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House Chairman Pushes for More Farm Subsidy Funding

Write the bill and worry about costs later.

In a hearing to set the stage for the 2018 farm bill, House Agriculture Chairman Michael Conaway said he will write a bill based on producers’ needs and worry later about how to pay for it. “A good farm bill,” he said, “will require resources,” meaning money to offset low commodity prices and unfair subsidies overseas.

The Democratic leader on the committee, Collin Peterson, agreed, “We should write the bill based on what’s needed,” rather than a budget target set elsewhere in Congress. In writing the 2014 farm bill, the Senate and House Agriculture Committees were instructed to shave $23 billion off the projected 10-year cost of the bill of $980 billion. Costs are down by $100 billion, chiefly because of lower enrollment in the food stamp program.

“As we begin consideration of the next farm bill, current conditions in farm country must be front and center,” said Conaway, who asked a panel of farm economists how the four-year slump in farm income compared with the hard times of the agricultural recession of the mid-1980s. Financial stress is less severe, the economists said, but they could deteriorate if interest rates rise higher and faster than forecast and if a decline in land values accelerate. Land is 80% of farm assets, so a drop in value reduces a farmer’s financial standing.

Economist Joe Outlaw of Texas A&M said crop subsidy payments totaled $13.2 billion during 2015 and 2016, while cash receipts from crops fell by $23.7 billion. “In no way are commodity payments making producers whole,” said Outlaw. “There is a growing need to provide additional funding as adverse economic conditions are expected to continue.”

USDA estimates farmers will see the fourth year in a row of lackluster income, a substantial change from the agricultural boom that began in 2006 and peaked in 2013. Net cash income of $93.5 billion would be a modest increase from 2016 but only 69% of the record set four years ago. Pat Westhoff, head of a University of Missouri think tank, said net farm income, a measure of solvency that includes the value of crops in storage, over the next several years would be similar to 2005-2009 in the early days of the agricultural boom.

“In the upcoming farm bill, we will measure our requirements first and then determine what kind of a budget we will need to meet those needs,” said Conaway, who cited the U.S. complaint at WTO against Chinese subsidies of wheat, corn, and rice, alleging supports that were $100 billion above permitted levels in 2015.

Cotton and dairy producers need an improved safety net as part of the 2018 farm bill, said Peterson, who said the CRP, which pays landowners for long-term idling of fragile farmland, would be increased to 35 to 40 million acres from its current limit of 24 million acres.

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