On Thursday, the U.S. Department of Agriculture released its 10-year projections for the food and agriculture sector. The report noted that, "Over the next several years, the agricultural sector continues to adjust to lower prices for most farm commodities. Although reduced energy prices have decreased energy-related agricultural production costs, lower crop prices result in declines in planted acreage. Lower feed costs provide economic incentives for expansion in the livestock sector." Today's update highlights aspects of the report that focused on corn and soybeans.
Secretary of Agriculture Sonny Perdue testified before the House Agriculture Committee yesterday at a hearing on the “State of the Rural Economy.” Today’s update includes an overview of the testimony provided by the former GOP Governor of Georgia, as well as as some of the issues lawmakers addressed during the hearing, which lasted over three hours.
Prior to yesterday’s hearing, USDA released a short video (available below) indicating that Sec. Perdue has hit the ground running in his first days at the Department; the USDA update also included a timeline, with photos and news links, of what Sec. Perdue “has been up to the past few weeks.”
In his opening remarks at yesterday’s hearing, Committee Chairman Mike Conway (R, Tex.) stated that, “Mr. Secretary, while it took some time to get you confirmed, I want to commend you for landing on your feet and going full throttle from the second you took office. I greatly appreciate you weighing in with the administration on the vital importance of trade to our nation’s farmers and ranchers, particularly regarding NAFTA.
“Your work to begin reining in the Waters of the U.S. regulation and put in place a new rule that fully respects private property rights, federalism, and no fewer than three U.S. Supreme Court rulings is critical to helping dismantle this attempted federal land grab.”
Chairman Conaway added that, “Thus far, we have a safety net in place that is largely working as intended, with two exceptions: cotton and dairy. America’s cotton farmers — and the entire industry — have rallied around a way to mend their safety net to make it more effective in mitigating the effects of China’s and India’s predatory trading practices.
“You have the legal authority to effectuate this policy and I would urge you with the utmost urgency to exercise your authority. As you know, Congress would have done this a couple of weeks ago but for the recklessness of a couple of folks in the other chamber.”
And Committee Ranking Member Collin Peterson (D., Minn.) noted at the opening of yesterday’s hearing that:
As you’re well aware, the rural economy is trending downward. High yields have kept things afloat but I worry that we could find ourselves in real trouble especially if the weather doesn’t cooperate or market conditions decline.
Secretary Perdue’s Prepared Testimony
In his prepared remarks yesterday, Sec. Perdue indicated that, “Over the past three years, a strong dollar, generally weak global economic growth, and ample global production have combined to lower trade demand from the United States and to depress many commodity prices. As a result, we have seen a 50 percent drop in net farm income from the all-time record highs farmers experienced in 2013. This has squeezed some of our farmers and others who also contribute to the ag economy, and we are seeing it across the countryside in a broad range of areas from input dealers to food manufacturers.”
Sec. Perdue explained that, “It is clear that more and more producers are increasingly exposed to financial risk: bank credit is tightening, delinquency rates on both commercial and FSA loans, while still at relatively low levels, have been trending upwards since 2014, and land values are falling in many agricultural regions. All are contributing to increased uncertainty and concern in rural America.”
More specifically on the Farm Bill, Sec. Perdue explained that, “Roughly 1.8 million farms are enrolled in the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, which are helping cushion the downturn in some commodity prices. To date, the ARC and PLC programs have provided $5.3 billion in financial assistance for crop year 2014 to 1 million farms and $7.8 billion to 1.7 million farms for crop year 2015, which was paid out to producers last fall.
Overall, in calendar year 2016, government farm payments totaled about $13.0 billion in 2016 and are expected to total $12.5 billion in 2017.
“On top of that, the crop insurance program offset roughly $6.3 billion in farm losses in crop year 2015 and is expected to cover $3.6 billion in 2016.”
Sec. Perdue indicated that “not all programs are functioning as producers hoped they would,” and turned to dairy and cotton as examples.
And on the issue of the proposed USDA reorganization, Sec. Perdue stated that, “[J]ust last week, I directed a reorganization of USDA to focus our attention keenly on agricultural trade, consistent with direction from the 2014 Farm Bill. The Under Secretary for Trade and Foreign Agricultural Affairs will be responsible for coordinating agency efforts at opening new and protecting current markets.”
While addressing conservation, Sec. Perdue indicated that, “Stewardship is not optional for farmers, producers and ranchers. American agricultural bounty comes directly from the all the resources used to produce food and fiber. Today, that land and those resources sustain more than 320 million Americans and countless millions more around the globe. My father’s words still ring in my ears, ‘Son, if you take care of the land, it will take care of you. Owned or rented, we’re all stewards, and our responsibility is to leave it better than we found it.’ Without proper care, our resources could be squandered.”
DTN Ag Policy Editor Chris Clayton reported yesterday that, “Agriculture Secretary Sonny Perdue indicated Wednesday that a boost in the farm safety net for cotton producers likely will have to wait until the next farm bill is completed, despite encouragement from members of the House Agriculture Committee for Perdue to take action.
“‘The problem is I don’t want to give false hope because my options are limited,’ Perdue told the committee in a livestreamed hearing.”
The DTN article indicated that, “‘The best thing is that cotton prices continue upward,’ Perdue told the committee. ‘That’s the ultimate solution. The good news is supply and demand is improving with more consumption than production recently. So all of those are good news, but that doesn’t necessarily negate the fact that producers are already hurting.’
House Agriculture Committee Chairman Mike Conaway, R-Texas, repeatedly used his time to criticize a pair of Democrats on the Senate Agriculture Committee for ‘stabbing America’s cotton farmers in the back‘ by trying to also add a dairy program into the fiscal-year 2017 funding bill that eventually caused appropriators to take out a fix for the cotton program.
Mr. Clayton explained that, “Reps. Rick Crawford, R-Ark.; Trent Kelly, R-Miss.; and Jodey Arrington, R-Texas, each called on Perdue to do all he can to reestablish cotton as a crop eligible for commodity payments. Crawford said, ‘We’re all in this together. Cotton producers need relief and they need it yesterday.'”
“Kelly said he disagreed with Vilsack’s interpretation of the law and called on Perdue to reassess the possibility of designating cottonseed as an other oilseed,” the DTN article said.
Chairman Conaway, in his questions to Sec. Perdue highlighted the cotton issue, as well as trade. A video replay of the exchange is available in the video below.
Andrew Soergel, in an article yesterday at USNews Online, quoted Sec. Perdue as saying, “We’ve got to sell our way out of this supply-demand situation that is depressing prices in the U.S. now.”
Mr. Soergel added that, “In further explaining the new position and the organizational shift – which he referred to as an organizational ‘realignment’ – Perdue said Wednesday his goal was to find an undersecretary who can work with Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer as they begin looking at, among other things, potential tweaks to the North American Free Trade Agreement.
‘Our role at the USDA is to provide the expertise, the content to the secretary of commerce, Secretary Ross, and to our new trade representative, Mr. Lighthizer, in order to be a triumvirate of sales,’ Perdue said Wednesday.
A variety of other issues were discussed at yesterday’s hearing; following are some examples.
Rep John Faso (R., N.Y.) made points regarding labor issues during his remarks with Secretary Perdue (video clip available below).
During a portion of his questions, Rep. Rick Crawford (R., Ark.) discussed trade issues with Cuba (video clip available below).
And Democratic Illinois Representative Cheri Bustos brought up points regarding infrastructure and rural development.
Also with respect to rural development, fellow Georgian Austin Scott talked about the importance of rural broadband infrastructure at yesterday’s hearing (video clip available below).
Meanwhile, Rodney Davis (R., Il), who represents an area in central Illinois and chairs the Subcommittee on Biotechnology, Horticulture, and Research, stressed agricultural research issues during a portion of his time questioning Sec. Perdue.