U.S. farm income is down sharply from the records set in 2013, with little improvement forecast in the near term. “If something doesn’t change between now and 2018, we will be in a big crisis,” said Zippy Duvall, president of the largest U.S. farm group, during a luncheon session with reporters, referring to the target date for Congress to overhaul farm policy law.
“Everybody’s pulling down their cash assets and reserves, which will make next year worse,” said Duvall, a Georgia farmer who was elected president of the American Farm Bureau Federation in January. “We don’t see anything concrete that is going to change the situation.”
AFBF chief economist Bob Young said pressure is greatest on new farmers, who typically have limited financial reserves, and on growers who rent cropland. Rental rates soared during the agricultural boom that began in 2006 and are a major expense for farmers.
USDA estimated net farm income, a measure of wealth from farm production, this year will be 58 percent of the level of 2013. Season-average prices for this year’s corn, soybean and wheat crops are forecast to be the lowest in a decade. Livestock, dairy and poultry prices also are down. USDA analysts say farmers are cutting back on expenditures with the result that solvency measures, such as the debt-to-asset ratio, “remain near historic lows” despite four years of deterioration.
Duvall said the AFBF is “real concerned” about the wave of mergers among seed and ag chemical companies. “We want to make sure the R&D (research and development) dollars remain the same.” Besides the Bayer-Monsanto deal announced this week, Dow and DuPont are merging, government-owned ChemChina is buying Swiss-based Syngenta, and two fertilizer companies, Agrium Inc. and PotashCorp, are combining. Antitrust regulators are expected to examine the deals.
“All four of them at once, wow,” said Young. He said regulators should “look at these in the context of all four going on at the same time.” The Dow-DuPont and Bayer-Monsanto combinations each involve a major seed company and a large ag chemical company, he said. A key question will be whether there will be sufficient competition for sales when the deals are completed, said Young, who is scheduled to testify on Tuesday at a Senate Judiciary hearing on ag consolidation.
The AFBF believes food stamps should remain as part of the farm bill, said Duvall. “We think it’s important they stay together” as a way of linking food production with consumers. Conservative House Republicans tried to sever food stamps from the rest of the farm bill during debate over the 2014 farm law. House and Senate negotiators reunited the elements in the final, compromise version.
It could be early winter, at the annual AFBF convention, before the organization recommends items for the 2018 farm law, said Duvall. The AFBF has assembled a farm bill team to identify farm bill issues. At present, he said, the sentiment leans toward “tweaking what we have,” rather than large-scale change in policy.
“It would be a smart thing,” Duvall said wryly when asked if the Bayer-Monsanto merger might eliminate Monsanto’s name. The St. Louis company, the world’s largest seed company and a pioneer in genetically modifying crops, has a wealth of critics who use it was a symbol of modern agriculture’s flaws.