this program provided stability, in your
estimation, for the domestic cotton industry, and if so, can
you talk about how that has happened?
Mr. Johnson. Yes. Thank you for that question. We do feel
like that has been a very successful program. If you look back
prior to 2008, the U.S. textile industry struggled for decades,
and that has stabilized since that program was instituted in
2008.
There is a great example of the success of that program in
your home State. One of the most technologically advanced
textile mills in America is in Rabun Gap, Georgia, and the
funds that are provided through that program allow mills to
update their technology and equipment and make them more
efficient. It has been very successful, and we would love to
see the full payment rate of 4 cents restored to continue that
success.
Senator Warnock. Yes, I am glad you brought that up because
it is something, as you pointed out, that has created
stability, and yet we did see that reduction in the 2012 Farm
Bill. How do you think restoring that rate to 4 cents per
pound, how would that affect the U.S. cotton industry?
Mr. Johnson. Well, the textile industry is such an
important industry for national security. I think that just
bringing that payment rate back up to 4 cents would allow more
efficiency, make the U.S. textile industry more competitive,
and that is the goal. It is great to be able to take the cotton
that is grown here in the U.S. and see it used in manufacturing
here.
Senator Warnock. There is no question that these mills are
major economic drivers in the State of Georgia. You see it up
close in rural towns like Jefferson and Rabun Gap, and this
program is vital to ensuring that these mills can remain
competitive globally, and that they can keep their doors open.
I hope we can revisit that rate in this year's farm bill. I
certainly will be doing everything I can to see to it that that
happens.
Mr. Johnson. Thank you.
Senator Warnock. Thank you so much.
Senator Smith. [Presiding.] Thank you, Senator Warnock. I
believe that Senator Hyde-Smith is deferring to Senator
Fetterman, because I believe he needs to go someplace. Senator
Fetterman, you may go forth.
Senator Fetterman. Thank you so much.
Mr. Ragland, I appreciate the work that all generations of
farmers do to help feed the world. I have a particular concern
of young and beginning farmers we have in agriculture. Would
you be?
Mr. Ragland. Yes, Senator Fetterman. Thanks. Thanks for the
comment and the concern. As a somewhat young farmer still--I am
quickly departing from that, sadly--it is getting increasingly
hard to establish roots as a farmer, due to constraints with
land availability and availability of funding. There is more
risk and there are higher stakes than there has ever been. It
is difficult.
One comment I would make along those lines, Farm Service
Agency has some great programs through loans that are very
helpful to young farmers. One thing I would encourage with
that, based on personal experience and hearing from others, we
need to make sure those loan programs work in a way that is
effective and timely for our producers.
One of the biggest obstacles I see there is how long it
takes to get operating loans approved, how long it takes to get
land deals done. Sometimes if a farm comes up for sale, you
have got a matter of days or hours to get it done, and some of
these loans can drag out for months. I had one that took 14
months a few years ago. These programs are well intentioned,
but we need to make sure we are efficiently rolling them out so
that young farmers can take the opportunities that they do
have.
Senator Fetterman. Yes. As a young farmer, would greater
access to the farm safety net be really significant for you?
Mr. Ragland. I think that it is important not only for
young farmers but for all farmers that we have a stronger
safety net. The risk, as I mentioned, is greater than it has
ever been, and our lenders have to have the confidence that
there is a reasonable chance they are going to get repaid. As I
mentioned with references prices needing to increase, in
particular with base acre updates, the combination of all these
things is really a cumulative effect. We need to look at all
these things and together they will make a significant impact
on the future for young farmers, in particular.
Senator Fetterman. Do you have any thoughts or ideas to how
you can encourage more young people to go into farming?
Mr. Ragland. Well, I think that folks need to see that
there is opportunity. There needs to be a path forward, and I
think these things I have mentioned--making the loan programs
better, having greater tools for risk management--create those
opportunities.
I see a bright future for agriculture. I see a lot of
bright folks that are willing to enter the industry. I do not
see a crisis of a lack of folks interested. We need to make
sure that they have the resources at their disposal in order to
be effective when they do enter the agriculture industry.
Senator Fetterman. Thank you.
Mr. Gendebien, I know that the dairy industry continues to
evolve, and I am sure you are familiar with what a dairy State
we are, in Pennsylvania. It is important that the farm bill
keep up pace with the needs of small farmers. Do you believe
that is accurate?
Mr. Gendebien. I do. I do. In southeastern Pennsylvania,
Lancaster County is one of the largest dairy counties in the
Nation, and it is comprised of mainly small, successful family
dairies. It is very important that the farm bill helps both
large and small producers, because we need them both.
Senator Fetterman. It would be very important to have those
dairy safety networks for all of them. What can we do to stop
the trend of losing small dairy farms?
Mr. Gendebien. I think it is very important that we stand
behind the DMC. That is a program that works. A modest increase
in that program would be very beneficial. Also helping farmers
understand Dairy Revenue Protection, because that is a terrific
program as well, and that is for large and small producers.
Sometimes small producers do not have the time to wrap their
arms around these programs, so we need to make them easy, and
we need to make sure that they understand how they work.
Senator Fetterman. Thank you.
Senator Smith. Thank you, Senator Fetterman.
Senator Hyde-Smith.
Senator Hyde-Smith. Thank you so much. Mr. Hillman, we need
to protect our small farmers, our large farmers, and every
farmer in between. As we have discussed, it can be rather
expensive to put a crop in the ground these days, especially on
a large scale, say a couple of thousand acres or more. Will you
please provide the Subcommittee with some rough numbers of the
financial risks so many U.S. farmers take every year?
Mr. Hillman. Thank you, Senator. I think, and I alluded to
some in my testimony earlier, economies of scale right now are
such that, just for instance, the piece of equipment that I was
referring to, the combine that I purchased in 1986 versus
today, seven-fold. I think that when we talk about farming and
taking on that risk, economies of scale are there not only just
with the equipment but also the interest rates that we have
today right now, all of the inputs, also with labor.
When you talk about costs per acre, going back to my early
career, some of the costs per acre for rice or soybeans or corn
are approaching what land was going for back in the late
1980's. The risk involved of going out there when you have the
economies of scale of having to farm more, certainly that does
help defray some of those costs, but it also increases the
risks that these family farmers are taking.
It is a tug-of-war when we talk about the economies that we
are dealing with and the numbers that we are playing with right
now.
Senator Hyde-Smith. Okay. I have got a few more minutes.
Mr. Ragland, you lived and farmed through very real economic
challenges when China, as your largest export market, was
cutoff for a period of time. Economic disruptions have hit the
various forms during the life of the current farm bill and
could continue to do so in the future.
As a farmer, how do you view keeping up with status quo
Title I farm safety net?
Mr. Ragland. Well, as we have alluded to earlier, we need
an increase in our reference prices. We need the opportunity
for a voluntary base update as well. Many farmers like myself
have a very small percentage of their cropped acres that have
base, and that impacts ARC and PLC programs, which are the
backbone of Title I.
It is difficult with budget constraints, but to reflect the
increases in our costs of production we truly need a
significant increase in all facets of the reference prices and
bases, just so we can be competitive and have reasonable
disaster assistance and risk management within that Title I.
Senator Hyde-Smith. Okay. Mr. Johnson, will you please
provide the Subcommittee with some rough financial numbers that
you have experienced and the risks that farmers take every
year? Can you give us some examples of that?
Mr. Johnson. Well, I think a lot of my comments would be
similar to Mr. Hillman's. We are not too far apart, and cotton
and rice are not too far apart when you think about cost of
production. When you think about farming efficiently, he
brought up the combine example. A cotton harvester right now,
the cost for that approaches $1 million, and you really need
close to 2,000 acres to justify making that purchase. When we
look at fuel, labor, our seed and crop protection, that is how
we end up in that 90 to $1-a-pound rate for our cost of
production.
We are just under a lot of pressure to be efficient. I
mean, the only way you address that is by becoming more
efficient and improving your practices and making more yield
with less, and to this point that is what we are trying to do.
We need these support programs to be more effective in the
current environment than they are right now.
Senator Hyde-Smith. Thank you so much.
Senator Smith. Thank you. Senator Welch.
Senator Welch. Thank you very much, and I appreciate----
Senator Smith. Happy birthday, Senator Welch. I cannot miss
the opportunity.
Senator Welch. Well, I appreciate that. That is a kind
memory of the Spirit of 76. That is my age.
You know, sir, what you just said is really the dilemma
that I feel about farming. There is an enormous pressure on you
to be, quote, ``efficient.'' That gets translated into being
big. That puts enormous pressure on small family farmers.
What I have always wrestled with, and I think a lot of us
on this Committee have wrestled with, is we have an enormous
appreciation for small local agriculture because it does so
much for the people who live in that area, not just the farmers
but all of us in Vermont, for instance, benefit immensely by
the custodians of the landscape, which by and large are our
dairy farmers. Yet the needs you have, because of those costs,
really gobble up the smaller farms.
You know, this is the central dilemma, Madam Chair and
Ranking Member, that I think we face. How do we maintain local
agriculture, small family agriculture, for the values that it
represents, not just out of sentiment but it is about local
environment, it is about the local economy, it is about values
that are so embedded in that farm family culture, when they are
getting totally pressured by the demands to be, quote,
``efficient,'' which really means big. That is the needle
somehow we have to thread.
In Vermont, dairy has been our backbone in terms of playing
that role historically, and it is under immense pressure. The
Dairy Margin Program has been really helpful, but despite it
about 60 percent of our farms we have lost in the last 30
years.
I just want to ask a little bit about the Dairy Margin
Program. Mr. Gendebien, I share the concerns that Senator
Fetterman was speaking about and also Senator Gillibrand, of
course, represents all of New York but upper State New York,
across Lake Champlain, very similar farming situation to what
we have in Vermont.
Let me just ask, as a Northeast dairy farmer during the
pandemic, how did the Dairy Margin Coverage Program help? That
is for Mr. Gendebien.
Mr. Gendebien. It helped a great deal. It is very important
for the smaller farmers, but what is happening, Senator Welch,
is the definition of a small farm is changing. It is not 75
cows anymore. It is 500 to 800. DMC program could be modestly
enhanced so that that bottom Tier 1 is increased above five
million pounds. That would really, really help.
These farms are still family farms. Margins are tight for
everybody. I understand exactly what you are saying, where the
margin per unit, per 100 pounds of milk sold, is so small, it
is so slim that some of these farmers cannot even afford
liability insurance. Then to expect them to buy Dairy Revenue
Protection, they are not going to do that either.
So DMC, Dairy Revenue Protection, they are very important
programs. We just need to make them more accessible to more
people.
Senator Welch. By the way, one of the other issues is the
cost side, because obviously the margin is a function of what
the price is and what the cost is. Of course, there is a great
deal of concern about climate issues, and I think, on this
Committee, a real desire to find ways to make it possible for
the agricultural community to make the significant contribution
of reducing carbon emission, and anaerobic digesters is just an
example of being installed on a farm where I am.
Does that approach have some promise that would be
beneficial to the survival and prosperity of our small dairy
farms?
Mr. Gendebien. I believe it does. These renewable natural
gas digesters are fantastic technology, and a community
digester, where we could share would be very, very important
for smaller farmers, absolutely.
Senator Welch. Which it also would help with the runoff
issue that is a problem.
Mr. Gendebien. It would. Farmers, we want to participate in
every single sustainability program. It is just that sometimes
the cost outweighs the benefit.
Senator Welch. Right. Thank you very much. I yield back,
and thank you, Madam Chair.
Senator Smith. Thank you so much, Senator Welch.
I believe we have no further questions from this panel so I
would like to just thank all of our witnesses again for your
time and attention and your excellent testimony. We often say,
on the Agriculture Committee, that we are less partisan than
some other spaces in Washington. We certainly have our regional
differences, but the purpose of this particular hearing is to
really fully flesh out what all of the differences are. As
Senator Boozman said, people farm in the concrete, not the
abstract, and it is very important to understand how all of
those differences come into play, particular with these risk
management tools.
I want to thank very much Senator Hyde-Smith and our staff,
including the full Committee staff, for making this Committee
hearing work so well.
For Senators who wish to submit questions for the record,
those questions are due one week from today, which will be
Tuesday, May 9th. For our witnesses, you will have two weeks to
respond to any questions for the record.
Thank you again, and with that this hearing is adjourned.
[Whereupon, at 12:14 p.m., the hearing was adjourned.]
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