A Better Safety Net for Young Farmers

OMAHA (DTN) -- As senators work out their details for a farm bill, young farmers on Tuesday told them about the need for base acres and higher reference prices, as well as access to crop insurance and better terms on loans.

The U.S. Senate Subcommittee on Commodities, Risk Management and Trade heard from a Mississippi crop farmer, a Minnesota livestock producer and a Florida dairy farmer, as well as a Farm Credit lender. While it was a subcommittee hearing, nearly every member of the full Senate Agriculture Committee wanted their chance at the microphone to make statements, ask questions and plug their own farm bill goals.

The Senate hearing follows the House Agriculture Committee advancing its version of the farm bill out of committee last month. That bill boosts the farmer safety net but is opposed by a majority of Democrats over cuts to nutrition and other budget moves to fund the bill.

STABENOW JABS HOUSE BILL

Hearing from farmers about the need to boost the safety net, Sen. Debbie Stabenow, chairwoman of the Senate Agriculture Committee, said her farm bill framework addresses a lot of those needs. The Senate bill would allow new farmers to establish base acres, Stabenow noted. "We can talk about ARC and PLC, but if you don't have base acres, you don't have a chance to get that."

Still, Stabenow suggested the House bill would adversely affect beginning farmers because the bill would increase ARC and PLC by "an extraordinary 70%," while also relaxing or removing payment and eligibility limits for larger farms.

The House bill includes a provision that would waive the $900,000 adjusted gross income limit for farmers that draw 75% or more of their income from agriculture. The bill also increases payment caps for those farmers from $125,000 to $155,000. Stabenow said these changes "will make land rents even more unaffordable for beginning farmers, making access even more challenging, and I think that's something we really have to discuss."

Sen. Tina Smith, D-Minn., who chairs the subcommittee, said Tuesday she has heard more about the challenges of younger producers finding access to land. She also cited that fewer beginning farmers receive assistance from USDA compared to established farmers, and a major driver for that is the lack of base acres.

"It's challenging for them to use the USDA commodity safety net," she said.

Smith also cited a study last year from the Food and Agricultural Policy Research Institute showing a 10% increase in PLC "would result in hundreds of millions of taxpayer dollars going into the pockets of landlords and investors, not farmers." Base acres also increase land prices and rent on that ground.

Sen. Cindy Hyde-Smith, R-Miss., ranking member of the subcommittee, credited the House Agriculture Committee for advancing its farm bill, and added, "I will continue to emphasize the need for more 'farm' in farm bill."

Hyde-Smith said commodity programs and crop insurance need to address "skyrocketing interest rates" and input costs. "And we know when you have to borrow money to buy big, expensive equipment -- when that interest rate goes up, that can be a gamechanger in so many operations," Hyde-Smith said. "And it can determine if you continue to do this or not."

FARMER TESTIMONY

Christian Good, a farmer from Macon, Mississippi, grew up on a farm raising corn, soybeans, cotton, cattle and catfish. Good said he bought his first piece of ground in 2020 with a Farm Credit loan. Good said Mississippi farmers are pressured this year from rising input costs and interest rates along with lower commodity prices.

Speaking about the current farm bill, Good said, "The lack of meaningful safety net that our current farm bill provides is a real concern for farmers in my community."

While Good is enrolled in Price Loss Coverage, he said the price floor for crops "are so outdated that I can confidently say that if I were to receive those prices for corn and for soybeans, my farm and my family's farm would be out of business."

Pointing to the House bill provision that allows an update of base acres, Good said, "For young farmers, this change would be monumental."

Good noted the House bill allows a broader update of base acres for everyone. He called base acres a "foundational piece for risk management and, more important, the balance sheets of younger farmers that aren't as strong."

Tessa Parks grows grass-fed beef and sells organic hay in Northfield, Minnesota. Her operation this year added 100 rented acres of hay, and they bought their tractor. Parks focused on increasing access to capital such as expanding Farm Service Agency loan limits.

Like Good, Parks also said the farm bill needs to find ways to allow beginning farmers to establish base acres, "which would provide greater financial stability for producers like me."

Asked about crop insurance, Parks noted farmers need three years of tax filings to qualify for crop insurance, which basically leaves them without a safety net. Given her family's operation, Parks said crop insurance isn't a major focus unless there were improvements to a forage program.

"It's been difficult to find the right fit for our farm," Parks said.

Parks said she and her husband have kept their records on their operation to try to buy a whole-farm insurance policy, "but it still doesn't work for us."

Parks plugged a provision from Sen. Stabenow that would expand the use of USDA's Noninsured Crop Disaster Assistance Program (NAP).

Kevin Lussier, a third-generation Florida dairy farmer who milks 300 head of Jersey cows, testified about Farm Service Agency loans helping him establish his farm. Lussier said traditional lenders consider agriculture risky, and he said FSA loans have been "invaluable to the success of our farm" and other farmers and ranchers. Lussier plugged increasing the lending limits for FSA ownership and operating loans to reflect the higher costs of production.

"The cost of land has skyrocketed, and inputs have gone up," Lussier said. He added, "Those numbers have increased so much that those limits need to follow suit."

Both the House bill and Senate framework look to increase FSA lending limits.

Lussier also talked about the value of the Dairy Margin Coverage (DMC). The current DMC is limited to 5 million pounds of milk for Tier I coverage. The House bill increases the limit to 6 million pounds. "Moving the cutoff to 10 million pounds would allow more producers to benefit."

Lussier said his 300 cows hit the DMC cap now, so expanding his operation would leave part of his milk production with no safety net.

On a different topic, Lussier also talked about the importance of the farm bill considering issues such as rural childcare. To keep young farmers operating, Lussier said it's important to have more options for childcare in rural areas.

FARMER ACT

Hoeven, R-N.D., asked Good about crop insurance and plugged his bill, the "FARMER Act," which would reduce crop insurance premiums and increase protection levels. Most GOP members of the committee back the bill. Hoeven suggested his bill would help end ad-hoc disaster payments and help farmers with access to credit.

Good talked about the difficulty of a younger farmer turning a profit. "Deductibles may be the profit margin. So, I think at the end of the day, if we can reduce that deductible, we can make crop insurance more profitable, and we will have a much more solid base."

The full Senate hearing can be watched here: https://www.agriculture.senate.gov/….

Also see "House Aggies Advance Farm Bill" here: https://www.dtnpf.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

(c) Copyright 2024 DTN, LLC. All rights reserved.