On May 2nd, the Senate Ag Subcommittee on Commodities, Risk Management, and Trade held a hearing entitled “Commodity Programs, Credit, and Crop Insurance – Part 1: Producer Perspectives on the Farm Safety Net.”
Below are some high-level takeaways on some of the key issues covered in the hearing prepared by Delta Strategy Group.
Subcommittee Chair Tina Smith (D-MN)
- Though commodity prices are good, producers are struggling to cover their input prices. Climate change and extreme weather events are also applying increased pressure to farmers every year. Producers need safety net programs to mitigate these losses and even out the inevitable fluctuations in markets. We know that some of these safety net programs are harder to utilize for small and medium sized farmers and specialty crop farmers. We should focus these sessions on how to make these programs work for small and beginning farmers.
Subcommittee Ranking Member Cindy Hyde-Smith (R-MS)
- We need to ensure that farming remains an attractive career for young and next-generation farmers. We need to ensure that we do not neglect the small farmers or punish large farmers. The current farm safety net is inadequate, especially for seed cotton and rice producers. Existing reference prices do not reflect recent events going back to the trade war with China, and I hear from many different producers that Congress needs to act to raise reference rates.
Committee Chair Debbie Stabenow (D-MI)
- We have spent billions in ad hoc disaster response spending, and I have serious concerns regarding our ability to continue to fund these programs as House Republicans push to cut spending.
- We must ensure that our farm safety nets work well for specialty farmers and help develop diversified income streams for farmers.
Committee Ranking Member John Boozman (R-AR)
- Congress must protect agriculture from undue burdens and protect producers’ flexibility. We cannot tie conservation or climate programs to traditional risk management programs. We have to make sure not to create a one-size-fits-all approach to conservation programs.
Zippy Duvall, President, American Farm Bureau Federation
- USDA’s recent farm sector income forecast shows a significant decrease when accounting for inflation while the share of input costs continues to rise. Interest rates have significantly impacted farmers as well.
- We have seen significant increases in farm sustainability, but we need to prioritize traditional farm policy and ensure that farmers have affordable access to supplies and the ability to manage market volatility. Voluntary participation in climate and conservation programs has proved effective in both incentivizing farmers and empowering sustainability. That said these programs should never be tied to a farmer’s ability to get insurance.
- We are being vastly outspent in research and development by countries like China. If we make voluntary programs available, farmers will take advantage and help us lead in both food production and sustainability goals.
Rob Larew, President, National Farmers Union
- The farm safety net is being tested in an unprecedented way right now. We need a well-funded, permanent disaster program; we need to increase reference prices and loan rates to offset higher production costs; additional crop insurance options should be made available to specialty crop producers; farmers should be able to move marginal land from production in exchange for crop insurance protections; there should be a dual enrollment option for ARC and PLC.
Patrick Johnson, Producer and Director, National Cotton Council:
- We need a strong cotton safety net consisting of an effective commodity policy providing either price or revenue protection to address prolonged periods of low prices. We need a strong and fully accessible suite of crop insurance products that producers can purchase to tailor risk management. Supply chain disruptions and geopolitical challenges have led to a dramatic increase in input costs, leading to decreased profitability.
- When calculated based on seed cotton, production costs are far above PLC reference prices. Today’s production costs are diminishing the effectiveness of current reference prices, which should be increased. Cotton producers should also not face limits to crop insurance options. Eliminating the prohibition on simultaneous enrollment in PLC and the stacked income protection plan would allow producers to tailor their risk management practices and decrease dependence on ad hoc disaster programs.