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House Ag Subcommittee Reviews Farm Safety Net Issues

On Wednesday, the House Ag Subcommittee on General Farm Commodities and Risk Management discussed the Farm Bill, crop insurance, and ad hoc disaster programs in a meeting titled, “A Hearing to Review the Efficacy of the Farm Safety Net.”  Witnesses at Wednesday’s hearing included Illinois farmer Jeff Kirwan, as well as farmdoc’s Gary Schnitkey.

Subcommittee Ranking Member Austin Scott (R., Ga.) noted in his opening remarks that, “This committee should take on a larger role in crafting policy, so tomorrow’s disasters leave less of an impact on our producers and create less risk for our food supply chain.

“Without a doubt, it is difficult to find a silver bullet to remedy all of the problems facing our agriculture industry.”

Rep. Scott added that, “As we review the effectiveness of the safety net and begin to consider future changes, our primary objective must be to do no harm to the existing programs and make sure any enhancements are to the benefit of all of production agriculture, not just certain regions of the country or specific causes of loss.”

And Full Ag Committee Ranking Member Glenn ‘GT’ Thompson (R., Pa.) indicated on Wednesday that, “Whether it be a natural disaster that can wipe out a crop at a moment’s notice, a foreign government that interferes with a market, or a pandemic that disrupts the entire supply chain—producers are in a constant battle to remain viable. That is why a strong safety net is a critical piece of rebuilding a robust rural economy.”

Rep. Thompson outlined his guiding principles for disaster programs during the hearing, which include:

  • The program must complement rather than compete with crop insurance;
  • The program should be easy to implement, and;
  • The program should be reliable and respond quickly to disaster events.

With respect to perspective from witnesses at Wednesday’s meeting, in prepared remarks, Illinois farmer Jeff Kirwan explained that, “Crop insurance is the cornerstone of my operation.

Our ability to market our grain, manage risk, and financially survive depends on crop insurance.  Hundreds of thousands of dollars invested in a growing crop can be wiped out in one weather event.

“And there are broader impacts on the ag economy.  Considering what farmers spend on ag inputs, machinery, equipment, and crop protection, we must succeed for the entire industry.  That is why crop insurance is so critical.”

Mr. Kirwan added that, “On top of crop insurance, looking at the recent past, whether it was CFAP, WHIP+, or Market Facilitation Program payments, the timely emergency assistance that you and USDA provided allowed farmers like me to meet each of these challenges, pay our bills and continue producing.

“Typically, most farm program payments are authorized under farm bill programs. However, since 2018, USDA has implemented several ad hoc payment programs in response to the impact on the U.S. agricultural sector of trade retaliation and the Coronavirus Disease2019 (COVID-19) pandemic. Payments under ad hoc programs are expected to decline substantially in 2021 as market and trade conditions improve.” (“U.S. Farm Income Outlook: February 2021 Forecast,” by Randy Schnepf and Stephanie Rosch. Congressional Research Service (February 24, 2021)).

“Through it all, the farm safety net— ARC-PLC —  also played a role in keeping farmers afloat.  But in the absence of ad hoc disaster assistance, there’s no question those programs – and the timing of payments – were simply not designed to address extraordinary economic and weather-related disasters.  There needs to be a review of these programs, and farm organizations must be a part of that conversation.”

And farmdoc’s Gary Schnitkey pointed out that, “One hopes that the worst of the trade disputes and COVID control measures are behind us.  Still, the justification for MFP and CFAP programs may have exposed weaknesses in the existing commodity title programs.”

Dr. Schnitkey noted that, “Many commodities have had higher prices since late summer 2020, and income looks good in 2021.  This more robust outlook differs from what many– me included — would have expected last year at this time, illustrating how situations can change abruptly in agriculture.

“The committee’s evaluation of the efficacy of the programs is timely as the safety net will come into play in the future.”

Keith Good Photo

Keith Good

Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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