The Senate Agriculture Committee holds its first farm bill hearing today in Kansas, 19 months before expiration of current law. Congress has not enacted a farm bill on time since 1990, so an early start seems prudent — the committee held its kickoff in Washington last week. Yet, it’s too early to push to the side other issues that could dominate 2017.
“Ag policy makers will likely spend most of 2017 on issues much bigger than the farm bill,” say economists David Widmar and Brent Gloy, who say half a dozen topics may well demand attention. They list potential upheavals in U.S. farm exports, courtesy of President Trump’s trade policy, the potential of higher tariffs or taxes on Mexican goods, the possibility that the new administration will change the biofuels mandate and “the gigantic issues” of immigration reform, health-care law and infrastructure spending.
“We think that we can all agree this is a big to-do list that Washington has in front of themselves. It is likely to keep them busy for quite some time,” say Widmar and Gloy, who write a blog on agricultural economics. Many of the items on their watch-list go beyond the control of the Senate and House Agriculture committees.
Farm groups, along with the rest of the loosely aligned farm bill coalition, are on the watch for any spending cuts in key USDA programs, whether this year or next, when the new farm bill will be drafted. The 2014 farm bill was projected to cost $100 billion a year, but is running below forecasted levels. Analysts such as Carl Zulauf of Ohio State University say the spate of low commodity prices could result in a large baseline for crop subsidies in the new farm bill.
Besides nixing the 12-nation TPP trade pact, Trump has suggested high tariffs on Chinese goods and plans to renegotiate the two-decades-old North American Free Trade Agreement with Canada and Mexico. “These three countries — for better or worse — have been at the epicenter of recent trade discussions,” say Widmar and Gloy. The three countries also are the three largest customers for U.S. ag exports, buying 46 percent of shipments. Canada and Mexico are the top two sources of food and ag imports.
While the White House has declared a new era of bilateral trade agreements, Canada and Mexico say an overhaul of NAFTA will be a three-way negotiation for its three members. Mexico expects talks to begin as early as May. The White House has not set a timeline. Mexico is Trump’s big target in NAFTA while Canada would see “tweaks” in trade rules.
Mexico is one of the two top markets for U.S. corn exports and has threatened to look for other suppliers. It’s also a leading market for U.S. soybeans, pork and dairy products. A border adjustment tax could strengthen the dollar and make U.S. farm exports more expensive overseas.
Trump sent a letter to an ethanol conference this week to declare “renewal fuels are essential to America’s energy strategy,” helping to calm concern over how the new administration will enforce the federal mandate to use biofuels, such as corn ethanol. The new EPA administrator, Scott Pruitt, was a biofuel skeptic while an Oklahoma state official. At his confirmation hearing, Pruitt said he would enforce the Renewable Fuels Standard while reserving the right to make adjustments to reflect market conditions. That satisfied many in farm country but some doubts linger. The agency usually proposes in May the biofuels target for the coming calendar year.
Stepped-up enforcement of immigration law has stirred concern in the agriculture sector, where half or more of farm workers are undocumented. The simmering debate over replacing the Affordable Care Act has rural ramifications, said NPR, pointing to a Vermont researcher who found health care costs are a top issue for farmers.