As farmers across the country prepare for the 2019 planting season, the one question on everyone’s minds seems to be: will the new Farm Bill provide an adequate safety net to see farm families through another brutal year?
Last week, the Wall Street Journal and Politico reported that farm bankruptcies rose to the highest level in at least 10 years. Asked about these troubling reports, House Agriculture Chairman Collin Peterson (D-MN) said, “I have been saying for a year people are nervous.” Meanwhile, Senate Agriculture Chairman Pat Roberts (R-KS) noted the Farm Bill can help farmers “but we need price recovery.”
House Agriculture Committee Ranking Member Mike Conaway (R-TX) may have been the canary in the coalmine on this question, arguing throughout the Farm Bill process that the safety net provisions of the Farm Bill must be strengthened.
Farming is inherently risky, requiring a large amount of capital upfront with thin, and sometimes negative, profit margins. But farmers are perpetual optimists, always hoping and willing themselves to believe that the next year will be better.
Unfortunately, the United States Department of Agriculture (USDA) just published a new long-range price forecast that suggests farmers will continue to face depressed commodity prices and rising costs of production.
2019 marks the 6th consecutive year farmers will plant into a down market. The agricultural economy is now in a deep and prolonged recession.
Net Farm Income (NFI) stood at an anemic $66.3 billion in 2018 compared to $134.3 billion in 2013, meaning income has dropped more than 50% since 2013. Seven in 10 farms have an operating profit margin in the “red zone” – indicating a high risk of financial problems.
And the hopefulness of our nation’s farm families will continue to be tested, as NFI for the next 5 years is projected to average just $77.3 billion, meaning the highest projected farm income will still be only 59% of pre-2014 levels.
While many in the farm and ranch community expected farm income to decline in 2014, no one expected the downturn to be this deep or prolonged and the toll this has taken on America’s famers has been serious. Many farm families have already depleted their reserve savings and are watching their equity erode.
Farm Policy Facts recently spoke with family famers in Minnesota to put faces on the dire situation unfolding. Brandon Fast grew up on the family farm watching his dad and grandfather work the land, and now farms 1,200 acres in south west Minnesota.
“A strong farming community ends up coming from being able to sell our product at a good value,” Brandon says. “That’s the only way we are going to be able to not only keep the farmers that we have now, but create an optimism for that older generation that says [to the next generation of farmers] you know what, ‘I think I can end up helping you out and I think you can end up making it.’”
Until that recovery happens, more and more farm families are taking extreme measures to make ends meet.
A recent USDA report on the face of America’s farming community noted that nearly 80% of farm household income comes from off-farm sources as farmers seek non-farm income to help pay the bills the farm economy cannot pay.
“We are all trying to diversify – operating a seeding business, raising livestock, or our spouses end up working off the farm,” Brandon says. “I have some friends whose wives end up working a $12-an-hour job part-time just to get some type of health insurance, because they can’t foot the bill.”
In other words, times are bad in rural America right now, and farmers need a break. A swift implementation of the 2018 Farm Bill would be a great first step, as would an aggressive trade agenda that opens markets abroad for America’s farmers and ranchers.
But as was the case during the 1980s and the late 1990s, Washington may well need to bolster the safety net to head off what may otherwise become a full-on farm financial crisis that will truly threaten rural communities and undermine economic growth in the cities.
Source: Farm Policy Facts
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