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U.S. Farmers Favor Little Change in Farm Programs
Don’t screw up what we already have. That’s the word from the agricultural field to elected representatives in Washington concerning farm bill talks and budget proposals.
On no subject does that advice apply more than on the issue of crop insurance.
President Trump’s proposed budget calls for $29 billion in cuts to the federal crop insurance program over the next 10 years, crippling the safety net many crop producers credit with keeping them in business through tough seasons.
“Crop producers would like to maintain the status quo,” says Representative Collin Peterson. The Democrat from Minnesota is the ranking minority member of the U.S. House Committee on Agriculture.
The 2014 Farm Bill essentially ended direct commodity payments in lieu of strengthening the crop insurance program.
“I was at the table when those decisions were made,” says Senator Michael Bennet (D-CO), a member of the Senate Committee on Agriculture, Nutrition, and Forestry. “Farmers willingly gave up direct payments in favor of the benefit of crop insurance. They would see a reversal of that as a betrayal.”
Nearly $16 billion of the proposed reduction would come by limiting crop insurance premium subsidies to $40,000. The government currently subsidizes, on average, 62% of premiums. The cap would hit larger producers, those with 2,000 acres or more. That constitutes around 4% of farmers and 55% of U.S. farmland, according to the USDA 2012 Census of Agriculture.
With commodity prices low and the USDA projecting a decline in net farm income of 8.7% this year, additional cuts through the Harvest Price Option could also be devastating. The Harvest Price option allows farmers to insure crops based on the higher of the price at harvest or planting, providing a valuable risk management tool.
Like crop insurance, Republican Senator Charles Grassley of Iowa, who sits on the Senate Ag Committee, says his constituents are counting on Washington to “not screw up trade.” With one third of U.S. ag products earmarked for export, producers value the markets they have and would like them maintained. “They’re telling us to be very careful,” says Grassley. New export markets in developing nations like China are welcome, but they can’t replace the stability and surety of existing markets.
Others in the ag community are concerned about cuts to USDA rural development programs, statistical services, and the Department of Agriculture in general. “People are concerned about what those cuts could really mean,” says Grassley.
Environmental conservation matters, and producers nationwide are concerned with the effect of budget cuts on conservation programs. In Bennet’s state of Colorado, a 26% cut to ag research would jeopardize USDA Agricultural Research Service stations like the Central Great Plains Resources Management Research Station in Akron, Colorado. The station focuses on integrated cropping systems that maximize soil and water resources.
“One of their projects is drought-resistant wheat, an issue of great importance to Colorado farmers,” says Bennet. “It’s a minuscule line item, but without it, no one is going to continue their generations of research. We have to think long-term. People are tired of government with no attention span.”
He also cites the precarious position of regional cooperative efforts like the Rio Grande River Basin. “These types of partnerships won’t occur without funding, and saving water is vitally important.”
Cost sharing also matters in Grassley’s Iowa, where the USDA’s Environmental Quality Incentives Program (EQIP) assists farmers in upgrades to livestock facilities and cropland that improve water quality and encourage use of cover crops.
Some changes are invited. Peterson says he hears from the dairy folks that they’d like to see improvements in the Margin Protection Program (MPP). He also says cotton producers would like a different program.
Grassley and Peterson are responding to producers’ concerns about the current CRP program, one area where they have set sights on making changes. “For one thing, the rent rate needs adjustment,” says Grassley. “Farmers are irritated that the government pays more cash rent than they can pay.” The 2014 Farm Bill was drafted when commodity prices where high, and CRP rates needed to be competitive. Since then commodity prices have fallen, with no immediate signs of reversal, putting rental rates out of line with average cash rents.
Peterson says he is prepared to follow the lead of South Dakota Senator John Thune, a Republican who serves on the Senate Ag Committee, in his proposal to increase the cap on CRP acres to 30 million acres and expand grazing and haying options, other needed adjustments, according to producers. CRP is currently capped at 24 million acres.
Thune would like to allow grazing at 25% of the stocking rate in exchange for a 25% reduction in payment on enrolled grazed acres. Likewise, for a 25% payment reduction, producers would be allowed to hay one third of enrolled acres per year on a rotating basis.
Peterson says the reforms would free up the money to expand the acreage, and he points out that light grazing can enhance wildlife habitat potential. “Even the wildlife people know that now,” says Peterson.
The new Farm Bill will cover 2018-2022, with the bulk of the work taking place this fall and hopefully finished by the first of the year.