The House Agriculture Committee proved that the show must go on today, even if the Secretary of Agriculture has yet to be confirmed. The Committee held a hearing to review the economic challenges facing rural America as they begin Farm Bill preparations.
Members heard from several witnesses who highlighted these factors, including low farm commodity prices, declining net farm income, tightening credit conditions, a strong dollar, and unfair trade practices by foreign competitors.
“There is real potential for a crisis in rural America,” said Chairman K. Michael Conaway. “Net farm income for America’s farmers and ranchers has fallen 50 percent over the past four years with the collapse in commodity prices. As we begin the farm bill process, these economic realities must be front and center. The farm bill serves as a safety net for producers, helping manage risk in difficult times. We are in those times now, and we must deliver solutions that work for our nation’s farmers and ranchers.”
The Chairman started his opening statement by acknowledging the Committee usually kicks off every year with the Secretary of Agriculture offering testimony. While nominee Sonny Perdue has not yet been confirmed, Conaway has visited with Perdue several times, believes he is an excellent choice, and hopes he can be confirmed soon.
Conaway also laid out to the Committee why the next Farm Bill is vital and why it needs to be passed on time.
America’s farmers and ranchers are facing very difficult times right now. This is something that the Federal Reserve, the Agricultural & Food and Policy Center, the Food and Agricultural Policy Research Institute, USDA, and even The Wall Street Journal agree on.
Farmers and ranchers have endured a 45 percent drop in net farm income over the last three years, the largest three-year drop since the start of the Great Depression. The most recent ERS report now tells us that net farm income will be down again in 2017. Overall, ERS is forecasting a 50 percent drop in net farm income since 2013. It’s hard for any of us to imagine our income being sliced in half.
We are told that 1 in 10 farms are now highly or extremely leveraged. Nominal debt levels are at all-time highs and real debt levels are approaching where they were prior to the 1980s farm financial crisis.
Yes, interest rates are lower and that certainly is a mitigating factor that differentiates our situation from the 1980s. But, as the recent Wall Street Journal article stated, and as I have experienced as a CPA in West Texas, there is real potential here for a crisis in rural America.
That is why I am so eager for Governor Perdue to be confirmed. Even as we work to develop a new Farm Bill, the Secretary of Agriculture may well be called upon to help struggling farmers and ranchers. Let’s all pray that a good crop and better prices this year will make that unnecessary.