LINCOLN, Neb. (DTN) -- With the chances of passing a farm bill this year waning, farmers, ag financiers and economists told the House Agriculture Committee on Tuesday that the industry needs support as the ag economy continues to deteriorate.
The committee held a hearing examining the condition of the agriculture economy and committee leaders continued to push for the passage of a farm bill.
At the start of the hearing, House Agriculture Committee Chairman Rep. Glenn Thompson, R-Penn., said he's willing to consider all options in passing a farm bill this year.
"As recently as last week, House Ag Committee Democrats expressed a preference to see a bill fail before engaging," Thompson said in opening remarks. "So, I will say again: If there are members on the other side of the aisle that truly want to see a farm bill come to fruition this year, my door remains open to negotiation from any partner willing to come to the table with a serious proposal, not more red lines."
Thompson said he would consider informal preconference negotiations with the Senate.
"That is not my preferred option, but it is one I am willing to entertain," he said. "However, I cannot reconcile nor negotiate a bipartisan 900-page bill with a partisan 90-page summary. For that to be viable, Chairwoman (Sen. Debbie, D-Mich.) Stabenow needs to unveil her bill text."
Rep. David Scott, D-Ga., ranking member of the House Ag Committee, said he's concerned that if elected, a new Trump administration would launch another trade war with China.
Scott said that during the previous Trump administration, then Secretary of Agriculture Sonny Perdue used about $23 billion in Commodity Credit Corporation funds to compensate farmers for losses related to Trump's trade war with China.
"American farmers bore the brunt of the trade war last time, and they would be hit hard again if Republicans pursue an economic agenda that will undermine the stability of American commodity prices and lead to retaliatory tariffs," Scott said in his opening statement.
"Bottom line, if we want to get a farm bill done this year, as these witnesses want, we have to find a different way to pay for it without locking away this important tool for five years."
BLEAK AG ECONOMY
David Dunlow, a cotton, peanut, soybean and wheat farmer from Gaston, North Carolina, painted a bleak picture of the ag economy.
He told the committee that he and many other producers question whether their operations will be viable unless Congress steps in with a farm bill and perhaps other relief.
Production costs in North Carolina are all "well above" market prices, Dunlow said.
"There's not a single commodity I produce that will cash flow," he said. "I and other Southeastern producers are hanging on by a thread. Our industry has heard from lenders across the country who have seen producer equity erode, and without federal assistance this year, many of these lenders will no longer be able to finance growers. I have never experienced a worse time in my 40 years of farming, and the stress has taken a toll on my health as I wonder how our operation will survive."
In previous years when market prices were below cost of production, he said, farmers could benefit from the commodity title of the farm bill to offset losses.
Dunlow said reference prices for Price Loss Coverage and Agriculture Risk programs established in 2018 have not kept pace with inflation. This makes many of the current programs not supportive, he said.
The lack of an update, Dunlow said, is "rendering the safety net ineffective" today.
"The results have been back-to-back years of losses on our farm," Dunlow told the committee.
"And next year could be just as bleak. Over my career, I have been able to purchase several small farms. Now I have been forced to refinance all these farms to pay my operating debt from last year. Because of our deteriorating financial condition, I have not found any traditional lenders willing to fund our operation."
MAKE FARM PROGRAMS MORE EFFECTIVE
Tony Hotchkiss, chairman of the American Bankers Association's Agricultural and Rural Bankers committee, said Congress could act to update reference prices on a more regular basis to make farm programs more effective annually.
He said it might be possible to allow USDA to reset the reference prices to better reflect farmers' economic conditions.
"Reference prices have historically been set once in a farm bill, and I believe with our economy and our world moving at such a rapid pace, almost an annual setting of those reference prices makes more sense because you avoid getting and them out of correlation with what's going on in the market," Hotchkiss said.
"And I also believe that that having a correlation to the cost to produce versus the market is really important because there isn't always a strong correlation between that cost to produce and the market price versus what a reference price could do from a safety-net perspective. And as has been said by some of my esteemed colleagues here, it's important that farmers can at least break even."
Ronald Rainey, an Extension agricultural economist at the University of Arkansas, said that dating back to 2013, U.S. farmers have seen a widening disparity between crop prices received and input prices paid.
"Without any relief in the form of improved crop prices received," he said in his written testimony, "farmers will continue to suffer from cost/price squeezes and eroding profit margins."
RELIEF SOUGHT
Dana Allen-Tully, a dairy, corn, soybean and alfalfa producer from Eyota, Minnesota, and president of the Minnesota Corn Growers Association, said that even if Congress is able to push a farm bill over the finish line, it may not be enough to overcome the challenges.
"Well, we would hope that the Senate also moves their bill forward with a similar safety net that this body has passed out of committee," Allen-Tully said. "But the provisions in both the Title 1 and crop insurance really do work towards making a much stronger safety net than what we have currently. But it may not be soon enough, considering the state of where we're at in July of 2024."
In the next few weeks, she said, farmers will know more about their situations.
"So, a lot will be determined in terms of yield losses in the next four weeks," Allen-Tully said. "I'm from Minnesota, but Iowa has similar challenges, North Dakota, Illinois, Indiana, South Dakota, and so I think that there may be some significant crop insurance claims that come about both from price and yield."
Dunlow told the committee that his farm has to rely on an operating line of credit from a private equity institution at a higher-than-market interest rate.
The dire economic conditions on his farm are making it difficult if not impossible to hand the operation to his son, William, and future generations, he said.
"We all talk about new farmers," Dunlow said. "I gave my future son-in-law, Peyton, who has an agricultural degree from NC State, an opportunity to work on the farm. However, after having discussions with my daughter, he had decided to seek employment elsewhere due to the lack of profit provided by our operation."
Dunlow said the bottom line is producers "need real relief" before the end of the year.
"We can't wait any longer," he told the committee. "Members of Congress must understand that another straight extension of the current law is unacceptable. Without support in 2024, I may no longer be able to farm."
Todd Neeley can be reached at todd.neeley@dtn.com
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