Perspectives from Farm Economy Experts05/30/2017
U.S. Senator Pat Roberts, R-Kan., Chairman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, recently held a hearing, titled, “Examining the Farm Economy: Perspectives on Rural America.”
This is the third hearing in preparation for the upcoming Farm Bill reauthorization. Witnesses included the U.S. Department of Agriculture, Federal Reserve Bank of Kansas City, Agri-AFC, and Oregon State University.
Below are Chairman Roberts’ remarks, as prepared for delivery:
Good morning. I call this hearing of the Senate Committee on Agriculture, Nutrition, and Forestry to order.
We started off this year by holding two field hearings. One at Kansas State University, followed by another in Senator Stabenow’s home state of Michigan.
We were there to do one thing – and that was to sit on the wagon tongue and listen. And, we will continue to do that. We listened to farmers, ranchers, lenders, cooperatives, and many others in rural America regarding what’s working, not working, and what needs to be improved in the 2014 Farm Bill.
One thing is clear – times are challenging right now in farm country. And that’s why we are here today – to examine the economic landscape of rural America.
When the 2014 Farm Bill was written and passed, times were relatively good in agriculture. But, as everyone should know, a lot has changed since then.
At the time, net farm income was at record highs. In the years since, the farm sector is expected to face a 50 percent decline in net farm income.
Low commodity prices are continuing to weigh on farm sector profits for both row-crop and livestock producers. Crop receipts are expected to decline by over $42 billion and livestock receipts over $23 billion.
On the credit front, reduced farm income over the past four years has continued to weaken credit conditions in the agricultural sector.
Demand for farm loans, as well as renewals and extensions, has increased due to ongoing cash flow shortages. And, prolonged tight profit margins are creating additional declines in repayment rates for farm loans.
Right now, weakness in the crop and livestock sectors is causing producers to expend more working capital to meet short-term obligations. Many farmers are becoming more leveraged as working capital is decreasing while debt levels continue to rise.
Obviously, this is a trend that should be monitored closely. But let us not forget, there are a number of economic factors which are different now than what was seen during the 1980s.
Over the past few years, global production has exceeded global demand; the fundamentals of supply and demand are certainly working.
At the same time, our government is spending money it doesn’t have. Our national debt is approaching $20 trillion.
Despite these difficult conditions, time and time again, agriculture has been asked to do more with less. I would remind everyone in this room that the last Farm Bill voluntarily cut spending.
And, the previous crop insurance contract negotiation cut $6 billion from the program on top of a previous $6 billion cut from the 2008 Farm Bill.
That’s why virtually everyone on this Committee agrees that ag has already given at the store.
Farmers, ranchers, and rural families understand fiscal responsibility. But, now is not the time for additional cuts. We need to review what is working and what is not working.
What is needed is certainty, bold thinking, and new ideas that address today’s challenges and these tough times in the agricultural economy.
We need to ensure that producers have risk management tools at their disposal – let me emphasize that crop insurance is the most valuable tool in the risk management toolbox.
We need to find ways to reduce regulatory burdens that hurt producers’ bottom lines. And, we need to strengthen our export markets for not only the things that we make, but also for the things that we grow.
As I’ve said before, we need a farm bill that meets the needs of producers across all regions and all crops. The challenges are so great given the critical times we live in, it is essential that small differences do not get in the way of the larger goal – to pass a Farm Bill.
Today, we will take a deeper look and work to understand expectations of the economic landscape and the challenges that all regions of rural America face.
I remind my colleagues that the occupation of farming can be a challenging profession. Earlier this year, farmers and ranchers from Kansas, Oklahoma, Texas, and Colorado experienced devastating wildfires that affected more than 1 million acres across the four states.
On top of that, just a couple weeks ago, a massive blizzard dumped over 20 inches of snow that has the potential to impact roughly 40 percent of the wheat acreage in Kansas.
Producers in other states are facing floods, diseases, and poor planting conditions.
These weather events, layered on top of the economic conditions, are exactly why it is important that we have strong risk management tools available to help producers manage during times of loss.
We know that times are tough in the agricultural economy. Going forward, we can do one of two things—we could focus on narrow interests that don’t serve all of agriculture, or we can work together to get things done like we have in the past. This may require compromise, and all sectors of the agricultural economy will have to work together.
At the end of the day, our role on this Committee is to pass a Farm Bill that provides certainty and stability to farmers, ranchers, and rural communities across the country.
Source: Morning Ag Clips