Growers across the country face tighter margins due to the combination of high production costs and sharply lower commodity prices, a panel of farmers told a House Agriculture subcommittee. They asked for action against farm subsidies overseas and for continued federal support at home. “For many Texas producers, there is no room for error” this year, said Steve Verrett, a cotton grower and executive vice president of Plains Cotton Growers in Lubbock, Texas. “I would say the health of the farm economy is very precarious.”
U.S. prices are hurt, Verrett said, by an surge in trade barriers and crop subsidies in countries such as China. Dow Brantley, president of USA Rice Federation, listed a half-dozen nations with unfair trade policies that affect rice, “the most government-interfered crop in the world.” Brantley said operations like his would be hurt by new rules on eligibility for crop subsidies although family farms are supposed to be exempt. The panel of farmers called for a strong crop-insurance system and farm program. Kevin Paap, the Minnesota Farm Bureau president, said, “There is going to be a need for more [USDA guaranteed] loans. Will there be enough money?”
Paul Combs, a farmer, bank director and farm-equipment dealer from southeastern Missouri, said the farm economy “is limping along” after a multi-year boom in farm income. “Many [farmers] are barely able to cash-flow.” Farm-equipment manufacturers expect sales to drop by 15-25 percent this year, he said. Brantley, who grows rice, cotton, corn and soybeans in Arkansas, pointed to estimates that the market price for this year’s rice crop will be 20-percent lower than the 2013 crop.
“Farmers with especially high production costs and high levels of debt will likely face additional financial stress in the coming months if the current environment in crop sector profit margins persists,” said Nathan Kaufman of the Kansas City Federal Reserve Bank. While income is down, USDA analysts say farm debt is low by historical standards and assets are large, which provides a buffer.