farm economy

When farm bill negotiators get down to business, the 47 House "conferees" will face an unusually big-caliber Senate team, with Majority Leader Mitch McConnell as one of its members, a rare role for the leader. Senate Agriculture Committee leaders, in cheering the formal appointment of their nine negotiators, used "bipartisan" to describe their approach and take a swipe at the Republican-written House farm bill and its proposal to require more people to work 20 hours a week to qualify for food stamps.

For Iowa farmer John Heisdorffer, the math is brutal in the U.S.-China tariff war: "You tax soybeans at 25 percent and you have serious damage to U.S. farmers." China, the No. 1 customer for U.S. farm exports, canceled purchases of nearly $140 million worth of U.S. soybeans just before the two countries imposed tit-for-tat tariffs on each other's products. Iowa Sen. Joni Ernst said on Sunday the Trump administration was working on "a number of new free-trade agreements," but China "will be a much longer haul."

With a trade war looming, commodity prices swooning, and the dairy industry in full-blown crisis, a growing number of American farmers are embracing a controversial set of farm policies that would manage the country’s commodity production and stabilize crop prices. <strong>No paywall</strong>

Agriculture Secretary Sonny Perdue drew a familiar picture of a fragile farm economy recently for lawmakers pondering the 2018 farm bill: income at half its 2013 level, high production costs, debt on the rise, and low commodity prices in the year ahead.

U.S. farm numbers continue to drift lower, dropping to 2.048 million according to a USDA survey conducted last June, only a shadow of their peak during the Depression. At the same time that the total falls, the portion of land operated by the biggest farms, the powerhouses with more than $1 million a year in sales, continues to grow, now covering a quarter of all farmland.

Five weeks after he told the largest U.S. farm group that he supports "a [farm] bill that includes crop insurance," President Trump asked Congress to slash the taxpayer-subsidized program by a third. The $26-billion cut over a decade was part of a fiscal 2019 budget package that called for the eradication of USDA's first green-payment program and for denial of crop subsidies and land stewardship payments to people with more than $500,000 in adjusted gross income.

Farm income is stagnant at the same time that farmers and ranchers across the country are borrowing larger amounts of money and paying sharply higher interest rates on the loans, said the Kansas City Federal Reserve Bank. "Large loans drove the increase in farm lending, which may heighten concerns about cash flow in 2018."

Farmers are among President Trump's staunchest supporters, and they have a response to his threats to scrap NAFTA and rewrite other trade agreements: "Without those global markets, our already-depressed farm economy would go down even more," said Zippy Duvall, leader of the largest U.S. farm group. "Trade should not be a dirty word," Duvall told the estimated 7,000 attendees at American Farm Bureau Federation convention, where Trump is scheduled to speak this afternoon.

As Congress expanded the role of crop insurance over the past couple of decades, the cost of the federally subsidized program tripled, to $9 billion annually over the past five years. The Congressional Budget Office says that if lawmakers are worried about costs, they could alter the program to cut outlays by 25 percent or more, with the likely consequence of reducing participation in the largest program in the farm safety net.

In back-to-back-to-back reports, USDA economists will paint a numerical picture of the U.S. farm sector this week, with estimates of farm income, ag exports, and the output, demand and prices for 2018 crops. Most likely, they will add up to large crops, comparatively low grain prices and constrained income heading into the fifth year since the collapse of the commodity boom.

Only four in 10 of the farmers polled for Purdue's Ag Economy Barometer say they expect the U.S. economy to grow in the year ahead, down sharply from the post-election euphoria that drove the monthly barometer to a record high in January. "Additionally, uncertainty regarding the future of agricultural trade, which an overwhelming majority of producers regard as important, could also be a concern for farmers when they consider future prospects," said the Purdue economists who run the barometer.

The government could pare as much as $464 million annually from the cost of running the taxpayer-subsidized crop insurance system if it set more stringent terms with insurers, said a congressional watchdog agency. The recommendations hit different areas than the White House has targeted, or that lawmakers are expected to pursue in writing the 2018 farm bill.