Looking at a New Safety Net
Conner: Trump Administration Creates Opportunity for New Farm Bill
CHICAGO (DTN) -- A new farm bill creates the opportunity to deal with current struggles with different commodities as well as potentially reward rural America for its support of President-elect Donald Trump, a prospect for U.S. Agriculture secretary said Monday at the DTN/The Progressive Farmer Ag Summit.
Chuck Conner, president and CEO of the National Council of Farmer Cooperatives, remains high on several speculative lists as a Trump nominee for Agriculture secretary. Conner was a deputy Agriculture secretary under President George W. Bush and served a five-month stint as acting secretary during that time.
Under the theme of "Farm Strong," the 10th annual DTN/The Progressive Farmer Ag Summit kicked off Monday and continues through Wednesday in Chicago. Markets in China, tax issues and farm policy were among the major topics Monday afternoon.
On Monday, Conner did not talk about any potential job interviews, but he highlighted the prospects for a new farm bill under the next Congress that would help deal with some of the problems with the current farm safety net.
Conner, who began working on farm policy in the late 1970s, noted most farm bills are dictated by events in the ag economy over the prior year. "If you can tell me where prices are, and more importantly, where they are trending around the time Congress begins the farm bill debate, then I can usually give you some direction where they are going to go with the farm bill," Conner said. "Short-term prices have a big impact on long-term farm policy."
Given the overwhelming strength of the rural vote for Trump, Conner noted Trump owes his presidency to rural America. That should translate into an opportunity to write a "blockbuster" farm bill.
"There is no doubt this election showed rural America still has a tremendous amount of influence on national elections, and in this case on farm policy as well," Conner said. "That represents an opportunity for us on a number of fronts, but particularly as we write a farm bill."
The Senate Agriculture Committee is going to be busy early next year dealing with hearings and votes for Trump nominees at USDA, but Conner still believes the House and Senate Agriculture Committees will focus in 2017 on drafting new farm legislation.
Conner stressed the economic situation for farmers isn't as bad as it was in the early 1980s leading up to the 1985 farm bill. Still, net farm income has dropped below the 10-year average, a key indicator that lawmakers watch.
"It is a trend line that is not good, but it also represents an opportunity for us in these times," he said.
BIG TOPICS FOR FARM POLICY
The big topics for farm policy will be to revamp policies and programs for dairy and cotton producers, Conner said. Historically, USDA has had a stronger dairy program to help manage markets and supply. The new program in the 2014 farm bill saw an enrollment decline with dairy farmers seeing few benefits from an insurance program pegged to feed costs.
Cotton producers saw their commodity programs go away in the 2014 farm bill, but the insurance program created for cotton, known as STAX, also is not popular with producers and has limited enrollment. Cotton producers have aggressively pushed to get cottonseed designated as a separate commodity crop.
Further, Conner said he thinks Congress will address some inequities of the Agricultural Risk Coverage program that causes farmers in one county to get a large ARC payment while farmers in an adjacent county get none.
"This has played out a number of times in the past year -- a real disparity there and frankly an unfairness that has to be corrected legislatively," Conner said.
Those demands for changes to commodity programs will likely require Congress to look at cutting other parts of the farm bill to prop up the farmer safety net, Conner said. "Just to maintain the current safety net is going to require more resources," Conner said. "If you fix dairy, if you fix cotton, if you fix some of these discrepancies in payments, it could require significantly more resources."
And yet Trump's tax proposals are projected to increase the budget deficit by an average of $600 billion a year over the next decade -- $6 trillion over 10 years -- if all of those tax cuts are implemented. That would leave Congress reluctant to prop up safety net programs.
"We're not expecting to have enormous resources in the next farm bill," Conner said.
Conner said it might be possible to take some funds from the Supplemental Nutrition Assistance Program, which takes up the lion's share of funding at USDA, to pay for farmer programs. Yet, Conner noted that would be a significant battle with urban members of Congress and budget hawks.
PUSH FROM CRITICS
While farmers would like to see the safety net strengthened, Conner also pointed out there will continue to be a push from critics to reduce payment limits in the commodity programs and cap payment indemnities on crop insurance. There will also continue to be a big drive to cut premium subsidies for crop insurance as well. Conner said such changes to crop insurance would likely lead the largest farmers to get out of the insurance program.
"You would be knocking out those people who are already the least likely to collect to the detriment of everybody else," Conner said. "Insurance rates would have to skyrocket to cover only those higher-risk producers."
Conner also warned against the idea of dividing nutrition and farm programs in a farm bill. He said there would never be another farm bill again if that were to happen.
Regulations were another key factor in Trump's election. Conner said he expects Trump to take early action to get rid of some of the rules such as the waters of the U.S. regulation. "In effect, you guys voted for Trump in rural America mainly to say 'We expect you to stop that.'"
Yet Conner also noted farm critics, such as staff at the Environmental Working Group, will push a tough agenda on issues such as water quality to target farmers and demand tougher restrictions on production. Strong conservation incentives in the farm bill can help offset some of these battles, Conner said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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