Ag Policy Blog

As President Donald Trump prepares to release his administration's budget blueprint for fiscal year 2018, several major agricultural groups wrote leaders on the House and Senate appropriations committees on Wednesday asking the committees to increase funding for the farm safety net.

The president's budget proposal is expected to call for more Defense, Homeland Security and law enforcement spending. Other areas of the federal budget, the president proposes to cut, though few details have been released. Initial reports suggest major cuts to EPA and foreign aid.

While administrations often speak with authority about their budget plans, they are basically outlines of the administration wish list. Congress does the actual budgeting for federal departments.

Congress currently has a deadline in April to complete the budget for the 2017 fiscal year as well.

The 12 farm organizations built their letter on the backbone of a March 1 letter sent by the House Agriculture Committee to the House Budget Committee. The Ag Committee urged its Budget colleagues to "require no further budget reductions."

The ag groups reiterated the Ag Committee's concerns that rural America is struggling as farmers and ranchers deal with continuing low prices and higher costs. "Net income has dropped 50% from just four years ago, the largest four-year percentage decrease since the Great Depression."

As DTN has reported, USDA and the Food & Agricultural Policy Research Institute (FAPRI) at the University of Missouri have both projected farm income will continue to fall throughout 2017. Commodity prices are expected to remain low.

The farm groups stated the debt-to-asset ratios remain below the 1980s farm crisis, but farmers are still struggling with low prices and eroding their capital reserves. Farmers in some commodities have higher debt ratios than others. "Based on averages, one in ten farmers is either highly or extremely highly leveraged." Those debt-to-asset ratios are 24% for wheat farmers, 16% for corn farmers and 19% for cotton.

Farmers are worried about high stocks as hopes of new market access have gone away with the cancellation of U.S. participation in the Trans Pacific Partnership. Yet, farmers also are facing higher subsidies from competitors, the farm organizations stated. In other developed economies, the average subsidies is about 18 cents for every dollar a farmer receives, while in the U.S. the average is about 8 cents.

That said, the farm groups point out the 2014 farm bill cut farm programs and reduced the safety net. The changes in farm programs particularly hit dairy and cotton farmers.

And with all of that in mind, the farm groups wrote the appropriators to declare their support for a strong farm bill in 2018. The groups want Congress to provide the dollars necessary to help farmers cope through the current times. The group want additional funding outside the current farm bill resources to make that happen.

"While we do not yet have a full-fledged financial crisis in rural America, many farmers and ranchers are not going to be able to cash-flow in 2017. With USDA projecting continued low prices in 2018 and beyond, this situation threatens to quickly and vastly expand with each and every crop year. The factors outlined above make the case for a strong safety net that will ensure that U.S. farmers and ranchers have the wherewithal to continue to farm and ranch until market conditions improve. Providing this safety net will be impossible to achieve without providing additional funding outside the current Farm Bill resources," the groups wrote.

The letter comes after House Agriculture Committee Chairman Michael Conaway, R-Texas, had told farmers at the Commodity Classic event that he expected no new funding for the farm bill, but hoped to simply hold on to the budget baseline set in 2014. Conaway had said any increase in programs for the next farm bill was going to have to be a rob Peter to pay Paul kind of situation.

Signing on to the letter were:

The American Farm Bureau Federation, American Soybean Association, American Sugar Alliance, National Association of Wheat Growers, National Barley Growers Association, National Milk Producers Federation, National Sunflower Association, National Corn Growers Association, National Cotton Council, National Farmers Union, National Sorghum Producers, Panhandle Peanut Growers Association, Southern Peanut Farmers Federation, Southwest Council of Agribusiness, USA Rice Federation, US Canola Association, US Dry Bean Council and the Western Peanut Growers Association.

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