[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
PRODUCER PERSPECTIVES ON THE 2023 FARM BILL
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON GENERAL FARM COMMODITIES, RISK MANAGEMENT, AND CREDIT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
APRIL 26, 2023
__________
Serial No. 118-8
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-037 PDF WASHINGTON : 2023
COMMITTEE ON AGRICULTURE
GLENN THOMPSON, Pennsylvania, Chairman
FRANK D. LUCAS, Oklahoma DAVID SCOTT, Georgia, Ranking
AUSTIN SCOTT, Georgia, Vice Minority Member
Chairman JIM COSTA, California
ERIC A. ``RICK'' CRAWFORD, Arkansas JAMES P. McGOVERN, Massachusetts
SCOTT DesJARLAIS, Tennessee ALMA S. ADAMS, North Carolina
DOUG LaMALFA, California ABIGAIL DAVIS SPANBERGER, Virginia
DAVID ROUZER, North Carolina JAHANA HAYES, Connecticut
TRENT KELLY, Mississippi SHONTEL M. BROWN, Ohio
DON BACON, Nebraska SHARICE DAVIDS, Kansas
MIKE BOST, Illinois ELISSA SLOTKIN, Michigan
DUSTY JOHNSON, South Dakota YADIRA CARAVEO, Colorado
JAMES R. BAIRD, Indiana ANDREA SALINAS, Oregon
TRACEY MANN, Kansas MARIE GLUESENKAMP PEREZ,
RANDY FEENSTRA, Iowa Washington
MARY E. MILLER, Illinois DONALD G. DAVIS, North Carolina,
BARRY MOORE, Alabama Vice Ranking Minority Member
KAT CAMMACK, Florida JILL N. TOKUDA, Hawaii
BRAD FINSTAD, Minnesota NIKKI BUDZINSKI, Illinois
JOHN W. ROSE, Tennessee ERIC SORENSEN, Illinois
RONNY JACKSON, Texas GABE VASQUEZ, New Mexico
MARCUS J. MOLINARO, New York JASMINE CROCKETT, Texas
MONICA De La CRUZ, Texas JONATHAN L. JACKSON, Illinois
NICHOLAS A. LANGWORTHY, New York GREG CASAR, Texas
JOHN S. DUARTE, California CHELLIE PINGREE, Maine
ZACHARY NUNN, Iowa SALUD O. CARBAJAL, California
MARK ALFORD, Missouri ANGIE CRAIG, Minnesota
DERRICK VAN ORDEN, Wisconsin DARREN SOTO, Florida
LORI CHAVEZ-DeREMER, Oregon SANFORD D. BISHOP, Jr., Georgia
MAX L. MILLER, Ohio
______
Parish Braden, Staff Director
Anne Simmons, Minority Staff Director
______
Subcommittee on General Farm Commodities, Risk Management, and Credit
AUSTIN SCOTT, Georgia, Chairman
ERIC A. ``RICK'' CRAWFORD, Arkansas SHONTEL M. BROWN, Ohio, Ranking
DOUG LaMALFA, California Minority Member
DAVID ROUZER, North Carolina SHARICE DAVIDS, Kansas
DUSTY JOHNSON, South Dakota DONALD G. DAVIS, North Carolina
MARY E. MILLER, Illinois ERIC SORENSEN, Illinois
BARRY MOORE, Alabama JASMINE CROCKETT, Texas
BRAD FINSTAD, Minnesota NIKKI BUDZINSKI, Illinois
JOHN W. ROSE, Tennessee SALUD O. CARBAJAL, California
RONNY JACKSON, Texas ANGIE CRAIG, Minnesota
MONICA De La CRUZ, Texas ALMA S. ADAMS, North Carolina
JOHN S. DUARTE, California SANFORD D. BISHOP, Jr., Georgia
ZACHARY NUNN, Iowa ------
MARK ALFORD, Missouri
(ii)
C O N T E N T S
----------
Page
Brown, Hon. Shontel M., a Representative in Congress from Ohio,
opening statement.............................................. 3
Submitted letter............................................. 123
Scott, Hon. Austin, a Representative in Congress from Georgia,
opening statement.............................................. 1
Prepared statement........................................... 2
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 5
Prepared statement........................................... 5
Witnesses
Haag, Tom, President, National Corn Growers Association, Eden
Valley, MN..................................................... 6
Prepared statement........................................... 8
Submitted questions.......................................... 123
Holladay, Shawn, Chairman, National Cotton Council, Lubbock, TX.. 15
Prepared statement........................................... 17
Submitted questions.......................................... 125
Flansburg, Aaron, Chairman, USA Dry Pea and Lentil Council,
Palouse, WA.................................................... 23
Prepared statement........................................... 24
Submitted questions.......................................... 126
Satterfield, Kirk, Chairman, USA Rice, Benoit, MS................ 26
Prepared statement........................................... 27
Submitted questions.......................................... 128
Moore, Andrew, President, U.S. Canola Association, Dalton, GA.... 30
Prepared statement........................................... 32
Submitted questions.......................................... 129
Cates, Daryl, President, American Soybean Association, Columbia,
IL............................................................. 59
Prepared statement........................................... 60
Submitted questions.......................................... 130
Frischhertz, J.D., Patrick A., General Manager, St. Louis
Planting, Inc.; Member, Board of Directors, American Sugar Cane
League, Plaquemine, LA; on behalf of American Sugar Alliance;
American Sugarbeet Growers Association......................... 70
Prepared statement........................................... 71
Submitted questions.......................................... 133
Cheyne, Brent, President, National Association of Wheat Growers,
Klamath Falls, OR.............................................. 76
Prepared statement........................................... 77
Submitted questions.......................................... 135
Meeker, Craig, Chairman, National Sorghum Producers, Wellington,
KS............................................................. 85
Prepared statement........................................... 87
Submitted questions.......................................... 137
McMillan, Daniel T., Producer, Southern Grace Farms, Enigma, GA;
on behalf of United States Peanut Federation................... 89
Prepared statement........................................... 91
Submitted questions.......................................... 137
PRODUCER PERSPECTIVES ON THE 2023 FARM BILL
----------
WEDNESDAY, APRIL 26, 2023
House of Representatives,
Subcommittee on General Farm Commodities, Risk Management,
and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Austin
Scott of Georgia [Chairman of the Subcommittee] presiding.
Members present: Austin Scott of Georgia, Crawford,
LaMalfa, Rouzer, Johnson, Miller of Illinois, Moore, Finstad,
Rose, Jackson of Texas, De La Cruz, Duarte, Nunn, Alford,
Thompson (ex officio), Bost, Mann, Brown, Davids of Kansas,
Davis of North Carolina, Crockett, Budzinski, Carbajal, Craig,
Adams, and Bishop.
Staff present: Harlea Hoelscher, Patricia Straughn, Trevor
White, John Konya, Rodney Brooks, Kate Fink, Amar Nair, Ashley
Smith, Michael Stein, and Dana Sandman.
OPENING STATEMENT OF HON. AUSTIN SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
The Chairman. The Committee will come to order. Welcome,
and thank you for joining today's hearing entitled, Producer
Perspectives on the 2023 Farm Bill. After brief opening
remarks, Members will receive testimony from our witnesses
today, and the hearing will be open to questions. In
consultation with the Ranking Member and pursuant to Rule
XI(e), I want to make Members of the Subcommittee aware that
other Members of the full Committee may be joining us today.
So over the course of today, Members of the Subcommittee
will hear testimony from producers and leaders of ten national
commodity organizations. These witnesses represent a broad
segment of American agriculture and know firsthand the
challenges facing farmers in rural American. Since the 2018
Farm Bill was enacted into law, the agriculture sector has
experienced numerous shifts in Federal policy outside of our
standard farm bill programs. This includes trade aid to respond
to illegal retaliatory actions by China, a variety of programs
enacted in response to the coronavirus pandemic, and numerous
iterations of disaster assistance responding to extreme weather
events. All told, over $90 billion in ad hoc assistance has
been provided over the past 6 years. While this assistance was
much needed at the time and has allowed many of our farmers to
survive economic conditions they might not have otherwise, it
is not predictable, reliable, or fiscally responsible to expect
such assistance in the future.
That is why making improvements to the 2023 Farm Bill is so
critical. Farmers need assurance that over the next 5 years a
safety net will be in place that can stand the test of changing
markets and extreme weather events. Title I programs,
specifically Agriculture Risk Coverage and Price Loss Coverage,
otherwise known as ARC and PLC, were established in the 2014
Farm Bill, and the reference price used to determine assistance
were set using 2012 cost-of-production data.
Meanwhile, inflation has gone up significantly since 2012,
and the price of most inputs has doubled or even tripled since
2021 alone. Farm sector debt is at record high levels, and net
farm income is expected to fall 16 percent from 2022 to 2023.
These warning signs underscore the importance of our work on
the 2023 Farm Bill. As the risk challenges of farming continue
to mount, I think it is safe to say that if you are not farming
today, you are likely not going to be farming tomorrow.
As we deliberate, we must make sure we are doing everything
we can to help all beginning, young, and small farmers and
taking care of future generations. One thing I want to point
out is that approximately 90 percent of our nation's food comes
from approximately 12 percent of our producers. I want to say
that again. Ninety percent of the food supply inside the United
States comes from approximately 12 percent of our producers.
There is no question that food security is national security,
and that 12 percent does considerable work in making sure that
we have the abundant, affordable food supply that we depend on.
The testimony we will hear today will shed light on what
improvements will be necessary to ensure we get the policy
right and can craft a 5 year farm bill that meets the needs of
producers across the country. I look forward to hearing
proposals on how we can ensure the safety net is being
appropriately targeted to acres in production and the farmers
bearing the financial risk of growing the food and fiber to
feed and clothe not just this nation, but consumers across the
world.
I want to thank the first panel of witnesses appearing here
today and preemptively say thank you to the witnesses appearing
on the second panel later this afternoon. Your testimony is a
vital part of the information-gathering process that will guide
our Committee in the farm bill reauthorization process.
[The prepared statement of Mr. Austin Scott follows:]
Prepared Statement of Hon. Austin Scott, a Representative in Congress
from Georgia
This hearing of the General Farm Commodities, Risk Management, and
Credit Subcommittee will come to order. Over the course of today,
Members of the Subcommittee will hear testimony from producer leaders
of ten national commodity organizations. These witnesses represent a
broad segment of American agriculture and know first-hand the
challenges facing farmers and rural America.
Since the 2018 Farm Bill was enacted into law, the agriculture
sector has experienced numerous shifts in Federal policy outside of our
standing farm bill programs. This includes trade aid to respond to
illegal retaliatory actions by China, a variety of programs enacted in
response to the coronavirus pandemic, and numerous iterations of
disaster assistance responding to extreme weather events. All told,
over $90 billion in ad hoc assistance has been provided over the past 6
years.
While this assistance was much needed at the time and has allowed
many of our farmers to survive economic conditions they might not have
otherwise, it is not predictable, reliable, or fiscally responsible to
expect such assistance in the future. That is why making improvements
to the 2023 Farm Bill is so critical. Farmers need assurance that over
the next 5 years, a safety net will be in place that can stand the test
of changing markets and extreme weather events.
Title I programs, specifically the Agriculture Risk Coverage and
Price Loss Coverage--or ARC and PLC--were established in the 2014 Farm
Bill and the reference prices used to determine assistance were set
using 2012 cost of production data. Meanwhile, inflation has gone up
significantly since 2012, and the price of most inputs has doubled or
even tripled since 2021 alone. Farm sector debt is at record high
levels, and net farm income is expected to fall 16 percent from 2022 to
2023. These warning signs underscore the importance of our work on the
2023 Farm Bill.
As the risks and challenges of farming continue to mount, I think
it's safe to say that if you're not farming today, you're likely not
going to be farming in the future. As we deliberate, we must make sure
we're doing everything we can to help all beginning, young, and small
farmers and taking care of future generations.
One thing I want to point out is that approximately 90% of our
nation's food comes from approximately 12% of our producers. There is
no question that food security is national security, and that 12% does
considerable work in making sure we have the abundant, affordable food
supply that we depend on.
The testimony we will hear today will shed light on what
improvements will be necessary to ensure we get the policy right and
can craft a 5 year farm bill that meets the needs of producers across
the country. I look forward to hearing proposals on how we can ensure
the safety net is being appropriately targeted to acres in production
and the farmers bearing the financial risks of growing food and fiber
to feed and clothe not just the nation, but consumers across the world.
I want to thank the first panel of witnesses appearing here today
and preemptively say thank you to the witnesses appearing on the second
panel later this afternoon. Your testimony is a vital part of the
information gathering process that will guide our Committee in the farm
bill reauthorization process.
With that, I will yield to the Ranking Member of the Subcommittee,
Congresswoman Shontel Brown, for any opening remarks she would like to
make.
The Chairman. With that, I yield to the Ranking Member of
the Subcommittee, Congresswoman Shontel Brown, for any opening
remarks that she would like to make.
OPENING STATEMENT OF HON. SHONTEL M. BROWN, A REPRESENTATIVE IN
CONGRESS FROM OHIO
Ms. Brown. Thank you. Good morning. I would like to begin
by thanking Chairman Scott for gathering us together today for
this hearing. It is a distinct honor and privilege to serve as
the Ranking Member of the General Farm Commodities, Risk
Management, and Credit Subcommittee. In the American spirit of
collaboration and bipartisanship, I look forward to working
with you, Chairman Scott, to ensure that fundamental safety net
programs and risk management tools that our farmers and
ranchers rely on to feed America's families are buttressed and
bolstered. These issues represent an intersection of the most
important issues impacting our farmers and ranchers and,
subsequently, American families. As we begin to work in earnest
to craft the 2023 Farm Bill, it is my sincere hope to work
effectively together with a collective goal of providing our
nation's farmers and families within our Subcommittee's
jurisdiction.
However, Mr. Chairman, what is crucial to achieving that
goal is ensuring that diverse perspectives are represented at
the table and here in our committee room. Yet, as I look at our
panel this morning, and as I will again later this afternoon, I
would be remiss if I did not draw attention to the stark lack
of diversity represented here today in terms of farm size,
gender, and race. Our nation's strength in agriculture and as a
people is our diversity. We must acknowledge that this farm
bill is for everyone, no matter what you look like, what you
grow, or where you grow it.
Mr. Chairman, I hope it is easy for you to agree that a
critical component of writing a farm bill that works for all is
ensuring that everyone is invited to sit at the table. I would
like to enter into the record a letter formally requesting an
official opportunity for us to hear from minority and
disadvantaged farmers and stakeholders on farm bill issues
pertaining to the Subcommittee.
The Chairman. Without objection.
[The letter referred to is located on p. 123.]
Ms. Brown. Thank you.
Today's hearing gives us the opportunity to hear directly
from our major commodity groups' leaderships to share their
perspectives on how the existing farm bill Title I and Title XI
programs have served their commodities. I also look forward to
hearing insights regarding our direction for the upcoming 2023
Farm Bill.
The uptick in production costs over the last few years,
coupled with the increased frequency of natural disasters, make
it imperative that we ensure the protection and resiliency of
our farm safety net programs and risk management tools. Over
the last 6 years, we have seen nearly $70 billion in ad hoc
payments to producers. This is $70 billion in addition to our
existing farm bill safety net and disaster mitigation programs.
These dollars, although welcomed by those who received them,
have been distributed in an inequitable manner, favoring
certain producers over others, as has been confirmed by the
Government Accountability Office. We have also heard in the
case of ad hoc disaster aid that these payments are often
incredibly delayed, sometimes not reaching eligible producers
until months after the disasters occurred.
This is the bottom line. These ad hoc payments are
unpredictable, unreliable, and inefficient. It is our duty to
ensure that the upcoming farm bill includes a strong, up-front
investment in the farm safety net to provide our producers with
timely assistance when disaster strikes.
When it comes to ensuring that producers of all
backgrounds, including specialty crop growers, urban farmers,
socially disadvantaged, and beginning farmers, have the tools
they need to succeed and meaningfully contribute to our
nation's food supply chain. I am always willing to collaborate
with colleagues across the aisle whenever and wherever possible
because our producers come before politics.
I am eager to hear from our witnesses today and those we
have in the future to get firsthand and frank insight into what
is working well within the various program areas and where
there is room for improvement.
And with that, Mr. Chairman, I yield back.
The Chairman. Thank you, Ranking Member Brown.
And I now recognize Chairman Thompson for any opening
comments he would like to make.
OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA
Mr. Thompson. Well, thank you, Mr. Chairman and Ranking
Member Brown, for holding this important hearing.
As you all are aware, over the last 4 months, the
Agriculture Committee has been working overtime to hear the
input of stakeholders, not just through hearings in Washington,
D.C., but at field listening sessions across the country,
several of us just returning from one of these listening
sessions in Gainesville, Florida, and others who attended
events in New York, Texas, California, and my home State of
Pennsylvania. We had a roundtable actually on Friday in North
Carolina. And in addition, I have traveled to over 40 states
since initially becoming the Republican leader of the House
Committee on Agriculture. And I have done this because I know
that to get the policy right, we need to hear directly from the
folks in the countryside instead of voices within the beltway.
Today, the countryside is coming to us, and I am very
pleased that we will hear directly from producers about the
priorities of ten national commodity groups. To have them
gathered in one room in one place in one day is pretty
incredible, and so thank you to both the Chairman and the
Ranking Member for making that happen.
These policies were developed through grassroots efforts of
the members of those associations and will provide valuable
insight to the Committee as we work to craft a strong, on-time,
and effective 2023 Farm Bill. Through the listening sessions
and my travels, I have heard loud and clear that the farm
safety net, both commodity policy and crop insurance, needs
improvements. These improvements will come with a price tag,
which is why it was so critical that Ranking Member Scott,
David Scott and myself, were able to craft a strong budget
views and estimates letter that was unanimously adopted by the
Committee. This letter to the Budget Committee clearly
articulated the needs and justifications for additional
resources to write a meaningful farm bill.
To maximize the impact of any additional funding that may
come, we will need valuable feedback from stakeholders about
where those dollars can go the furthest to assist our farmers
and ranchers and foresters, which I will ultimately benefit
consumers and rural communities.
The insight from today's hearing is an important part of
ensuring Members of this Committee have a clear understanding
of the right policy. Then it will be incumbent upon us to
navigate the policies to get the best possible farm bill to the
President's desk. This is no small undertaking, and it will
require all of us, stakeholders and Members alike, to pull on
our work boots. But if there is any sector that knows the value
of hard work, it is agriculture.
So I want to thank all the witnesses for being here today
for their participation and throughout this process, and I
yield back.
[The prepared statement of Mr. Thompson follows:]
Prepared Statement of Hon. Glenn Thompson, a Representative in Congress
from Pennsylvania
Thank you, Mr. Chairman and Ranking Member Brown for holding this
important hearing. As you all are aware, over the last 4 months, the
Agriculture Committee has been working overtime to hear the input of
stakeholders, not just through hearings in Washington, D.C., but at
field listening sessions across the country.
Several of us are just returning from one of these listening
sessions in Gainesville, Florida and others have attended events in New
York, Texas, California, and my home State of Pennsylvania. In
addition, I have traveled to over 40 states since becoming Republican
leader of the House Committee on Agriculture. I have done this because
I know that to get the policy right, we need to hear directly from the
folks in the countryside instead of voices within the beltway.
Today, the countryside is coming to us. I am very pleased we will
hear directly from producers about the priorities of ten national
commodity groups. These policies were developed through grassroots
efforts of the members of those associations and will provide valuable
insight to the Committee as we work to craft a strong, on-time, and
effective 2023 Farm Bill.
Through the listening sessions and my travels, I have heard loud
and clear that the farm safety net--both commodity policy and crop
insurance--needs improvements. These improvements will come with a
price tag, which is why it was so critical that Ranking Member Scott
and I were able to craft a strong Budget Views and Estimates letter
that was unanimously adopted by the Committee. This letter to the
Budget Committee clearly articulated the needs and justifications for
additional resources to write a meaningful farm bill.
To maximize the impact of any additional funding that may come, we
will need valuable feedback from stakeholders about where those dollars
can go the furthest to assist our farmers, which will ultimately
benefit consumers and rural communities. The insight from today's
hearing is an important part of ensuring Members of this Committee have
a clear understanding of the right policy, then it will be incumbent
upon us to navigate the politics to get the best possible farm bill to
the President's desk. This is no small undertaking, and it will require
all of us--stakeholders and Members alike--to pull on our work boots.
But if there is any sector that knows the value of hard work, it is
agriculture.
So, I want to thank all of the witnesses again for their
participation today and throughout this process, and I yield back.
The Chairman. Thank you, Mr. Chairman.
And before I give a very brief introduction of the people
that are testifying before us today, I want to remind all of
the Members that we will have a second panel that will begin at
2:00 today. And so once the first panel is completed, we will
break, and then we will have a second panel at 2:00.
Our first witness today is Mr. Tom Haag, President of the
National Corn Growers Association. The next witness on this
panel is Mr. Shawn Holladay, Chairman of the National Cotton
Council. Our third witness today is Mr. Aaron Flansburg,
Chairman of USA Dry Pea and Lentil Council. Our next witness is
Mr. Kirk Satterfield, Chairman of USA Rice. Our fifth and final
witness for this panel is Mr. Andrew Moore, President of the
U.S. Canola Association.
Thank you all for being here today. We are now going to
proceed with the testimony. You will each have 5 minutes. The
timer in front of you will count down to 0, at which point the
time has expired, so please begin to wrap your comments up as
you see it approaching zero.
Mr. Haag, please begin when you are ready.
STATEMENT OF TOM HAAG, PRESIDENT, NATIONAL CORN GROWERS
ASSOCIATION, EDEN VALLEY, MN
Mr. Haag. Thank you, Chairman Scott, Ranking Member Brown,
and the rest of the Members, for this opportunity here to
testify today.
My name is Tom Haag. I am a fourth generation family farmer
from south central Minnesota, where my son and I grow 1,700
acres of corn and soybeans. And I am currently the President of
the National Corn Growers Association.
Farmers across the country are busy today planting seeds
and preparing for a strong crop and a future harvest. The
Committee's continued outreach is laying critical groundwork
for a strong, bipartisan farm bill. Corn growers are as
optimistic for this process as we are for this year's harvest.
This morning, I will focus my testimony on NCGA's top farm
bill recommendations for the crop insurance and commodity
prices. The areas of emphasis for corn growers are summarized
in our key principles: protecting the Federal crop insurance,
strengthening the producers' safety net, bolstering U.S.
international market development, and supporting voluntary
conservation programs.
Our farm bill recommendations seek to make USDA programs
more effective and responsive through strategic investments and
policy enhancements. Federal crop insurance has a proven track
record for helping producers quickly respond to natural
disasters. Corn growers consistently ranked crop insurance as
the most important program and title of the farm bill. We
strongly oppose any efforts to restrict producers' access to
crop insurance products and oppose harmful programs cuts that
would negatively impact crop insurance products, their
delivery, or the sound structure of the program.
One area where crop insurance can be improved is the cost
of coverage to producers. NCGA broadly supports increasing
affordability of crop insurance. Many corn growers purchase
endorsement policies and higher levels of buy-up. But for
others, the individual cost of purchasing coverage can
discourage higher levels of coverage.
In the commodity title, ARC Program provides important
countercyclical revenue coverage for farmers. Corn growers have
identified two places to improve the program's effectiveness.
Currently, our county payment's rate may not exceed ten percent
of the county benchmark revenue. This maximum payment rate has
limited assistance provided to producers. NCGA supports
increasing the maximum rate above ten percent in order to
provide increased assistance to growers who experience
significant revenue losses. For example, in the year 2020,
growers across Iowa suffered major losses due to the duration.
The yield losses were widespread and deep enough for our county
to trigger payments to multiple counties. But the program's
effectiveness was restricted due to the limitations.
NCGA also recommends increasing the coverage level for our
county above the current 86 percent of the county's revenue
benchmark to make programs more responsive to revenue losses.
The PLC Program provides important price protection for
farmers. Corn growers value the PLC Program as optional,
particularly during the periods of sustained lower average
prices. The current statutory reference price for corn is $3.70
per bushel, well below the current market price and long-term
historical average prices.
NCGA supports strengthening the effective reference price's
escalator, which allows more responsive price protection. The
provision is capped at 115 percent. The statutory reference
price for corn, the escalator would be capped at $4.26. For
corn growers, the effective reference price is expected to
trigger higher levels of price protection starting in the year
2024. NCGA supports strengthening this market-oriented
mechanism by raising the 115 percent cap or modifying the
formula to be more responsive to changes in the market.
NCGA supports funding the Market Access Program and the
Foreign Market Development Program. NCGA also supports three
initiatives to make the existing working land conservation
programs more effective. We appreciate the budget challenges
and varied approaches to current issues impacting the
agriculture sector. Corn growers stand ready to provide
additional feedback and support as the legislative process
moves forward towards a successful farm bill harvest this year.
The Chairman. Mr. Haag, we are approaching beyond the 5
minutes. We are having problems with the clock, but if you
could just finish up, I would appreciate it. Are you done?
Mr. Haag. I am sorry?
The Chairman. We are obviously having problems with the
timer, so----
Mr. Haag. Okay. I am through anyway, though. Thank you, Mr.
Chairman.
[The prepared statement of Mr. Haag follows:]
Prepared Statement of Tom Haag, President, National Corn Growers
Association, Eden Valley, MN
Chairman Austin Scott, Ranking Member Shontel Brown, and Members of
the House Agriculture Committee, thank you for the invitation to
testify today before the General Farm Commodities[, Risk Management,
and Credit] Subcommittee.
My name is Tom Haag. I am a fourth-generation family farmer in
south-central Minnesota where my son and I grow more than 1,700 acres
of corn and soybeans. I currently serve as President of the National
Corn Growers Association (NCGA).
Founded in 1957, NCGA is a farmer-led trade association with nearly
40,000 dues-paying corn farmers nationwide and more than 300,000 corn
growers who contribute to corn promotion programs in their states. The
NCGA mission is to create and increase opportunities for corn growers
and our vision is to sustainably feed and fuel a growing world.
Farmers across the country are busy today planting seeds and
preparing for a strong crop and future harvest. The hearing today and
the Committee's continued outreach is laying critical groundwork for a
strong, bipartisan farm bill. Corn growers are as optimistic for this
process as we are for this year's harvest. Thank you to all the Members
and staff for your tremendous work on behalf of the American farmer.
In terms of farm bill priorities, the consensus number one issue
for corn growers continues to be protecting Federal crop insurance. As
users of the commodity programs, NCGA also supports improvements to
strengthen both the Agriculture Risk Coverage (ARC) and Price Loss
Coverage (PLC) commodity programs. Together, the crop insurance and
commodity programs authorized through the farm bill are the most
significant Federal risk management tools for corn producers.
This morning I will focus my testimony on NCGA's approach to the
farm bill and offer our top recommendations for the crop insurance and
commodity titles.
2023 Farm Bill Approach
As a grassroots led association, NCGA and our affiliated state
associations have worked with grower leaders from across the country to
develop principles and prioritize policy recommendations for the farm
bill. We are working closely together to ensure the next farm bill
addresses the current and future needs of all corn growers.
The values, objectives, and areas of emphasis for corn growers in
the 2023 Farm Bill are best summarized in our key principles:
Protecting Federal crop insurance
Strengthening the producer safety net
Bolstering U.S. international market development efforts
Supporting voluntary conservation programs, and
Championing initiatives important to rural America.
Our farm bill recommendations seek to make existing USDA programs
more effective, efficient, and responsive through strategic investments
and policy enhancements. The 2018, 2014 and earlier farm bills have all
laid a great foundation for the modern producer safety net that
Congress can continue to build upon.
Since the 2018 Farm Bill was signed into law, corn growers and
stakeholders within the broader farm economy have faced and weathered a
litany of difficulties and challenges outside of producers' control.
Key risk management tools and USDA programs continue to be stress
tested by natural disasters, economic challenges, and black swan events
like COVID-19 and global conflicts. Corn growers appreciate efforts by
Congress and the Administration to provide temporary and ad hoc
assistance for these unusual risks and losses that were uncovered by
existing Federal programs. While recent programs outside the farm bill
have benefited producers, the reauthorization of the farm bill is an
opportunity to strengthen the effectiveness and responsiveness of these
risk management tools for farmers.
After studying potential new programs and novel approaches to these
challenges, we continue to find that most of our members are more
supportive of improvements to existing crop insurance and commodity
programs than creating entirely new, complex, and untested structures
or schemes. NCGA has a track record of advocating for market-oriented
farm policies that help growers manage their risks. Our focus for the
safety net continues to be on accessible tools geared towards revenue,
which factors in both yield and price risks that producers face
throughout the growing and market seasons.
Corn growers appreciate the complicated budget environment in which
the upcoming farm bill legislation will be developed. This March, NCGA
and over twenty affiliated state associations joined a letter signed by
400 national, regional, and state agriculture associations, ``to
express our strong support for providing the Senate Committee on
Agriculture, Nutrition, and Forestry and House Committee on Agriculture
with sufficient budgetary resources to write a new bipartisan, multi-
year, comprehensive, and meaningful piece of legislation.''
With over ninety million acres of corn planted across the country
most years, NCGA understands small improvements and changes to Federal
policies can potentially lead to large budgetary impacts. Given the
nation's fiscal outlook, debt, and deficit, we recognize that hard
choices will have to be made on Federal priorities. Just as corn
growers work to be good stewards of the land, we also strive to be good
stewards of Federal farm safety net resources.
Crop Insurance
Delivered through the successful public-private partnership model,
Federal crop insurance has a proven track record of helping producers
quickly respond to natural disasters. Corn growers consistently rank
crop insurance as the most important program and title of the farm
bill.
To meet the growing list of challenges and demands of tomorrow,
NCGA believes crop insurance must continue to be protected and
strengthened as the cornerstone of the Federal safety net. Throughout
the development of the new farm bill, corn growers will strongly oppose
any efforts to restrict producer access to crop insurance products and
oppose harmful program cuts that would negatively impact crop insurance
products, their delivery, or the sound structure of the program.
NCGA is a proud and active member of the Crop Insurance Coalition
which is comprised of a diverse range of farmer, lending, input,
conservation, and crop insurance organizations that work together to
advocate on behalf of crop insurance.
Corn growers are grateful that leaders on the Agriculture
Committees are committed to educating their peers on the benefits of
this risk management tool and the critical role it plays in the
agricultural value chain.
One area where crop insurance can be improved is the cost of
coverage to producers. While inflation has made headlines for increased
input costs including fuel, fertilizer, and land, the costs of
purchasing crop insurance have also risen. Farmers paid $6.55 billion
in premium costs for 2022, a seventy-five percent increase from $3.75
billion in 2020, before the onset of the recent high input cost
environment. The higher costs for coverage have added pressure on
growers already facing difficult decisions about managing rising costs.
NCGA broadly supports increasing the affordability of crop
insurance for producers. Many corn growers are still able to purchase
endorsement policies and higher levels of buy up coverage, but for
others, the individual costs of purchasing coverage can discourage
higher levels of coverage therefore leading to a higher risk profile.
Data published by the Risk Management Agency (RMA) demonstrates how
Federal crop insurance is a major pillar of risk management for the
nation's corn growers. According to RMA's summary of business, in 2022,
corn growers purchased Federal crop insurance coverage on over 79.8
million acres of corn, of which 11.3 million acres had additional
companion and endorsement policies. Nationwide, corn farmers insured
$66.5 billion in liabilities through the purchase of over 384,000
policies that earned premium.
Last year, in response to widespread drought and other natural
disasters, total crop insurance indemnities for corn have so far
totaled $4.28 billion. Despite the large scale of indemnities, the
nationwide loss ratio for corn is 0.68, far less than the statutory
target of 1.0. A loss ratio below 1.0 means that crop insurance
payments were less than the total premiums paid by producers and the
Federal Government. Over the past twenty years, from 2003 to 2022, the
national loss ratio for corn has averaged 0.72.
Most corn growers purchase revenue protection policies, which
protect against loss of revenue due to a production loss, change in
price, or a combination of both. In 2022, revenue protection policies
alone covered over 73.8 million acres of corn. Built into these
policies is harvest price protection, which is critical coverage for
farmers who forward sell their corn and other crops, as well as
livestock producers who produce their own grain. Yield protection
policies covered an additional 4.9 million acres of corn in 2022.
Corn growers also have access to many endorsements and options
including several area-wide policies. In 2022, 4.65 million acres had
coverage through the Supplemental Coverage Option (SCO) and 3.19
million acres had coverage through the new Enhanced Coverage Option
(ECO). The policies are optional endorsements where growers can pay for
additional area-based coverage on top of their underlying crop
insurance policy. Corn growers also purchase hurricane insurance
protection-wind index (HIP-WI), margin protection policies, and whole-
farm revenue protection (WFRP). In 2022, HIP-WI endorsement covered 1.5
million acres, representing $256.8 million in liability for corn, and
paid $131.2 million in indemnities for all commodities with the top
recipients in order by crop including corn, soybeans, and cotton.
NCGA and affiliated state organizations continue to partner with
other entities for the study and creation of improved crop insurance
endorsements and policies. Whether through Federal research and
development or private development for approval of Federal policies by
the Federal Crop Insurance Corporation (FCIC), NCGA and our state
associations have been successful in developing policies that follow
sound insurance principles and are actuarially appropriate. Examples of
these successful efforts include the widely adopted Trend-Adjusted
Yield Endorsement and the recent voluntary endorsement for corn
producers who split-apply nitrogen.
Agriculture Risk Coverage (ARC)
NCGA supports the continuation and improvement of the Agriculture
Risk Coverage (ARC) program, which provides important counter-cyclical
revenue coverage for farmers with base acres. After nearly a decade of
experience with ARC, corn growers have identified two specific
components within the existing formula where Congress can significantly
improve the commodity program's effectiveness. These statutorily set
factors are the maximum payment rate and the coverage level.
Despite higher-than-average commodity prices in recent years, the
ARC-County program has supported growers experiencing revenue losses
when yields were reduced due by natural disasters. For example, in the
2020 crop year ARC-County provided $41.5 million in assistance to corn
growers in yield impacted areas, while the price-based PLC program was
not triggered nationally for corn growers.
Under current law, ARC county payment rates may not exceed ten
percent of the ARC-County benchmark revenue. In reviewing recent Farm
Service Agency (FSA) county level data when ARC payments have been
triggered, the maximum payment rate has often limited assistance
provided to producers enrolled in the program. In practice, the maximum
payment rate acts as an additional de facto payment limitation within
the ARC program.
NCGA supports increasing the maximum payment rate above ten percent
in order to provide increased assistance to growers who experience
significant revenue losses. While our members remain supportive of the
ARC-County program, the maximum payment rate currently limits
assistance and does not adequately address the true depth of the losses
producers experience.
For example, in 2020, growers across Iowa and neighboring states
suffered major losses due to the devastating derecho. The storm and
accompanying damaging winds hit millions of acres of highly productive
crop land in August before corn harvest could begin. The yield losses
were widespread and deep enough in Iowa for ARC-County to trigger
payments in multiple counties, but the program's effectiveness in
offsetting losses was restricted due to the ten percent benchmark
revenue limitation.
NCGA also recommends increasing the coverage level for ARC-County
above the current eighty-six percent of the county revenue benchmark.
This change would make the commodity program more responsive to growers
facing revenue losses. Corn growers understand and agree that no
Federal program should be designed to cover one hundred percent of
losses or make farmers entirely whole. However, the current coverage
level was previously set during the 2014 Farm Bill and now deserves
reconsideration.
The two proposed changes are simple, straightforward, and effective
in strengthening the safety net. Increasing the maximum payment rate
and the coverage level will allow producers to receive more responsive
and more adequate assistance in times of revenue losses, particularly
in areas experiencing disasters. The February 2023 CBO baseline
projects average ARC-County payments of $21.10 per corn base acre. The
two changes are expected to increase the average per base acre
projected payments for corn growers.
Although ARC-County and revenue-based Federal crop insurance
policies both offer forms of revenue protection, Congress designed the
programs to offer complementary risk protection by covering different
losses. For example, ARC-County provides protection when prices are
lower than a historical benchmark period. Crop insurance will not cover
those situations because the prices used in crop insurance guarantees
reset each year. ARC-County provides useful protection in years in
which prices have declined from a historically higher price period,
while the crop insurance revenue policies provide price protection
within a single year.
NCGA and our grower members also remain appreciative of the
multiple policy improvements to the ARC-County program in the 2018 Farm
Bill including provisions incorporating trend adjusted yields;
increasing the transitional yield, i.e., yield plug; and shifting the
primary source of yield data for the ARC-County program from the
National Agricultural Statistical Service (NASS) to aggregated crop
insurance data from RMA.
Price Loss Coverage (PLC)
NCGA supports the continuation and improvement of the Price Loss
Coverage (PLC) program, which provides important price protection for
farmers with base acres. Corn growers value having the PLC program as
an option particularly during periods of deep and sustained lower than
average commodity prices. For this farm bill, NCGA is focused primarily
on improvements to the effective reference price escalator.
The current statutory reference price for corn is $3.70 per bushel,
which is well below current market prices and long-term historical
average prices. From 2012 to 2021, the national marketing year average
price for corn was $4.31. The PLC reference price for corn was eighty-
six percent of the average historical prices, translating to an eighty-
six percent level of protection.
Over the most recent 5 year period of 2017 through 2021, the
national marketing year average price is slightly lower at $4.21, with
the reference price representing protection at roughly eighty-eight
percent. Notably, when the current marketing year for the 2022 crop
finishes, these historical average prices will likely increase
considerably.
NCGA supports strengthening the PLC effective reference price
``escalator,'' which was first included in the 2018 Farm Bill. The
effective reference price allows the program to have more responsive
levels of protection that can rise and fall in response to actual
market prices. Under current law, the effective reference price for a
crop year is the higher of the statutory reference price or eighty-five
percent of the 5 year Olympic average market price, capped at 115
percent of the statutory reference price. For corn the escalator is
capped at $4.26.
For corn growers, the effective reference price is expected to
trigger higher levels of price protection starting with the 2024 crop
year. In the February 2023 baseline, the Congressional Budget Office
(CBO) projects that the effective reference price for corn will be
$4.01 per bushel for the 2024 crop year, at the current maximum of
$4.26 for the 2025 and 2026 crop years, $4.25 for 2027, and $3.71 for
the 2028 crop year. According to these CBO projections, this mechanism
will provide additional support for corn growers through at least 4 of
the 5 crop years of the 2023 Farm Bill. However, the potential support
is expected to be restricted by the 115 percent cap for at least 2 crop
years.
Similarly, the Food and Agricultural Policy Research Institute
(FAPRI) at the University of Missouri estimates that the average
effective reference price for corn over the next 10 crop years (2024-
2033) will be $4.05 per bushel. According to FAPRI, this mechanism will
provide additional support for corn growers through all 5 crop year
years of the 2023 Farm Bill, including effective reference prices of
$4.01 for the 2024 crop year, $4.24 for 2025, $4.25 for 2026, $4.24 for
2027 and $4.14 for the 2028 crop year.
Both economic models and baselines demonstrate that the escalator
will provide corn growers with an increased effective reference price
through the majority of the crop years covered through the 2023 Farm
Bill. These automatic increases in protection will provide meaningful
support to corn growers through current law even if prices continue to
be volatile or decline.
Corn growers recognize that improvements to the PLC effective
reference price can also enhance risk protection for producers. NCGA
supports strengthening this market-oriented mechanism by raising the
115 percent cap or otherwise modifying the effective reference price
formula to be more responsive to changes in market prices. The February
2023 CBO baseline projects average PLC payments of $26.13 per corn base
acre. Improvements to the effective reference price formula are
expected to increase the per base acre projected PLC payments for corn
growers.
A major challenge for corn growers in evaluating and pursuing
potential changes to farm programs is the most recent bearish
projections by CBO for long-term commodity prices. CBO projects that
marketing year average prices for corn will fall to $3.90 for the 2028
marketing year, decreasing further to $3.80 for the 2029 crop year,
before increasing 10 to $3.90 for the 2030 and 2031 crop years.
These price projections and their proximity to current statutory
reference prices practically means that any increase in the statutory
reference prices will have large Federal budgetary costs. More
meaningful enhancements in recognition of recent prices and higher
costs of production will have even greater Federal costs.
Commodity Program Administration
NCGA is committed to ensuring farm programs work for producers. The
farm bill provides an important opportunity to highlight areas where
implementation of commodity and loan programs has gone well and where
Congress can help improve upon the administration of farm programs.
In terms of program designs impacting both the PLC and ARC
commodity programs, NCGA opposes lowering payment limits and adjusted
gross income eligibility limits below current statutory levels. Corn
growers also believe FSA should have more flexibility to accommodate
the growing complexity of farm business structures and
intergenerational family farms. We remain committed to the decoupled
nature of commodity programs from current production in order to avoid
government programs driving or distorting planting decisions. NCGA
supports the voluntary update of base acres and program yields when
applicable.
Implementation of the current farm bill has been fairly smooth,
helped by familiarity of the programs, adequate sign-up periods, and
increased transparency of the program components, as well as USDA fact
sheets and additional resources on farmers.gov. We commend the
Committee for continued support of web-based decision tools that help
facilitate growers' education and evaluation of commodity programs and
options.
Corn growers support continuing the annual opportunity to choose
between commodity programs. We appreciate that commodity program sign-
up periods are now similarly timed with crop insurance decisions, which
allows coordinated risk management decisions to be based on current
market conditions.
Corn growers continue to utilize the opportunity to elect programs
on an annual basis as shown in FSA-published data. In the 2022 crop
year over 91.7 million base acres of corn were enrolled in the
commodity programs, including 54.7 million corn base acres in ARC-
County, 35.6 million in PLC, and 1.3 million in ARC-Individual. For the
2021 crop year, producers enrolled 45 million corn base acres in ARC-
County, 48.4 million in PLC, and 1.3 million in ARC-Individual. In
terms of percentages, for the 2022 crop year, 59.7 percent of corn base
acres were enrolled in ARC-County, 38.9 percent in PLC, and less than
two percent in ARC-Individual. For the 2021 crop year, 47 percent of
corn base acres were enrolled in ARC-County, 51 percent were in PLC,
and less than two percent in ARC-Individual.
Corn growers appreciate the working relationships with the FSA
local, state, and Federal offices. NCGA encourages the continuation of
the Acreage and Crop Reporting Streamlining Initiative (ACRSI) and
similar efforts to improve the farmer customer experience and create
greater efficiency throughout multiple USDA agencies. The agencies
within the Farm Production and Conservation (FPAC) Mission Area are
already working more closely together and should continue to share
common data and best practices.
Building upon the lessons of the pandemic, we believe opportunities
exist to further reduce the reporting burden on producers. USDA should
continue to find more ways to either utilize data already submitted to
the Department or to allow for the submission of additional information
electronically, which may reduce the number and length of in-person
visits to county offices and save farmers both time and money.
While the use of marketing assistance loans (MALs) is small among
corn growers, the program remains an important risk management tool,
particularly for corn growers without base acres. According to FSA, for
the 2022 crop year around 4,700 MAL loans have been issued covering
over 360 million bushels of corn. For the 2021 crop year, 6,208 loans
were issued on over 468 million bushels of corn. The national loan rate
for corn is $2.20 per bushel.
Additional Farm Bill Priorities
In addition to the crop insurance and commodity titles, the farm
bill includes programs important to corn growers including trade,
conservation, agricultural research, rural broadband, energy, and the
biobased economy.
In the trade title, NCGA supports increasing Market Access Program
(MAP) funding from $200 million up to $400 million annually and the
Foreign Market Development (FMD) program funding from $34.5 million up
to $69 million annually. These programs boost U.S. agricultural exports
and help agriculture and related businesses in rural America. NCGA is
supportive of H.R. 648, the Agriculture Export Promotion Act introduced
by Representatives Newhouse, Panetta, and many more Members. An
independent study showed that between 1977 and 2019 these programs
resulted in a return of $24.50 for every dollar invested and a 13.7
percent average annual increase in value of agricultural exports.
In the conservation title, NCGA supports three initiatives to make
the existing working land programs more effective in combating weed
resistance, reducing nutrient losses through farmer-led collaborative
watershed projects, and speeding the development and adoption of
innovative conservation practices by strengthening the interim
conservation practice standard program. Corn growers also encourage the
Committee to examine opportunities for increased flexibility within
conservation programming.
Corn growers support legislation to enable producers to more easily
adopt precision practices that will allow them to remain competitive in
a rapidly modernizing industry. NCGA has endorsed H.R. 1459 the
Producing Responsible Energy and Conservation Incentives and Solutions
for the Environment (PRECISE) Act as introduced by Representatives
Hinson, Panetta Finstad, and Craig. NCGA also supports H.R. 1495 the
Precision Agriculture Loan (PAL) Act introduced by Representatives
Feenstra, Panetta, Tokuda, Thompson, and Guest.
NCGA supports H.R. 1290 introduced by Representatives Finstad and
Costa which would clarify propane storage as an eligible use for funds
under the storage facility loan program. Corn growers are also
supportive of H.R. 1219 the Food and Agriculture Industry Cybersecurity
Act led by Rep. Pfluger. This bill will take necessary steps to protect
farmers across the country from growing cyber threats.
NCGA continues to engage in multiple broad-based coalitions and is
supportive of farm bill recommendations from these collaborative
entities. As a steering committee member of the Food and Agriculture
Climate Alliance (FACA), NCGA was involved in FACA's farm bill working
groups. NCGA also continues to be involved with the AGree Economic and
Environmental Risk Coalition (E2 Coalition) that focuses on
recommendations for agriculture data and reducing policy barriers to
conservation practice adoption. NCGA is supportive of the Agriculture
Innovation Act, S. 98, introduced by Senators Klobuchar and Thune,
which would strengthen USDA's ability to confidentially aggregate data
the department already collects and allow for potential research on
topics important to producers.
Challenges in the Corn Economy
In 2022, U.S. corn farmers planted 88.6 million acres of corn,
producing over 13.7 billion bushels with an estimated value $91.7
billion. Corn farmers faced weather challenges last year that reduced
planted acres and were detrimental to productivity in some regions. The
USDA March Prospective Planting Report indicates farmers intend to
plant 92 million acres of corn in 2023. Given an estimated planted-to-
harvest-acres ratio and USDA forecast yield of 181.5 bushels per acre,
2023 has the potential to be a record production year surpassing 15.2
billion bushels. Corn planting progressed ahead of a 5 year pace in the
first half of April, but many acres remain to reach completion with
continued possibility for weather delays. Plus, the full growing season
and harvest period of weather and environmental uncertainty remain.
Widespread drought and intense heat impacted much of the corn belt
during the 2021 and 2022 growing seasons. Unfortunately, growers across
the great plains are still facing extreme (D3) and exceptional (D4)
drought conditions, which could impact planting and productivity of
corn this year. According to the U.S. Drought Monitor, approximately
twenty-eight percent of corn production is located in areas
experiencing drought as of April 18, 2023. The latest report shows that
ninety-eight percent of corn production in the State of Nebraska is
within areas with drought conditions along with seventy-eight percent
in Kansas, sixty-three percent in Texas, and thirty-nine percent in
Iowa.
In other parts of the country, corn growers are facing delays in
corn planting due to late snow, excess moisture, and flooding. It
remains too early to know if corn production will be as heavily
impacted as it was in 2019 when wet weather conditions during planting
season across the high plains and throughout the Missouri River Basin
prevented many farmers from accessing flooded fields. Nationwide, 2019
set a record with over 19 million acres of cropland reported as
prevented from being planted, including over 11 million acres of corn.
Inflation, particularly around farm input prices, continues to be a
major concern. Inputs such as diesel, machinery, building materials,
and labor all experienced notable increases in price during 2021 to
2022. The most significant input cost increase has been fertilizer.
Historically fertilizer costs are about \1/3\ of the operating costs
for growing corn but are estimated at forty-six percent of corn
operating costs for 2022 and 2023.
Although fertilizer costs have declined from 2022 peaks, fertilizer
remains costly compared to prices over the past decade. Depending on
the form of nitrogen, April 2023 farm prices were fifty percent to more
than eighty percent higher than the 2009-2020 average price.
Similarly, prices for phosphorus fertilizers were more than fifty
percent higher and potash thirty percent higher. Fertilizer nutrients
are especially critical in corn productivity and returning those
nutrients is important in maintaining healthy soils.
Although production costs have been higher in recent years, corn
prices have also seen volatility and large swings in prices over the
last 2 years. As the economy transitions towards lower inflation,
commodity prices tend to move down faster than costs. For the 2023
crop, USDA projects the average farm price of corn at $5.60 per bushel,
a full dollar lower than $6.60 per bushel estimated average farm price
for the 2022 crop year. If realized, corn growers will face a 17.9
percent drop in corn price from 2022 to 2023, compared to only 1.3
percent decline in projected cost of production for corn.
With average costs for 2023 mostly unchanged from 2022 and with
corn prices notably lower, projected farm margins are expected to be
much tighter in 2023. Average corn yield in 2023 is expected to be
higher than the drought reduced 2022 yield, but even higher yields
would be needed to maintain revenue levels given the expected lower
corn price.
Market Demand and Sustainable Corn Production
Corn and corn byproducts are a valuable part of the U.S. economy,
helping to meet food, feed, and energy demands. Nearly forty percent of
the corn grown in the U.S. is used for livestock feed and over forty
percent is used for food and industrial purposes, including ethanol
production. NCGA continues to work with partners on developing and
supporting new uses of corn, including through the biobased economy.
The top three priorities for NCGA this year include passage of the farm
bill and improving both foreign and domestic demand for corn.
Although most U.S. corn is used domestically, exports have
comprised more than fifteen percent of total disappearance on average
over the past 5 years. Mexico is the top U.S. corn export destination,
accounting for twenty-seven percent of U.S. corn exports in the 2021/22
marketing year. We are extremely concerned with the implications of
Mexico's recent decree banning imports of biotech corn will have on
U.S. corn farmers and our nation's economy. Reaching a resolution on
this issue is critical and necessary to reaffirm the precedent for the
science-based-safety of biotech corn with our trading partners. NCGA
supports the initiation of a dispute settlement under USMCA to reach a
resolution.
Ethanol production represents thirty to forty percent of corn
demand and results in valuable co-products, returning the equivalent of
more than a billion bushels of corn as distillers grains for high-
protein animal feeds, distillers corn oil for renewable diesel and
biodiesel and CO2 for beverage and food processing, as well
as sequestration. Corn ethanol adds billions of gallons to our nation's
fuel supply. Because today's ethanol cuts GHG emissions in half
compared to gasoline, ethanol is a vital pathway for agriculture to
help address climate change. Priced lower than gasoline, ethanol is
available now to cut fuel prices, support domestic energy security and
help build a clean energy future.
Use of new ethanol blends continues to grow including E15, often
marketed as Unleaded 88, and E85, which is offered by a growing number
of retailers. The ethanol blend rate hit a record high of 10.39 percent
in 2022, supported by growing demand for these higher ethanol blends.
Ethanol has and continues to be priced at a discount to unblended
gasoline, resulting in greater consumer price savings with higher
ethanol blends. For example, drivers in my home state of Minnesota
saved an average of 17 per gallon in 2022 with Unleaded 88 compared to
regular fuel, which is a ten percent ethanol blend, and Minnesota
drivers continue to save up to 20 per gallon with this low-cost, low-
emission fuel choice. Corn growers support policies that maintain a
level playing field for clean transportation solutions and take greater
advantage of the ability for ethanol to further cut emissions and costs
to consumers, including H.R. 2434 the Next Generation Fuels Act and
H.R. 1608 the Consumer and Fuel Retailer Choice Act.
Corn farmers are committed to continuous improvement in the
production of corn, a versatile crop providing abundant high-quality
food, feed, renewable energy, biobased products, and ecosystem
services. As stewards of the land, we understand the responsibility we
have for creating a more environmentally and economically sustainable
world for future generations with transparency and through continued
advances and efficiencies in land, water and energy use. In June 2021,
NCGA released the corn sustainability report and specific goals for
2030.
NCGA's Corn Sustainability Advisory Group (CSAG) has taken the lead
in pursuing social sustainability within the corn industry. NCGA has
been working towards ensuring our organization is inclusive and
equitable, and finding ways to partner with other agriculture
organizations to work towards the same goal. CSAG is in the process of
developing a comprehensive plan to ensure we are working towards our
best future.
Summary and Closing
Thank you for your consideration of NCGA's priorities for the 2023
Farm Bill. We appreciate the budget challenges and varied approaches to
confronting current and emerging issues impacting the agricultural
sector. Our shared goal is to make existing USDA programs more
effective, efficient, and responsive through strategic investments and
policy enhancements.
NCGA recommends Congress oppose efforts to cut crop insurance or to
restrict producer access to crop insurance products. To improve crop
insurance, the farm bill can address the affordability and costs for
producers who chose to purchase coverage.
In the commodity title, NCGA has three specific recommendations for
improvements including increasing the ARC-County maximum payment rate
above ten percent; increasing the ARC-County coverage level above
eighty-six percent; and strengthening the PLC effective reference price
``escalator.'' Corn growers oppose lowering payment limits and adjusted
gross income limits below current levels.
In closing, NCGA greatly appreciates your work in support of
America's farmers, rural communities, and consumers. Corn growers stand
ready to provide additional feedback, perspectives, and support as the
legislative process moves forward towards a successful farm bill
harvest this year.
The Chairman. Okay. Thank you.
What do we need to do on the timer? Do you all need to just
do a 5 minute clock? All right. We are going to run a 5 minute
clock, and I will raise my hand when you have 1 minute. Fair
enough? All right.
Mr. Holladay, please begin when you are ready.
STATEMENT OF SHAWN HOLLADAY, CHAIRMAN, NATIONAL COTTON COUNCIL,
LUBBOCK, TX
Mr. Holladay. Chairman Scott and Ranking Member Brown,
thank you for this opportunity. My name is Shawn----
The Chairman. I am sorry, could you move the microphone a
little closer?
Mr. Holladay. How is that? Okay.
Chairman Scott and Ranking Member Brown, thank you for this
opportunity. My name is Shawn Holladay, and I am a fourth
generation cotton farmer from west Texas. I also currently
serve as the National Cotton Council as Chairman for 2023.
The general structure of the 20--along with my wife Julie
and daughter Katy. I better mention them because they are at
home farming. Our family owns and operates H2H Farms. I am also
a partner in a cotton gin there south of Lamesa.
The general structure of the 2018 Farm Bill has served that
industry well and should be maintained. However, additional
funding is necessary to address challenges both on the farm and
throughout the supply chain. A strong safety net must consist
of two key components: an effective commodity policy that
provides either price or revenue protection to address for long
periods of low prices and depressed market conditions, and a
strong and fully assessable 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 production costs, leading to
tighter margins and decreased profitability. Total production
costs now range between 90 and $1 per pound, which is well
above the futures prices in the mid-1980s. But when calculated
based on seed cotton, the cost of production is almost 48 , far
above the PLC reference price of 36.7 per pound. Today's
production costs are diminishing the effectiveness of the
current reference price, which should be increased.
Additionally, cotton producers should not face limits to
their crop insurance options. Eliminating the prohibition on
simultaneous enrollment of PLC and the Stacked Income
Protection Plan, or STAX, would allow a grower to better tailor
their risk management options, while also decreasing their
reliance on ad hoc disaster programs.
On the topic of financing, the Non-Recourse Marketing Loan
Program for upland cotton remains vital for the U.S. cotton
industry. However, despite higher production costs, the maximum
level of the loan rate has remained at 52 since 2002. It
should be increased to better reflect the cost of production
and recent market prices. Furthermore, various loan repayment
provisions should be modernized to better reflect the global
market and higher storage and logistics costs. These
improvements include allowing storage credits to better reflect
actual storage charges, determining a globally competitive
adjusted world price based on three lowest international
prices, limiting the amount of the annual decline in cost of
market values, creating a 30 day window for finalizing the AWP.
We should also remember that not all cotton is the same.
The 2018 Farm Bill continued important programs for Pima
cotton, which is grown in parts of the West. The 2023 Farm Bill
should increase the Pima loan rate to a more reflective level
of pricing and cost of production. To ensure this commodity
remains competitive abroad, the next farm bill should also add
marketing loan functionality to the Pima loan and maintain both
the Pima Cotton Competitiveness Payment Program and the Pima
Cotton Trust Fund.
On the domestic manufacturing front, the Economic
Adjustment Assistance for Textile Mills Program has allowed
investments in new equipment and technology, thereby reducing
costs, increasing efficiency, and allowing U.S. mills to be
more competitive. To support American manufacturing, we urge
Congress to restore the rate of 4 per pound that was in place
prior to 2012.
Trade is vital to our industry, which is why the Market
Access Program and Foreign Market Development Program are so
important. Our industry supports the coalition to promote U.S.
agriculture exports proposal to double funding for both MAP and
FMD.
Finally, our industry is opposed to any further tightening
of payment limits and program eligibility requirements. We are
encouraged that Congress has recognized this recent reality in
recent disasters by including increased payment limit levels to
producers who realize the majority of their income from their
farming operation. The same consideration should be given to
Title I program limits in the next farm bill.
In closing, I encourage the Committee to write a farm bill
that provides long-term stability for the future and addresses
the challenges that continue to be faced by our industry. Thank
you for this opportunity, and I would be pleased to respond to
any of your questions.
[The prepared statement of Mr. Holladay follows:]
Prepared Statement of Shawn Holladay, Chairman, National Cotton
Council, Lubbock, TX
Introduction
I am Shawn Holladay, a fourth-generation west Texas cotton producer
residing in Lubbock, and I currently serve as Chairman of the National
Cotton Council (NCC). I also served as Chairman of the American Cotton
Producers (ACP) in 2018 and 2019 and previously chaired the ACP's Farm
Policy Task Force for multiple years, working closely with Congress on
the creation and implementation of the seed cotton program for U.S.
cotton producers.
Along with my wife, Julie, and daughter, Katy, our family owns and
operates H2H Farms. Our operation includes land in Dawson and Martin
Counties of West Texas, primarily producing cotton. I am also a partner
in United Gin Corporation, located south of Lamesa, Texas.
The National Cotton Council (NCC) is the central organization of
the United States cotton industry. Its members include producers,
ginners, cottonseed processors and merchandizers, merchants,
cooperatives, warehousers, and textile manufacturers. A majority of the
industry is concentrated in 17 cotton-producing states stretching from
California to Virginia. U.S. cotton producers cultivate between 10 and
14 million acres of cotton, with production ranging from 12 to 20
million 480 lb bales annually. The downstream manufacturers of cotton
apparel and home furnishings are in virtually every state. Farms and
businesses directly involved in the production, distribution, and
processing of cotton employ more than 115,000 workers and produce
direct business revenue of more than $22 billion. Annual cotton
production is valued at more than $5.5 billion at the farm gate, the
point at which the producer markets the crop. Accounting for the ripple
effect of cotton through the broader economy, direct and indirect
employment surpasses 265,000 workers with economic activity of almost
$75 billion. In addition to the cotton fiber, cottonseed products are
used for livestock feed and cottonseed oil is used as an ingredient in
food products as well as being a premium cooking oil.
Economic Overview
The U.S. cotton industry continues to navigate an environment
characterized by increased production costs, sluggish consumer demand,
and supply chain disruptions. For the current 2022/23 marketing year,
the U.S. Department of Agriculture (USDA) estimates world cotton
consumption at approximately 110 million bales, down 5% from the
previous year and down 11% from 2020/21. The decline in global demand
stems from several factors. First, continued price inflation,
especially for energy and food products, is putting additional pressure
on consumer purchasing power, thus limiting demand for apparel and
textile products. Second, events such as the foreign currency crisis in
Pakistan and the devastating earthquake in Turkey are limiting the
demand for U.S. cotton by those two textile industries. Third, global
supply chains are continuing to adjust to China's slow post-COVID
economic reopening and the implications of the Uyghur Forced Labor
Prevention Act. Projections for the upcoming 2023/24 marketing year
call for a modest recovery in world cotton consumption, but those
estimates hinge on a continued recovery in the global economy and
moderation in overall inflation.
In 2022, U.S. growers planted 13.8 million acres of cotton, as
higher prices encouraged a 23% increase in area. However, due to
extreme drought conditions in the Southwest, harvested acreage of 7.4
million acres was at the lowest level since 1983. U.S. production of
14.7 million bales was 2.8 million bales lower than in 2021.
Looking ahead to the 2023/24 marketing year, production costs
remain elevated and are only slightly lower than year-ago levels.
According to USDA's Economic Research Service, U.S. cotton production
costs increased by $161 per acre between 2018 and 2022--an increase of
20 per pound based on an average yield of 800 pounds per acre. Cotton
harvest-time futures prices in mid-April 2023 are 19% lower than a year
ago, while the prices of competing commodities are just 7-8% lower than
year-ago levels. Cotton producers will face difficult economic
conditions in 2023 with lower cotton prices and high production costs.
The current economic signals are reflected in the latest acreage
expectations with USDA calling for 11.3 million acres planted in 2023,
a drop of 18%. Given current drought conditions in the southwestern
United States, there remains much uncertainty regarding cotton
production for the 2023/24 marketing year. To estimate U.S. production
for 2023/24, the NCC applies the 5 year average (2018-2022) abandonment
rate and yield for most cotton-producing states. In the Southwest,
adjustments were applied to the 5 year average values to account for
current drought conditions. For 2023/24, U.S. harvested area is
estimated to be 8.7 million acres with an overall abandonment rate of
22.6%. 2023/24 U.S. production is estimated to be 15.5 million bales
with an average yield of 853 pounds per acre.
Additional Budget Resources
The general program structure authorized by the 2018 Farm Bill has
served the industry well and should be maintained in the new farm law.
However, as Congress charts the path for the 2023 Farm Bill, additional
funding is necessary to address challenges both on the farm and
throughout the supply chain.
Since the implementation of the 2018 Farm Bill, ongoing trade
tensions and geopolitical disputes have caused major disruptions in
cotton exports, revealing gaps in cotton's safety net. A major
disruption in the global demand for cotton fiber also occurred due to
the worldwide COVID-19 pandemic, leading to increased storage, supply
chain disruptions, and an overall reduction in global cotton
consumption. Since passage of the 2018 Farm Bill, cotton growers have
also been impacted by record droughts across the Southwest and western
portions of the Cotton Belt as well as devastating hurricanes across
south Texas and the Southeast.
Thankfully, Congress and USDA responded to the needs of the cotton
and agricultural industries by authorizing several ad hoc assistance
programs. Since 2017, Congress has provided more than $90 billion in ad
hoc assistance to agriculture, and between 2018 and 2021, ad hoc
assistance comprised approximately 70% of all direct farm payments,
which includes traditional farm bill support provided through the
commodity and crop insurance titles. Although the U.S. cotton industry
continues to face a challenging economic environment, Congressional
budget procedures do not allow this past funding to be captured in the
new farm bill without additional dollars being allocated by the House
and Senate Budget Committees. We must ensure the House Agriculture
Committee has the necessary resources to draft a farm bill that
addresses the current needs facing the cotton industry.
Producer Safety Net
The cotton safety net must consist of two key components: (1) an
effective commodity policy that provides either price or revenue
protection to address prolonged periods of low prices and depressed
market conditions that span multiple years; and (2) a strong and fully
accessible suite of crop insurance products that producers can purchase
to tailor their risk management to address yield and price volatility
within the growing season.
The annual producer election of either Agriculture Risk Coverage
(ARC) or Price Loss Coverage (PLC) included in the 2018 Farm Bill has
worked well for growers and should continue in the new farm bill.
Cotton producers have overwhelmingly selected the PLC program, with
more than 90% of seed cotton base acres enrolled under that option.
Agricultural markets are cyclical, and an effective safety net is
imperative for the inevitable times of low prices. The combination of
commodity program options and crop insurance provides farmers as well
as their lenders the confidence entering the planting season that
downside risk is mitigated in periods of steep price decline or a
significant loss of production.
Supply chain disruptions and geopolitical crises in nations that
provide a substantial portion of critical production inputs have led to
a dramatic increase in cotton production costs, leading to tighter
profit margins and decreased profitability. Since 2018, cotton costs of
production have increased by 20 per pound, based on average yields of
800 pounds per acre. For many producers, total production costs now
range between 90 and $1.00 per pound, which exceed current futures
prices trading in the mid-1980s. When calculated based on seed cotton,
the total costs to produce a pound of seed cotton have risen nearly 9
since the 2018 Farm Bill, with current costs of production of almost
48 , far above the seed cotton reference price of 36.7 per pound
(Exhibit 1). The current costs facing producers are diminishing the
effectiveness of the current PLC reference price.
In addition, growers enrolled in the ARC/PLC programs are currently
limited in their access to crop insurance due to a prohibition on the
purchase of the Stacked Income Protection Plan (STAX) on their enrolled
farms. STAX is a crop insurance product for upland cotton that provides
coverage for a portion of a producer's revenue based on the county, or
area-wide experience. In 2018, when seed cotton became eligible for the
ARC/PLC under the commodity title, Congress prohibited the purchase of
STAX on ARC/PLC-enrolled farms, beginning with the 2019 crop. At the
beginning of the prohibition, most growers chose to enroll their base
acres in PLC. However, with higher cotton futures prices for the 2021
and 2022 crops and limited effectiveness of the current seed cotton
reference price, STAX has become a more attractive option.
Cotton producers should not be limited on their crop insurance
options and should be able to manage risk based on the needs of their
operation. Eliminating the prohibition on simultaneous enrollment in
PLC and STAX, as well as boosting the top coverage level of STAX for
those farms with no seed cotton base or who forego enrollment in ARC/
PLC, would allow a grower to tailor their risk management options
according to the needs of their operation while also decreasing their
reliance on ad hoc programs, putting producers in charge of their own
production risks.
Upland Cotton Marketing Assistance Loan
The non-recourse marketing assistance loan program for upland
cotton remains a cornerstone of farm policy for the U.S. cotton
industry. While current prices are well above the loan rate, we know
that will not always be the case. During times of low cotton prices,
the marketing loan program is an essential tool for multiple segments
of the cotton industry to effectively market cotton and provide cash
flow for producers to meet financial obligations. Even in times of
higher market prices, the marketing loan is utilized by the cotton
industry to provide cash flow for producers and flexibility in
marketing to encourage orderly movement of the crop throughout the
year. In recent years, over 50% of the upland cotton crop enters the
loan, and use of the loan approaches 80% in times of low prices. Also,
in periods of low prices, if growers choose to forgo the marketing
loan, they may receive a Loan Deficiency Payment (LDP) representing the
difference between the loan rate and the market price. This is an
important component of the marketing loan program that should be
retained.
Despite higher production costs, the maximum level of the loan rate
has remained at 52 since 2002. The level of the loan rate should be
increased to better reflect current costs of production and recent
market prices. In addition, loan repayment provisions should be
modernized to better reflect the competitive landscape in the global
market and the higher storage and logistics costs facing the industry
by: (1) allowing storage credits to better reflect actual storage
charges; and (2) determining a globally competitive Adjusted World
Price (AWP) based on the three lowest international prices, limiting
the amount of the annual decline in the costs-to-market values, and a
30 day window for finalizing the AWP (Exhibit 2).
Since being implemented in 2006, maximum storage credits have
declined, while actual storage charges have increased. Between 2006 and
2022, average storage charges across much of the Cotton Belt increased
by 45 per bale per month, while the effective storage credit fell 8
per month. Currently, the effective storage credit is 78 below the
average storage charge.
Basing the AWP on an average of the three lowest quotes in the
international market, rather than following the current practice of
using the five lowest quotes, would create more value for cotton during
loan redemptions and prevent cotton from stagnating in the loan and
accruing costs. This will in-turn make the cotton loan more effective
in providing support for producers and ensuring fluid movement into the
marketplace. Moving to the three lowest quotes is also consistent with
other provisions of the marketing loan program that are already based
on three quotes.
Establishing limitations on the annual decline in the costs-to-
market calculation is imperative. USDA currently conducts an annual
survey of costs-to-market, and in recent years the industry has
witnessed large changes in this calculation, which can negatively
affect marketing decisions. While USDA would continue to conduct the
annual survey of costs, this provision would establish limitations on
the annual decline from the previous year to mitigate negative impacts
on the competitiveness of U.S. cotton.
Providing increased flexibility in AWP determinations during loan
redemptions would allow producers to realize a more optimum AWP from
the day of the loan redemption or the locking in of a LDP. Growers
would then have the benefit to lower their costs to redeem cotton for a
thirty-day period following the redemption date. This provision would
be another tool to help move cotton from the loan and into the
marketplace. Similar flexibility should also be provided to the
determination of the LDP.
Complete automation of the marketing loan program should also be
addressed in the next farm bill. During the December 2018 lapse in
government funding, these programs were severely impacted due to the
need for direct personnel involvement in processing the entry and
redemption of cotton in the marketing loan program. During this period,
some growers were not able to enter cotton into the loan and access
those funds, while others could not market their cotton because they
could not redeem the loan. We urge this Committee to work with USDA to
provide the necessary support to ensure that any future lapse in
government funding does not negatively impact the marketing loan
program.
Extra Long Staple (ELS) Cotton Policies
There are important policies in place for ELS, or Pima, cotton. ELS
cotton is grown in California, Arizona, New Mexico, and parts of Texas.
The 2018 Farm Bill continued the ELS cotton loan program as well as a
provision to ensure U.S. Pima cotton remains competitive in
international markets. The balance between the upland and Pima programs
is important to ensure that acreage is allocated in response to market
signals instead of support levels.
ELS producers, like their upland counterparts, have experienced
sharp increases in production costs in recent years, with current costs
exceeding the safety net provided by the loan program. While ensuring
that market signals remain the driver of planting decisions, the 2023
Farm Bill can address deficiencies in the safety net provided to ELS
cotton producers by increasing the ELS loan rate to a more reflective
level of pricing and costs of production.
The next farm bill should also add ``marketing loan'' functionality
to the ELS loan. Of all the commodities eligible for Commodities Credit
Corporation (CCC) loan, ELS is one of only two commodities with a non-
recourse loan that lacks the provisions of an alternative repayment
provision during periods when market prices are lower than the
statutory loan rate. The new farm law should also maintain the ELS
Cotton Competitiveness Payment Program and the Pima Cotton Trust Fund.
Economic Adjustment Assistance for Textile Mills
After a decade of experiencing a precipitous decline in the amount
of cotton used by U.S. textile mills, U.S. mill consumption has
stabilized since 2008 due to ongoing assistance provided in the farm
bill. The recent years of stability and expected future growth can be
attributed to the continued benefits of the Economic Adjustment
Assistance for Textile Mills (EAATM) program, originally authorized in
the 2008 Farm Bill. Recipients must agree to invest EAATM proceeds in
equipment and manufacturing plants, including construction of new
facilities as well as modernization and expansion of existing
facilities.
EAATM funds have allowed investments in new equipment and
technology, thereby reducing costs, increasing efficiency, and allowing
domestic mills to be more competitive with foreign mills. This was
shown to be prophetic during the COVID-19 pandemic as the U.S. textile
industry was able to quickly shift their manufacturing facilities to
the production of personal protection equipment (PPE). In addition, the
industry continues to be a critical supplier of products to our defense
industry. The yarns and fabrics produced by the U.S. textile industry
are also integral products in the two--trade occurring with the
Dominican Republic-Central American Free Trade Agreement (CAFTA-DR) and
the United States-Mexico-Canada Agreement (USMCA) countries.When EAATM
was initially implemented in 2008, the support level provided was set
at 4 per pound of cotton consumption by the U.S. textile industry.
Yet, budget pressures reduced that number to 3 in 2012. We urge
Congress to restore EAATM support to the original 4 level in order to
further support this critical employment and manufacturing base.
Payment Limits and Program Eligibility
Our industry is opposed to any further tightening of payment limits
and program eligibility requirements, as we believe these policies are
already too burdensome and restrictive considering the size and scale
of production agriculture necessary to be competitive and viable in
today's global market. The NCC has always maintained that effective
farm policy must maximize participation without regard to farm size or
income. Artificially limiting benefits is a disincentive to economic
efficiency and undermines the ability to compete with heavily
subsidized foreign agricultural products. Artificially limited benefits
are antagonistic with a market-oriented farm policy. In fact, the
current program limits are incompatible with the cost structure and
capital investments necessary for today's family farms.
We are encouraged that Congress recognized this reality in recent
disaster assistance by including increased payment limit levels for
producers who realize the majority of their income from their farming
operation. This same consideration should be given to Title I program
limits in the next farm bill. Other proposed arbitrary restrictions
regarding the contribution of management and labor through changes to
the definition of ``actively engaged'' are out of touch with today's
farming operations and would only contribute to inefficiencies. These
policies also discourage the next generation from returning to their
rural communities. Under these proposals a son or daughter who wants to
return to the farm and utilize their accounting degree to market the
crop and keep the books would not be considered as ``actively engaged''
in the operation. The 2023 Farm Bill should not include policies that
seek to discourage the next generation of farmers.
Conservation
A strong conservation title benefits the environment and is an
important tool for producers across the United States. Voluntary
conservation programs reward producers for implementing sensible
environmental practices on working lands and provide a means to devote
marginal production acres into long-term use.
Working lands conservation programs are of utmost importance to
most producers. Going forward, the application of conservation funds,
both provided by the 2023 Farm Bill and the 2022 Inflation Reduction
Act, should (1) recognize the diversity of production practices by
rejecting a one-size-fits-all approach; and (2) reward--not penalize--
the environmental contributions of early adopters.
International Programs
The Market Access Program (MAP) and Foreign Market Development
Program (FMD) are extremely important tools that support U.S. exports.
Cotton Council International, the foreign market promotion arm of the
U.S. cotton industry, utilizes both programs and the industry has seen
clear benefits from these programs. Our industry supports the Coalition
to Promote U.S. Agriculture Exports proposal to double funding for both
MAP and FMD. MAP has not been increased since 2006 and \1/3\ of funding
has been lost to sequestration, inflation, and program administration.
FMD has not been increased in almost 20 years. With market volatility
and economic disruptions causing greater risks and uncertainties, the
new farm bill can provide the additional resources necessary for U.S.
agricultural exports to remain competitive.
Conclusion
In closing, I encourage the Committee to write a farm bill that
provides long term stability for the future. There will be price
declines from current levels, there will be natural disasters with
losses more severe than the essential assistance that commodity
programs and crop insurance can respond to, and there will be trade
disputes and geopolitical turmoil that will wreak havoc on our export
markets. However, it is critical that the 2023 Farm Bill provide an
economic safety net to address the challenges that will continue to be
faced by our industry.
The NCC looks forward to working with the Committee and all
commodity and farm organizations and other stakeholders to develop and
pass a new farm bill that effectively addresses the needs of all
commodities and all producers in all regions of the country.
Thank you for this opportunity, and I would be pleased to respond
to any questions.
Exhibit 1. Costs of Production per Pound of Seed Cotton
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Exhibit 2. Structure of the Upland Cotton Marketing Loan Program
Farm Bill Recommendations Highlighted in [Medium Gray]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Holladay.
Mr. Flansburg, please begin when you are ready.
STATEMENT OF AARON FLANSBURG, CHAIRMAN, USA DRY PEA AND LENTIL
COUNCIL, PALOUSE, WA
Mr. Flansburg. Thank you, Chairman Scott, Ranking Member
Brown--and the microphone, hello--and Members of the
Subcommittee. I am Aaron Flansburg. I am a fifth generation
farmer from Palouse, and that is a farm in eastern Washington
State. I currently am also the Chairman of the USA Dry Pea and
Lentil Council, and I still have the privilege of farming with
my parents and my wife, and my three kids are all on the farm
as well. We grow pulses, of course. We also grow wheat, barley,
canola, and alfalfa, and I am working towards organic
certification on part of our farm as well.
On behalf of the USA Dry Pea and Lentil Council, I would
like to thank you all for having this opportunity to testify
today and provide some of our perspectives on the 2023 Farm
Bill.
USA Dry Pea and Lentil Council represents farmers,
processors, exporters, food manufacturers of U.S. peas,
lentils, and chickpeas, which are part of a larger family of
crops called pulses. And these also include dry beans. Pulses
are nutrient-dense, healthy, affordable, and agronomically and
environmentally friendly. Pulses have a low water footprint and
don't require much or any nitrogen fertilizer to be grown, and
they are able to pull nitrogen out of the air to help the plant
to grow. This makes pulses one of the most efficient sources of
protein of any food available and one of the lowest greenhouse
gas emitters per gram of protein produced of any food source.
Pulses are grown throughout the United States with most of
the production in the northern tier States of Washington,
Idaho, Montana, North Dakota, South Dakota, and Minnesota. We
also have farmers in Nebraska who are part of our coalition and
beyond.
Dry peas, lentils, and chickpeas are Title I program crops,
and these programs, along with crop insurance, are serving our
growers well, providing a safety net and the risk management
needed to allow producers to get financing for their annual
production costs. We support the passage of a new farm bill and
an increase to the budget baseline as an investment in food
security for our nation and around the world.
As you write the next farm bill, we support continuation
and enhancement of Title I and crop insurance programs. First
and foremost, funding must be maintained for Federal Crop
Insurance Program that provide essential risk management for
farmers. Farm insurance provides a critical role in maintaining
access for growers to get credit on their farms and the
financial stability of my own farm.
The Agriculture Risk Coverage, ARC, and Price Loss
Coverage, PLC, program should be continued with additional
streamlining and flexibility. In place at the annual choice and
sign up for ARC and PLC, we support a new idea of providing
producers with the better-of option for these two programs in
any given year. For farmers with landlords, the current ability
to switch between the ARC and PLC programs is made burdensome
by a requirement for each landowner signing off on changes of
enrollment. We would like to see an allowance for farmers to
use power of attorney to switch between options, and that would
alleviate some of these administrative difficulties and
encourage flexibilities when farm needs shift.
In addition, we believe that the crop insurance
Supplemental Coverage Option should be available for both PLC
and ARC programs. If reference prices are adjusted, we would be
in favor of reference prices for dry peas, lentils, large
chickpeas, and small chickpeas to be adjusted proportionately
with other crops.
The current CBO projections show prices declining
significantly for all of our products from current levels, and
there is a great concern that producers will suffer operational
losses without triggering support intended from Title I
programs. We would like to point out that the current CBO price
projected for dry peas, lentils, and chickpeas seems to be low.
The current prices for 2023 are significantly higher than CBO
estimated for this year. And based on that and the historical
average prices, we believe CBO projections over the next 5 to
10 years are low, and that could impact the price of this farm
bill and estimates for any changes to reference prices.
Our organization also represents U.S. fava bean producers
and we request that fava beans be added to the list of crops
exempt from the base acre reduction requirements when planting
fruits and vegetables. We also support a voluntary update to
base acres on farms. We also have a few other priorities I
would like to talk about, increased support for ag research and
pulse crop health initiative. We urge Congress to increase
authorization for the School Pulse Crops Products Program. We
also support doubling the funding for both the Market Access
Program and the Foreign Market Development Programs. We support
increased funding for food aid programs in the 2023 Farm Bill.
And finally, the U.S. pulse processors have faced
challenges due to natural disasters and supply chain and market
disruptions. Like farmers, small processors need risk
management programs.
Thanks so much for your time. I appreciate the chance to
speak to your Committee.
[The prepared statement of Mr. Flansburg follows:]
Prepared Statement of Aaron Flansburg, Chairman, USA Dry Pea and Lentil
Council, Palouse, WA
Chairman Scott, Ranking Member Brown, and Members of the
Subcommittee:
I am Aaron Flansburg a farmer from Palouse, WA and current Chairman
of the USA Dry Pea and Lentil Council. I am a fifth generation farmer
in eastern Washington. I am lucky to still work with my mom and dad. We
raise pulse crops, wheat, barley, canola, alfalfa, and are working
toward organic certification on part of my farm. On behalf of the USA
Dry Pea & Lentil Council, thank you for the opportunity to testify
today and provide our perspectives on the 2023 Farm Bill.
The USA Dry Pea & Lentil Council represents the farmers,
processors, exporters and food manufacturers of U.S. dry peas, lentils
and chickpeas which are part of a larger family called pulse crops,
also including dry beans. Pulses are nutrient dense, healthy,
affordable, and agronomically and environmentally friendly. Pulses have
a low water footprint and don't require much or any nitrogen
fertilizers to be productive. They are one of the few crops that pull
nitrogen from the air to help the plant grow. This makes pulses one of
the most efficient sources of protein and lowest greenhouse gas
emitters, per gram of protein produced, of any food source.
Pulses are grown throughout the U.S., with production primarily in
the northern tier states of Washington, Idaho, Montana, North Dakota,
South Dakota, and Minnesota. Dry peas, lentils and chickpeas are Title
I program crops and these programs, along with crop insurance, are
serving growers well, providing a safety net and the risk management
needed to allow producers to get financing for their annual production
costs.
We support the passage of a new farm bill and an increase in its
budget baseline as an investment in food security at home and around
the world.
As you write the next farm bill, we support continuation and
enhancement of the Title I and Crop Insurance programs.
First and foremost, funding must be maintained for the Federal Crop
Insurance Programs that provide essential risk management for farmers.
Crop insurance plays a critical role in maintaining grower access to
credit and the financial stability of my farm.
The current Agriculture Risk Coverage (ARC) and Price Loss Coverage
(PLC) programs should be continued with additional streamlining and
flexibility. In place of the annual choice and sign-up for ARC and PLC,
we support providing producers with the ``better of'' the two support
programs for that year. This would remove a significant burden on
producers that requires them to try to predict weather and markets and
to get approvals from landlords. For many producers this is challenging
and time consuming. This change could also reduce the workload on FSA
offices. For farms with landlords, the current ability to switch
between the ARC and PLC programs is made burdensome by a requirement
for each landowner to sign off on changes in enrollment. An allowance
for farmers to use Power of Attorney to switch between options would
alleviate these administrative difficulties and encourage flexibility
as on-farm needs shift.
In addition, we believe that the crop insurance Supplemental
Coverage Option (SCO) should be available for both the PLC and ARC
programs.
If Reference Prices are adjusted, the Reference Prices for dry
peas, lentils, large chickpeas, and small chickpeas should be adjusted
proportionately to other crops.
The current Congressional Budget Office (CBO) projections show
prices declining significantly for all of the pulse crops from their
current levels, however, the price declines are not projected to
trigger support payments. There is a great concern that producers will
suffer operational losses without triggering support intended from the
Title I Farm Programs. We would point out that the current CBO price
projections for dry peas, lentils and chickpeas seem to be low. The
current prices in 2023 are significantly higher than CBO estimated for
this year. Based on CBO's underestimation for 2023 and the historical
average for pulse prices, we believe the CBO price projections over the
next 5 to 10 years are low and that could impact the cost estimates for
any changes to Reference Prices.
Our organization also represents U.S. fava bean producers. We
request that fava beans be added to the list of crops exempt from the
base acre reduction requirements when planting fruits and vegetables.
The USA Dry Pea and Lentil Council also supports a voluntary update
to base acres.
Beyond crop insurance and Title I farm programs, the other farm
bill priorities for the pulse crop industry include:
Ag Research and the Pulse Crop Health Initiative--Transforming and
maximizing food production requires a long-term investment in research
and research infrastructure for all of agriculture. Historically, pulse
crops have received very little Federal research support despite being
one of the most nutritious and environmentally efficient crops in the
food system. We continue to work for increased appropriations for the
Pulse Crop Health Initiative that was first authorized in the 2014 Farm
Bill.
School Food Programs--We have been working to remove barriers to
utilization of pulse products in school lunch programs. It has been a
slow and difficult process, but we are making progress with recent USDA
proposals to allow pulses to count toward certain category
requirements. To help move forward faster, we urge Congress to increase
the authorization for the School Pulse Crops Products Program (PCPP) to
$4 million per year.
MAP/FMD--Strong market promotion programs are critical to
increasing the demand for our commodities around the world. The pulse
industry supports doubling Market Access Program (MAP) funding from
$200 million to $400 million and the Foreign Market Development (FMD)
program from $34.5 million to $69 million in the new farm bill.
Food Aid--The war in Ukraine has exacerbated food security concerns
around the world and we support increased funding for the P.L. 83-480,
McGovern Dole and Section 32 food aid programs in the 2023 Farm Bill.
Rural Processor Disaster/Risk Management Tools--U.S. pulse
processors have faced challenges due to natural disasters and supply
chain and market disruptions. Like farmers, small processors need risk
management programs to maintain employees and processing infrastructure
during severe and prolonged disruptions. Our industry is seeking
options, both private-sector and public, to help small processors
survive unforeseen and prolonged disruptions to their operations.
Thank you again for the opportunity to testify and provide
perspectives on the 2023 Farm Bill.
Sincerely,
Aaron Flansburg,
Chairman,
USA Dry Pea & Lentil Council.
The Chairman. Are our lights working now down front? Okay.
So when you get to 1 minute, the yellow light will come on, and
then the red light will come on when you reach your time.
Mr. Flansburg, thanks for your testimony.
Mr. Satterfield, you are recognized. Please begin when you
are ready.
STATEMENT OF KIRK SATTERFIELD, CHAIRMAN, USA RICE, BENOIT, MS
Mr. Satterfield. Thank you, and good morning, Chairman
Scott, Ranking Member Brown, and Members of the Subcommittee.
Thank you for the opportunity to testify today. I am Kirk
Satterfield, a third generation family rice farmer from Bolivar
County in the Mississippi Delta. I am the current Chairman of
USA Rice, the national trade association representing all rice
farmers and segments of the rice industry.
Rice is grown on about 3 million acres across the U.S. Half
of our rice is consumed domestically, while the other half is
exported to more than 120 countries globally. Our industry has
its challenges as the global rice market is among the most
distorted of any sector, a factor that underscores the vital
importance of the U.S. farm safety net for farmers like me.
On average, each rice farmer contributes $1 million to
their local economy and employs six people. The broader $34
billion rice industry supports more than 125,000 jobs
nationwide. Rice fields provide critical life-sustaining
habitat for migratory waterfowl and other wildlife and also
contribute substantially to biodiversity, raising crawfish in
the South and salmon nurseries in California.
Rice did not experience a large run-up in market prices in
2020 and 2021, and the current PLC program could not adapt to
the dramatic increases in cost of production. This led to the
need for additional assistance for rice farmers for the 2022
crop year. Thank you for providing the critical funding for the
Fiscal Year 2023 omnibus appropriations bill.
Rice prices remained very close to the reference price
calculated using 2012 cost of production and established in the
2014 Farm Bill, rendering the program unworkable for rice at
its current level since the current cost of production is
nowhere near the 2012 levels. Texas A&M conducted a study in
2022 that show \2/3\ of rice farms are predicted to have
negative net cash farm income for the 2022 crop year. USDA also
reports a 30 percent increase in operating costs in 2022.
As a high cost input crop subject to severe global market
distortion thanks to predatory trade practices of foreign
countries, U.S. rice farmers are more vulnerable to the impacts
of inflation and other global events that have caused increases
to the cost of fuel, fertilizer, labor, as well as facing the
highest interest rates many farmers today have ever
experienced. We need a permanent fix to the rice farm safety
net in the 2023 Farm Bill to ensure the long-term viability of
the rice industry.
Recent years have seen new obstacles that the 2018 Farm
Bill could never have anticipated. In response to each of these
events, supplemental assistance was authorized by the
Administration or Congress to support agriculture. We believe
it is important to recognize that there were needs that the
current bill simply could not handle. A strengthened safety net
would ultimately be more cost-effective for farmers and
taxpayers than continued ad hoc programs.
We appreciated this Committee's budget views and estimates
letter emphasizing the need to increase the baseline so the
policy can be crafted to better anticipate and address the
needs of family farms in volatile times. The PLC Program has
traditionally been our real true safety net. It is allowed us
to better compete on a lopsided global playing field impacted
by foreign subsidies, tariffs, and non-tariff barriers. For
example, India subsidizes its rice producers by upwards of 90
percent and injected billions to offset escalating input costs.
This is only one example of many predatory trade practices used
by foreign competitors, and we continue to call for the U.S. to
address this blatant WTO violation by India and others.
USA Rice strongly believes reference prices under PLC need
to be meaningfully increased and indexed in order to provide a
safety net that remains relevant over the long haul. Payment
limitations, AGI, and actively engaged rules are outdated, and
we hope that Congress will take steps in the next farm bill to
better reflect the risk for full-time farm families. This is a
remedy that is long overdue.
Planting flexibility has been a longstanding commitment to
farmers by Congress to ensure that farmers are planting for the
market and for the soil and not for the government programs.
Any updates or reallocations to base acres should be voluntary
and the farmer's decision.
In sum, the work you do is extremely important to the farm
families that I represent, and I am truly grateful to have this
opportunity to testify before you today. Thank you.
[The prepared statement of Mr. Satterfield follows:]
Prepared Statement of Kirk Satterfield, Chairman, USA Rice, Benoit, MS
Thank you for the opportunity to testify before you today
concerning the current conditions in agriculture and our priorities for
the upcoming farm bill.
I am Kirk Satterfield, a third-generation rice farmer from Bolivar
County in the Mississippi Delta where I farm along with my wife,
Bridget, my parents, brother and sister-in-law, a niece and a nephew
and a great crew. We farm the land, along with its expansion, that my
father began with when he started his own farming endeavor in 1969.
I have the honor of serving as the current Chairman of USA Rice,
the global advocate for the U.S. rice industry, a $34 billion industry
representing farmers, millers, merchants, and allied businesses. I am
also President of the Mississippi Rice Council.
Rice farmers in the United States produce 20 billion pounds of rice
annually, which is grown on approximately 3 million acres of farmland
that is highly managed for sustainability. About half of our rice is
consumed here at home while the other \1/2\ is exported to more than
120 countries around the globe. Nearly \3/4\ of the rice consumed in
the U.S. is produced and processed domestically. However, our industry
has its challenges as the global rice market is among the most
distorted of any sector, a factor that underscores the vital importance
of the U.S. farm safety net for rice farmers like me.
This rice is produced on family farms across six major rice
producing states--Arkansas, California, Louisiana, Mississippi,
Missouri, and Texas--as well as a handful of other states, including
Florida, Illinois, Kentucky, South Carolina, and Tennessee, with
positive economic impacts in nearly every other state. On average, each
rice farmer in the U.S. contributes $1 million to his or her local
economy and employs six people. This equates to more than $5.6 billion
in positive economic impact on the U.S. economy and a total of 31,710
jobs directly supported by rice production. Also, rice farmers have an
additional $5.5 billion impact on the U.S. economy in value-added and
labor income generated by their operations. The broader rice industry
supports more than 125,000 jobs nationwide.
In addition to putting rice on grocery shelves, in restaurants, on
the dinner table, and as an essential ingredient for beverages and
other products, such as pet food, U.S. rice farmers have long been
committed to environmental stewardship which dates back generations--
well before sustainability became a buzzword.
Rice was not as fortunate as many other commodities that saw a
large run up in market prices in 2020 and 2021. We have had more
recent, relatively modest rises in price but much of the gains we have
seen have been offset by the erosion of the Price Loss Coverage
program's (PLC) effectiveness to adapt with the times and unprecedented
increases in costs of production. This led to the need for additional
assistance for rice farmers for the 2022 crop year.
I want to thank you all for providing this vital assistance to rice
farmers. The additional funding provided through the FY 2023 Omnibus
Appropriations bill was truly critical for a great many rice farmers,
including myself, as well as thousands of rural and urban communities
and businesses that are dependent on rice production and processing.
Many Title I commodities had marketing year average prices that
were well over their PLC reference prices for the 2021 program year and
are projected to be well over their reference prices for the 2022
program year. Unfortunately, rice market prices remain very close to
the reference price--a reference price that was calculated using 2012
costs of production and established in the 2014 Farm Bill, rendering
the program unworkable for rice at its current level.
The current cost of production is nowhere near 2012 levels. The
Agricultural and Food Policy Center at Texas A&M University conducted a
study in 2022 to examine the impacts of the rise in costs of production
on its representative farms and rice farms were most negatively
impacted. The rise in cost of production equated to an $880,000 loss in
net cash farm income from 2021 to 2022 per rice farm. According to the
study, \2/3\ of rice farms were predicted to have negative net cash
farm income for the 2022 crop year. USDA also shows a dramatic increase
in operating costs--a more than 30 percent increase in 2022--compared
to 5 years earlier.
As an especially high input crop that is particularly subject to
severe global market distortions due to the predatory trade practices
of foreign countries, like India, U.S. rice farmers are much more
vulnerable to the impacts of skyrocketing inflation and other global
events that have caused increases to the costs of fuel, fertilizer,
labor, and other crop inputs, as well as to the highest interest rates
many farmers today have ever experienced. As a capital-intensive
business, rice farmers put everything on the line each year to grow a
crop. So, the net result of the 2022 crop year would have been a sea of
red ink had it not been for the additional assistance that Congress
provided.
I should also note the challenge this is creating for our rice
industry infrastructure. Last year, the extraordinary increase in input
costs without a corresponding rise in rice prices created the perfect
storm resulting in the lowest rice acres being planted in the U.S. in
40 years. And, even with our tremendous increases in efficiency and
yields, we had the lowest rice production in 30 years. This threatens
not only rice farms but the entire U.S. rice infrastructure, including
mills and elevators, pesticide applicators and farm suppliers, and many
other rural businesses and economies that rice farmer's support.
Although input prices remain high, we are anticipating a rebound in
rice acres planted in the U.S. to normal levels in the near future. In
2022, a mere 2.2 million acres was planted. However, USDA forecasts
this year that the U.S. will plant 2.6 million acres of rice. This is
at least one encouraging sign.
We know that demand for rice by consumers in the U.S. and abroad
only continues to grow. Rice is the staple food for more than half of
the world's population and highly efficient rice farmers in the United
States want to continue to lead the way in feeding a hungry world,
especially at times when there is such a high potential for food
shortages.
Looking ahead, we need a permanent fix to the rice farm safety net
in the 2023 Farm Bill to ensure the long-term viability of the U.S.
rice industry.
The purpose of any farm bill should be to provide a foundation or
measure of stability for farmers to keep them on the farm despite
distorted global markets, often unforgiving weather, and other
challenges thrown at producers that are totally beyond their control.
Recent years have seen new obstacles that the 2018 Farm Bill could
never have anticipated, including a trade war, a global pandemic,
unprecedented subsidization of farmers in other rice producing
countries, and a string of especially severe and chronic natural
disasters. In response to each of these events, supplemental assistance
was provided by the Administration or Congress to support our vital
critical infrastructure industry--agriculture--in order to see farm and
ranch families through these volatile times which continue to
reverberate through today.
This has meant that a significant additional investment in
agriculture, above and beyond what the farm bill provides, has had to
be authorized to support farmers on top of the baseline funding of the
2018 Farm Bill. While we understand this is not captured in the
Congressional Budget Office's (CBO) baseline for the farm bill, going
forward, we still believe it is important to recognize that there were
needs that the current farm bill simply could not handle. And, as such,
we believe that the safety net under the 2023 Farm Bill must be
strengthened. A stronger safety net for farmers in the farm bill would
be more cost effective for farmers and taxpayers than continued ad hoc
programs.
Given this, USA Rice believes the forward looking 2023 Farm Bill
baseline must be increased so that policy can be crafted to better
anticipate and address the needs of family farms in these volatile
times. I want to thank you for the budget views and estimates letter
that the Committee sent outlining the importance of increased funding
for the farm safety net. We want the 2023 Farm Bill to be for farmers
and the only way to do that is by strengthening the farm safety net.
We think standing by our nation's critical rice industry is a
worthy investment. The pandemic taught us, among other things, that
food security as a national security issue is not a clever slogan. It
is a reality. We cannot afford to lose the domestic rice industry or
other commodities vital to the nation's food, fiber, feed, and fuel
supply.
Title I of the farm bill, specifically the PLC program, has
traditionally been our true safety net. It's what has allowed us to
better compete on a lopsided global playing field distorted by high and
rising foreign subsidies, tariffs, and non-tariff trade barriers.
For example, China was found to have illegally over-subsidized just
three crops--including rice--by $100 billion in a single year. For its
part, India subsidizes its rice producers by upwards of 90 percent and
injected even more financial support for its farmers facing escalating
input costs. This results in India dumping rice across global markets
at prices below the cost of production, causing India to gain market
share steadily and unfairly. In fact, in the past 10 years, India has
become the largest rice exporter in the world, controlling over 40
percent of the world market. This was made possible through India's
trade distorting practices and egregious violations of its World Trade
Organization commitments. These are just two examples of a litany of
predatory trade practices used by foreign competitors.
In the face of these and other challenges, USA Rice strongly
believes reference prices under PLC need to be meaningfully updated and
indexed in order to provide a relevant safety net that remains relevant
over the long haul.
Payment limitations also need to be adjusted to reflect the growing
risks undertaken by family farms. Just as lenders have had to adjust
how much they are willing to lend and what they will require as
collateral to keep up with current conditions, so too must the farm
bill's safety net adjust. This includes payment limitations, adjusted
gross income (AGI), and actively engaged rules that simply have not
kept pace with the times. They are outdated, as evidenced by the
hundreds of Members of Congress on both sides of the political aisle
who not long ago wrote to the Department of Agriculture expressing
concerns that the limitations applied to pandemic and trade war relief,
the same limitations long imposed on Title I programs, simply did not
cover the enormous losses suffered by producers. This reality also led
Members of Congress to pass more realistic program parameters in the
context of natural disaster assistance, the Emergency Relief Program,
for 2020 and 2021. We hope that Congress will take similar steps in the
context of the next farm bill. For full time farm families, this is a
remedy that is long overdue.
Further, we believe that Title I programs should be exempt from
budget sequestration. These programs are already designed to ensure
that the farmer is not made whole when suffering losses, but rather
deliver a modicum of help to remain in business, hopefully until
conditions improve. Sequestration has further limited assistance to
farmers during the times they need it most. At present, for those few
farmers who will receive a small amount of assistance under PLC or ARC
for losses last year, the assistance will be further reduced by 5.7
percent due to sequestration.
Promised producer planting flexibility has been a longstanding
commitment to farmers by Congress to ensure that farmers are planting
for the market and for the soil and not due to government programs. Any
updates or reallocations to base acres should be voluntary and the
farmer's decision.
In sum, the work you do on this Committee is extremely important to
the farm families I represent, and I am grateful to have this chance to
testify before you.
Farming has been an honor of a lifetime for me, and it means a lot
that you would place such a value on the work that I love.
Again, thank you for the opportunity to visit with you about these
issues of critical importance to farm families like mine.
The Chairman. Mr. Satterfield, that was just right. You had
10 seconds to go.
Mr. Moore, please begin when you are ready.
STATEMENT OF ANDREW MOORE, PRESIDENT, U.S. CANOLA ASSOCIATION,
DALTON, GA
Mr. Moore. Thank you, Chairman Scott, Ranking Member Brown,
and Members of the Subcommittee, and Chairman Thompson. As
President of the U.S. Canola Association, I want to thank you
for this opportunity to present the views of canola growers. I
am Andrew Moore. My family has been operating Moore Seed and
Grain Farms since 1955 in the beautiful mountains and river
bottoms of northwest Georgia. During the winter, we grow
canola, wheat, barley, and Cosaque black oats, and during the
summer, corn, full season, and double crop soybeans,
sunflowers, and grain sorghum. To help manage and utilize the
products we grow on our farm, my family vertically integrated
our business by commencing an expeller press oil mill in 2008
and a livestock feed mill in 2011.
Canola production in the U.S. has been slowly but steadily
growing but is not keeping pace with demand. The U.S. has
planted an average of over 2 million acres of canola per year
over the last 5 years. In 2022, the U.S. produced a record 3.8
billion pounds of canola seed, but this will only supply
roughly 27 percent of expected U.S. canola oil and mill
consumption.
While the Northern Plains accounts for the majority of U.S.
canola production, production has been increasing in the
Pacific Northwest, and winter canola has been successfully
introduced in the Southern Great Plains and the Southeast. In
the Southeast specifically, the winter canola acreage supports
double cropping of soybeans and other spring seeded crops.
Recently, several processors and seed companies have announced
investments that could spur significant expansion of canola
production. These investments are driven largely by the
potential for winter and double cropping canola that results in
more vegetable oil and protein meal from the same acreage. In
my region, we can produce three crops in 2 years or five crops
in 4 years on our existing acreage. Our farm has experienced an
eight to ten percent yield increase in our double crop soybeans
following winter canola versus following wheat.
Like many other row crop producers, canola growers rely on
the Federal Crop Insurance Program. In December, our farm
experienced unusual 8 temperatures with 20 to 30 mile per hour
winds that killed our canola crop. Luckily, we had Federal crop
insurance that helped us cover planting and fertilizer cost.
Policymakers should look to strengthen and expand crop
insurance, encourage broader participation among producers of
all commodities, and expand coverage to provide more protection
for farms.
USCA also supports the continuation of ARC and PLC programs
with support payments tied to historical crop bases. We have
strongly supported tying Title I program payments to the farm's
crop acreage basis rather than to the crops planted in the
current year. Tying payments to crops planted in the current
year led to major production and price distortions in the 1980s
and early 1990s as farmers made their planning decisions based
on higher government payments for crops with higher supports.
Decoupling payments from current year plantings allows farmers
to respond to market signals rather than planting the highest
government payment. Decoupling has been a key policy in every
farm bill since 1996 and should be preserved in the next farm
bill.
The USCA has worked through previous farm bills to
establish equal footing for canola in U.S. farm programs so the
crop can compete for acreage. These efforts have included
achieving competitive marketing loan rates, target prices, and
reference prices. From our perspective, the reference price of
$20.15 per hundredweight for other oil seeds, including canola,
that was established in 2018 Farm Bill, has been effective and
keeps canola and minor oilseed crops competitive with soybeans.
If reference prices are increased in the 2023 Farm Bill, it is
important to ensure that the new levels reflect their
respective market values and parity is maintained for competing
crops.
As it does for most crops, the current CBO projections show
prices declining for canola over the next 10 years. We would
note, however, that the CBO price projections for canola are
approximately 25 percent lower for most years than price
projections from the other entities such as FAPRI.
The USCA supports a couple of improvements of ARC and PLC
programs. We support a change in providing producers the
better-of option between ARC and PLC rather than requiring them
to annually choose between two programs. In addition, the crop
insurance Supplemental Coverage Option, SCO, should be
available for both PLC and ARC.
Finally, outside of crop insurance and farm programs, I
would like to take this opportunity to urge support for robust
funding for agricultural research in this farm bill.
Transforming and maximizing food production requires a long-
term investment in research and research infrastructure for all
of agriculture.
The USCA joined a group of over 60 organizations, including
commodity groups and other stakeholders, urging Congress to
prioritize robust investments in food and agricultural research
facilities and extension services in the farm bill. Funding in
the research title is needed to spur scientific breakthroughs,
keep pace with our global competitors, modernize facilities,
and ensure nutrition security. Despite growing challenges in
our food system, funding for public food and agricultural
research in the U.S. has declined over the past 2 decades,
while other countries are increasing research and surpassing
the U.S. investments.
Thank you again for the opportunity to testify today and
for considering the perspectives of U.S. canola growers, and Go
Dogs.
[The prepared statement of Mr. Moore follows:]
Prepared Statement of Andrew Moore, President, U.S. Canola Association,
Dalton, GA
Chairman Scott, Ranking Member Brown, and Members of the
Subcommittee:
On behalf of the U.S. Canola Association, I want to thank the
Chairman and Ranking Member as well as the Subcommittee for this
opportunity to represent the views of U. S. canola growers. I am Andrew
Moore, President of the U.S. Canola Association. Moore's Seed and Grain
Farms, Inc. has been operating since 1955 in the beautiful mountains
and river bottoms of northwest Georgia near Resaca, growing during the
winter: canola, wheat, barley, Cosaque black oats. Then during the
summer: corn, full season and double crop soybeans, sunflowers, and
grain sorghum. To manage production and market risks by utilizing the
products we grow on our farm, my family vertically integrated our
business by commencing an Expeller press oil mill in 2008 and a
livestock feed mill in 2011.
The U.S. has planted an average of over 2 million acres of canola
per year over the last 5 years. While the Northern Plains account for
the majority of U.S. canola production, production has been increasing
in the Pacific Northwest and winter canola varieties have been
successfully introduced in the Southern Great Plains and the Southeast.
In the Southeast, the winter canola acreage supports double cropping of
soybeans or other spring-seeded crops. In 2022, the U.S. produced a
record 3.8 billion pounds of canola seed, but this will only supply
roughly 27 percent of expected U.S. canola oil and meal consumption.
Recently, several processors and seed companies have announced
substantial investments that could spur significant expansion of canola
production. These investments are driven largely by the potential for
winter and double cropping canola that results in more vegetable oil
and protein meal on the same acreage. In my region, we can produce
three crops in 2 years or five crops in 4 years on our existing
acreage. For example, our farm has experienced an eight to ten percent
increase in yield in our double crop soybeans following winter canola
versus following wheat. Then the following year, our winter wheat
consistently achieved higher yields in fields that were planted behind
the canola/soybean rotation than fields that were produced behind full
season soybeans. This benefits growers, consumers, and the regional
economy.
Like many other row crop producers, canola growers rely on crop
insurance and the Federal Crop Insurance Program is the most vital
component. On December 26, 2022, and lasting a few days, our farm
experienced unusual 8 temperatures with twenty to thirty mile per hour
wind. Our canola was frozen and died. Luckily, we had Federal crop
insurance that helped us cover our planting and fertilizer cost.
Policymakers should look to strengthen and expand crop insurance to
encourage broader participation among producers of all commodities and
expand coverage to provide more protection for farms.
USCA also supports the continuation of the Agriculture Risk
Coverage (ARC) and Price Loss Coverage (PLC) programs, with support
payments tied to historical crop bases.
Importantly, we have strongly supported tying Title I program
payments to a farm's program crop acreage bases rather than to the
crops planted in the current year. Tying payments to crops planted in
the current year led to major production and price distortions in the
1980's and early 1990's as farmers made their planting decisions based
on the potential for receiving higher government payments for crops
with higher supports. ``Decoupling'' payments from current year
plantings allows farmers to respond to market signals rather than
planting for the highest crop payment and has been a key policy in
every farm bill since 1996. Market-based planting flexibility is the
cornerstone for income support in Title I and must be preserved in the
next farm bill.
The USCA has worked through previous farm bills to establish equal
footing for canola in U.S. farm programs so the crop can compete for
acreage. These efforts have included achieving competitive marketing
loan rates, target prices and, under the last two farm bills, the
reference prices that are used to determine income support payments
under the PLC and ARC Programs.
From our perspective, the reference price established in the 2018
Farm Bill for ``Other Oilseeds'', including canola, of $20.15 per
hundredweight ($0.2015 per pound) has been effective and keeps canola
and the minor oilseeds competitive with soybeans. If reference prices
are increased in the 2023 Farm Bill, it is important to ensure that the
new levels reflect their respective market values and parity is
maintained for competing crops.
As it does for most crops, the current Congressional Budget Office
(CBO) projections show prices declining significantly for canola over
the next 10 years, relative to prices of the past few years. We would
note, however, that the CBO price projections for canola are
approximately 25% lower for most years than the price projections from
other entities such as the Food and Agricultural Policy Research
Institute (FAPRI).
The USCA supports a couple of improvements to the Title I
Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs.
We support a change to provide producers the ``better of'' between ARC
and PLC, rather than requiring them to annually choose between the two
programs. This would provide growers the support they actually need
instead of trying to predict the weather and the market.
In addition, the crop insurance Supplemental Coverage Option (SCO)
should be available for both PLC and ARC. SCO is a crop insurance
product providing county coverage above farm-level coverage. There is
no clear reason why the SCO is not available with ARC, as it is with
PLC, and this restriction should be dropped.
Outside of crop insurance and farm programs, I would also like to
take this opportunity to urge support for robust funding for
agricultural research in this farm bill. Transforming and maximizing
food production requires a long-term investment in research and
research infrastructure for all of agriculture. The USCA joined a
diverse group of over 60 organizations, including commodity groups and
other stakeholders urging Congress to prioritize robust investments in
food and agriculture research, facilities, and Extension services in
the farm bill.
Funding in the research title is needed to spur scientific
breakthroughs, keep pace with our global competitors, modernize
facilities, and ensure nutrition security. Food and agricultural
advancements rely on innovations to increase productivity, adapt to new
pests and diseases, and lower food prices. Despite growing challenges
to our food system, funding for public food and agricultural research
in the U.S. has declined over the past 2 decades while other countries
are increasing research and surpassing the U.S. investments.
Thank you again for the opportunity to testify today and for
considering the perspectives of U.S. canola growers.
Andrew Moore,
President,
U.S. Canola Association.
The Chairman. Amen.
At this time, Members will be recognized for questions in
order of seniority, alternating between Majority and Minority
Members in order of arrival for those who joined us after the
hearing convened. As you know, the Members will be recognized
for 5 minutes each in order to allow us to get to as many
questions as possible. And we can see their lights, so I think
it would be helpful for the Members up here if we could to do
as we were before where the lights were showing so we would
know when we get to 1 minute if possible.
I now recognize myself for 5 minutes.
I think pretty much each of you referenced in your
testimony the current reference prices that were set in the
2014 Farm Bill using 2012 cost-of-production data, obviously,
that is extremely old. It would be old if it were only 3 years
based on what has happened to input prices.
To help provide some context, I want to just go down the
line, and could each of you give an approximate estimate of
where the break-even price is on your farm for the commodity
that you are currently representing and what the current
reference price, and if you know what the current loan rate is
for your commodity? Mr. Haag, we will start with you.
Mr. Haag. Thank you, Mr. Chairman. One thing with--corn has
started out with the reference price, and corn is the most
expensive part in the farm bill when it comes down to adding on
to what the reference price is. On the PLC, it is $3.70. You
start adding that up and up, it takes a lot of money to get
that up to--where we were today.
The Chairman. If I may, but what is break-even on corn? On
corn right now, the reference price is $3.70 a bushel, as you
said. I believe the loan rate is $2.20 a bushel. What is the
average break-even price for producers?
Mr. Haag. For a producer, it depends on the farm, right
now, I would say we are right around $5 a bushel for break-even
as a corn farmer, but it all depends upon how much land you
rent or how much debt you have, if you are an experienced
farmer or a young farmer bringing it up. But $5 is pretty close
right now to the break-even point.
The Chairman. Mr. Holladay, how about you?
Mr. Holladay. On cotton, the latest estimates are 90 a
lint pound, so when you go back to our seed cotton program,
which when we developed it, we used seed and cotton lint
together in the matrix of the support program because they have
two identifiable products that come out of cotton all the time,
and they are combined. And that is what is seed cotton. So when
you look at the seed cotton, our reference price is, what,
36.7 .
The Chairman. 36.7 a pound is what I show.
Mr. Holladay. Yes, and it is going to--about 48 . If you
did the calculation, it would be around 48 . And, that is on an
average producer. It runs the gamut. It could be 85 , it could
be 95 depending on where they sit and their production and all
that as far as break-even.
The Chairman. Mr. Flansburg?
Mr. Flansburg. Yes, so as I look at our crops, one of the
advantages we have is that the cost of production is actually
fairly low, so, we have higher chemical costs, higher fuel
costs, but in terms of having fertilizer needs, that hasn't
driven problems for our crops specifically. So, our reference
prices are definitely lower than what our current values are. I
think 24 for big beans is a number for our garbanzos. And so
large chickpeas are what I think about because it is what I
grow the most. And, the current price is over that. So, that
would be a point where I would have trouble selling them and
making money.
The Chairman. Okay. So I am showing that chickpeas are at
$21.54 on the reference price. I am showing a loan of $14. Does
that sound right?
Mr. Flansburg. Yes, that sounds right.
The Chairman. And what do you think your cost of production
is approximately?
Mr. Flansburg. Well, I have had to grow them for $14
before, and I know that that doesn't work very well. So an
exact number I would have to get back to you on that.
The Chairman. Okay. Mr. Satterfield?
Mr. Satterfield. So currently, the reference price on rice
is $14 hundredweight. Where I am in the mid-South with long
grain, I would say that number should be between anywhere
between $17 and $18.
The Chairman. Okay. And loan is half of that at $7?
Mr. Satterfield. Yes, loan of $7. That is correct.
The Chairman. Okay. Mr. Moore?
Mr. Moore. Yes, sir, thank you. The reference price per
hundredweight $20.15, which turns out to be about $10 a bushel.
And that is the reference price for canola. And the loan rate
is $10.09 per hundredweight.
The Chairman. What is your cost of production?
Mr. Moore. So that is the deal with canola is that we grow
it from North Dakota all the way down to Georgia, so we double
crop our canola. So ours is a little bit different than North
Dakota. So it can be a range. I don't have that specific number
because our farm is a little bit unique in how we process our
canola.
The Chairman. Okay. Thank you.
Mr. Holladay, in your testimony, you mentioned how
important the Marketing Assistance Loan is for your industry.
And you note that despite the higher production costs, the
maximum level of loan rate has remained the same since 2002.
Can you speak more on how raising loan rates to reflect current
market prices would be an effective tool for farmers?
Mr. Holladay. We use marketing loan quite a lot in cotton
simply because most of our cotton goes to export, and we have
different shipping and storage issues and marketing issues, and
we have the same volatile markets everybody else has. What we
are looking at is it would be forward-looking to raise that
base loan rate. Simply because it is so low, we are only going
to be using a portion of--it is a portion of the value of that
crop most of the time, but if you move it up, it is not a large
cost item, and it has a significant impact on the amount of
money that the producers can get when they put cotton in the
loan when prices have dipped below break-even or farther.
The Chairman. All right. Thank you. My time has expired. I
did not see the light down there. I apologize. And I look
forward to continued discussion on the loan and reference
prices.
With that, I recognize the Ranking Member, Ms. Brown, for 5
minutes.
Ms. Brown. Thank you, Chairman Scott.
I am going to start off by asking a big-picture question.
Based on your testimonies, I think we would all agree that our
farm safety net programs are an essential tool to help farmers
and ranchers literally weather any downturns in the market
beyond their control. However, I also think that we would all
agree that certain programs are easier to navigate than others.
So I would like to hear from each of you. Do you have any
suggestions for the sort of criteria we should use in
understanding how our farm safety net programs are functioning?
And I will start with you, Mr. Haag.
Mr. Haag. I had a little hard time understanding who the--
Representative Brown? Could you kind of repeat that a little
bit for me, please?
Ms. Brown. Yes. So, I am just curious about any suggestions
you may have as it relates to the criteria we should use and
understanding how our farm safety net programs are functioning.
Mr. Haag. With the farm safety net, it is the major tool in
our toolbox for the farmers, especially at the younger age
because he does not have the experience or the mandatory
existing land paid for or buildings--or not buildings, but
machinery. So with the crop insurance at the high level or
where we are at right now is important to keep it there, and
anything to help take it down would be hurting our younger
farmers more than the other farmers.
And the other big thing with crop insurance is that we need
everybody to be participating like we are now because if we
start having less people involved in crop insurance, the more
expensive it is going to get for the next generation of farmers
coming up.
Ms. Brown. Mr. Holladay?
Mr. Holladay. Yes, thank you very much for the question.
One way that we can look at how successful programs are is
looking at how much ad hoc disaster has to be spent as
basically a safety net procedure. And one way to implement them
better would be that we have to have easier access and better
education on getting into these programs and make it equal
access and make it a very identifiable procedure for everybody
that could participate on any given commodity and expand the
insurance coverage for those that might be not able to get
insurance in different plantings.
Ms. Brown. Thank you. Mr. Flansburg?
Mr. Flansburg. Yes, so a big-picture measurement of how the
farm programs are working is how many farmers are going out of
business in any given year and how many farms are sticking
around and able to make it. And, having farmers have the
ability to choose what they plant is important and to enable
them to navigate these programs is also important. So an
interface with the FSA office, that is a good first point of
contact for farmers to understand these programs, so all that
should be supported. And, really, for me, the insurance program
works well in the way that I navigate that with my own
insurance agent. So on the farm, that is a very useful tool.
Ms. Brown. Mr. Satterfield?
Mr. Satterfield. So, as has been referenced earlier today,
the cost of production being so much higher than 2012, it is
just a completely different world that we live in now as far as
pricing and input costs, and it really needs to be relevant for
the PLC to work. Last year, as a good example, the PLC
triggered very, very little, a negligible amount and on a year
when it was so needed when the costs were just so high and you
had exponential increases in all of your input costs. So again,
Texas A&M had a projection that \2/3\ of rice farms will be in
the negative, an $880,000 loss per farm. And I can tell you
that that is a pretty accurate number because there are some
people that are hurting out there in the rice business.
Ms. Brown. Mr. Moore?
Mr. Moore. Yes, ma'am. Thank you. I can back up the things
that these other people have been saying. FSA numbers for us, I
mean, big picture, our FSA numbers are very large. We have a
lot of FSA numbers on different land that we have, and so
consolidating that would be helpful. Market choices, the
producer always wants to have a market choice that they have
that they can grow per acre. I mean, we can do eight crops per
year on our farm, and so we would like to have that choice on
what works best for us. And then the PLC and the ARC program,
it is difficult to navigate through that every year on which
one we do. We have a lot of counties that we farm in.
Ms. Brown. Thank you. And I see my time has expired.
The Chairman. The chair now recognizes Mr. Crawford.
Mr. Crawford. Thank you, Mr. Chairman.
Mr. Holladay, I want to start with you. And, we share some
commonalities with regard to cotton production. Obviously, in
east Arkansas, we grow a lot of cotton, and I am very familiar
with the challenges that our growers there face, including
drought, high production costs, inadequate demand, supply chain
disruptions, and so on. Agriculture is inherently risky, but
for those who are less familiar with the day-to-day operations
and challenges of production agriculture, that suggests, well,
maybe you can just grow some different crops. How realistic of
an option is that for you as a cotton producer?
Mr. Holladay. Well, I live in the middle of the biggest
cotton patch in the world, and we grow cotton out there for a
reason. It is a very arid environment. It is best suited for
that environment. It takes less water for that cotton. So
cotton is very specific to that region. We have different cover
cropping technologies we use, but we don't have really a true
rotation that we rotate out of.
Mr. Crawford. This has been something that is been alluded
to by several of the members of the panel, but crop insurance
as an example, I think we ought to be expanding eligibility for
crop insurance, not shrinking it. And if we really want to
reduce cost to producers, if we really want to enhance the
uptake for young and beginning farmers so that we start to bend
that curve on the aging farming population and change
trajectory, I think we ought to be expanding acres and not
creating instability with safety net program eligibility. But
to what extent do you think producers should be in charge of
their own production risk? And how do you think this would
impact ad hoc disaster assistance?
Mr. Holladay. Well, I think increasing the safety net, we
need to get ad hoc disasters back to disasters. It does not
need to be a safety net policy. It needs to be for a disaster,
something. We have such a distance between, we have to be in a
negative cash flow so long before we ever hit this safety net.
It is going to be unsustainable. And, the crop insurance is a
tool that it is easily identifiable. You know exactly what is
going to happen when this happens. The expansion of that
product, making it more affordable at higher levels, anything
we can do to enhance that makes it a lot easier for especially
a young farmer to bank and have something identifiable. So not
only do we need to keep crop insurance sound, we need to be
looking at ways to expand it.
Mr. Crawford. Yes, I agree with that. And I am going to
tell you--and I am going to ask for y'all's input on this on an
ongoing basis. Everything that Congress has done over the years
to improve opportunities for young and beginning farmers has
failed miserably. And if that is not true, why are we not
seeing more young people in agriculture? Why are we seeing that
age continue to rise instead of going the other direction? So I
am going to ask you to really come up with some outside-the-box
ideas because I have a few myself. But we really need some
input because what we have done thus far has not worked. And so
we need to work on that.
Let me shift gears just a little bit. Mr. Holladay and Mr.
Satterfield, I would like to direct this to you as well. Let me
just go to Mr. Satterfield on this one. Congressman Mann and
myself, we have led multiple efforts, including a current one,
to call upon the Administration to formally open a dispute
settlement case with the WTO over India's over-subsidization of
rice and wheat. Can you explain how these trade-distorting
practices by India are affecting rice producers and wheat
producers?
Mr. Satterfield. Sure. With these trade practices, India is
dumping this rice in places that are so cheap just because of
the over-subsidization of their growers that places that used
to be some of our biggest markets we can't sell to anymore
because we are growing a great product, but they are getting
the rice so much cheaper because of the over-subsidization of
fertilizer and everything down the line from India. They can
take it and ship it around the world to places where we used to
go and just really robbing the market share. So it is really
just directly affecting us and our sales to these countries.
Mr. Crawford. So if I understand this right, we get wrapped
around the axle about the actual subsidization of a crop that
we forget about the subsidization of the inputs of the crop
that make it cheaper for them to produce. Is that fair to say?
Mr. Satterfield. Absolutely.
Mr. Crawford. All right.
Mr. Satterfield. Sure. Yes. And the amount of rice that
they keep, you hear stories of rice that they keep for their
people and somehow ends up in other countries as well, so I
think that right from the subsidization of the fertilizer and
the input costs and everything down the line, it just is a very
unlevel playing field for us for sure.
Mr. Crawford. Thank you. I appreciate you being here today.
And, gentlemen, I yield back.
The Chairman. The chair now recognizes Ms. Adams for 5
minutes.
Ms. Adams. Thank you, Mr. Chairman.
And thank you for your testimony today and for being here.
Your insights as producers are informative and certainly
important to the work that we are doing as a Committee,
especially on the farm bill.
Mr. Moore, I was happy to hear you talk about the
agricultural research and the facilities' needs. I am a
graduate of North Carolina A&T State University, the largest
public HBCU, but also an 1890s institution, and so we always
talk about the need for research, so I appreciate you raising
that.
As many of you may know, the number of Black farmers in the
United States has decreased precipitously over the last
century. In 1950, there were over 500,000 Black farmers. Yet,
by 1997, that number fell to 20,000. And over the course of the
20th century, Black farmers have lost over $300 billion worth
of farmland and acreage. And while this outcome is the result
of many different processes stacked against Black farmers, some
farmers have identified that role, that discrimination by FSA
staff and county committee members have played, including
mishandling paperwork like applications and poor customer
service.
So to all of you, quickly, what are your thoughts on the
FSA county committee system, and is there a role for county
committees to play and if you can speak to issues with the
office staffing and customer service that you may have
encountered? So we will start with you, Mr. Moore.
Mr. Moore. Thank you so much, Ms. Adams. Yes, so our FSA
office is in our county seat, and we have small counties in
Georgia and so there are a lot of counties that we have to work
through. Luckily for us, Glenn has been a great man for us, for
our county and our county area. He supports us in the ways that
we need to ask, and his office open to us, and we go in there
often.
Ms. Adams. Okay. Great. So if we can move to Mr. Shawn
Holladay?
Mr. Holladay. Yes. I would say that the county committees
are very, very important, and they serve their role very well.
And, we have to have a--from an FSA employee to a county
committee to even a state committee, we have to have very good
people in those positions. We have been involved as the cotton
industry, as many other commodities do. We help service
candidates for those. We help USDA service underrepresented
candidates for the state committee this year. I was involved in
some of that. We have a lot of stuff going on. But all of that
system works very well, but we have to be very careful to keep
those seats intact because we have had a difficult time getting
those seats filled sometimes.
Ms. Adams. Okay. Great. Okay. So we can move on to Mr.
Haag.
Mr. Haag. With the FSA, it is amazing how they have
improved, maybe that COVID was one of the things that harmed
American farmers during that time, but the FSA office, they
improved themselves by working more and having more work done
over the internet so you don't have to show up at the office as
much as you did before where you can email to get that
information. And with having your local people in your counties
like we have in Minnesota, it is important because they know
the operations that go on in our counties, so that is why it is
important to have that committee. So with the FSA is they made
huge programs, or, I mean, made it a lot easier to work with
the FSA than it had than in the past.
Ms. Adams. Well, thank you. Let me just move on quickly if
I can. USDA in recent years has undertaken efforts to enhance
the online experience for producers. Have producers of your
commodity had positive experiences with online tools, Mr. Haag?
Mr. Haag. I am sorry. I didn't hear what you said,
Representative.
Ms. Adams. Have producers of your commodity had positive
experiences with the online tools? Online, online.
Mr. Haag. The online tools, actually, my daughter has a lot
better experience than I do with it.
Ms. Adams. Okay.
Mr. Haag. She keeps all IT things running on our farm. But
yes, I mean, I think we are adopting those. Anything that we
can do online--we can't do everything, but anything we can do
online, we are adopting those technologies, and we were finding
them very useful.
Ms. Adams. Thank you. I think that red means I am out of
time, is that right? Thank you very much. Thank you, gentlemen.
The Chairman. Before I recognize Mr. LaMalfa, I am going to
have a roster update. Unless somebody comes in on the
Democratic side, we will be going to Mr. Bishop and then Mr.
Davis. And on our side, I have LaMalfa, Duarte, Johnson.
Mr. LaMalfa, you are now recognized for 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman.
Let me kind of pick up where Mr. Crawford left off with Mr.
Satterfield on the situation with India and the blatant
violations with the WTO and such and rice, as well as other
commodities, suffering some of the similar issues. Can you
share what you are hearing? What have you received from the
Administration, from USDA or USTR, on what they are doing to
address this issue?
Mr. Satterfield. Sorry about that. That is a good question.
We have taken cases that have gone to a certain degree and have
not gone any further. I would say that there is definitely work
to do there. It seems to get to a stopping point, and it
doesn't seem to go any further, so we still are battling that.
Mr. LaMalfa. How could Congress be helping bring more
awareness to the----
Mr. Satterfield. Yes. And there are things we are working
on. We have formulated a few plans to do that. I think just an
overall education about how it is truly affecting the American
rice farmers, I think there is maybe a disconnect on how really
hard it is, hard hit the rice industry is because of this.
Mr. LaMalfa. You mentioned the $17 price needed for rice.
What number would you put on for California?
Mr. Satterfield. Well, that is another thing we are working
on. And I know that is near and dear to your heart, as a rice
man yourself. With a little bit of a different reference price
in California and that is a number that should be a good bit
higher than what it is now.
Mr. LaMalfa. Yes, definitely. We grow that medium grain out
there it is a little different but----
Mr. Satterfield. Right. The good stuff.
Mr. LaMalfa. Thank you.
Mr. Holladay, you were talking about in the conservation
programs that they must reward, not penalize, the good
contributions that have been made across the board, but
especially by those that have done them early on, before the
programs were up to speed. Can you talk about that situation
where the early adopters of conservation have not really been
rewarded or even noticed, maybe even penalized?
Mr. Holladay. Yes, I appreciate that question very much.
When we look at these conservation programs and plans, they
seem to always want to be scaled. And when you look at those
scales, the people that have adopted a lot of these things
early on and people who are using these conservation tools and
practices already rather than using the program, we want to
ensure that those early adopters are getting supported for that
early adoption rather than having someone who had not adopted
and have the entire scale that they could be supported as they
move up the ladder. Basically, it is in retrospect after moving
backwards, you are punishing the ones that have been doing the
things that are more climate-smart to begin with.
Mr. LaMalfa. Yes, I appreciate that. We have been bailing
rice straw for probably nearly 30 years, and that is just one
small example. There is not a lot of credit on that.
Mr. Satterfield, various natural disasters have hit a lot
operations and a lot of commodities here. In my own home state,
again, we had several years of drought, some of it manmade and
some of it caused by water delivery cuts and misuse of water,
for example, of California's little over 500,000 acres of rice
typically grown last year, that was lopped in about \1/2\,
unbelievable what I was seeing on the west side of the valley I
represent there, the dry fields and the resulting effects on
wildlife and habitat and whole works. So what would you be able
to share with the Committee to enhance and support our food
systems where our producers would be able to get through these
hurdles? And I would just say quick, we need more water
storage. We need smarter allocation of water and not so much
environmental water running out. But what would you look at a
bigger picture we could be doing more?
Mr. Satterfield. Yes, I mean, I think you are exactly
right. There are a lot of great rice farmers in California, a
lot of good friends of mine. I was out in Sacramento in
January, saw the influx of all the water in the Sacramento
River and all of that area. So I think just an understanding of
the needs. The surface water, like you were talking about,
enhancing the size or whatever. Like you said, I could probably
defer to a few of my California friends for some specifics on
that. But they have definitely gone through the years with the
drought and then now with too much water, it is certainly a
complicated situation.
Mr. LaMalfa. Yes, certainly. And that goes with all of our
commodities here. We used to have so much cotton in California,
and that was one of the first things hit by water
misallocation. And, California grows--there are many, many
crops grown--they are 90 percent of what the U.S. consumes is
grown there, so we have to do better.
Mr. Chairman, I yield back. Thank you.
The Chairman. The chair now recognizes Mr. Bishop.
Mr. Bishop. Thank you very much. Thank you, Chairman Scott
and Ranking Member Brown, for having this important hearing for
us to get an update from our commodity stakeholders on their
priorities for the 2023 Farm Bill.
The 2018 Farm Bill enabled producers starting with the 2021
crop year to pick between the Agriculture Risk Coverage Program
and the Price Loss Coverage Program on an annual basis. Do you
think that this ability to annually elect which program in
which to participate has been beneficial to producers? If you
could each address that briefly.
Mr. Holladay. Yes, I think that is a really good aspect of
the program. I think anytime you have versatility, you have
risk management. When you have different tools to use at
different times, anytime you can keep those elections, you are
better off.
Mr. Flansburg. Thank you for the question. I enjoyed the
ability to change between these programs, but it is difficult
to change between these programs as a producer, too. So, I may
be in a somewhat unique position among farmers that I have
probably only six distinct landowners that I farm for. And,
there are people with 70, 80, 90+ landowners that they have to
negotiate between these programs with. So getting all those
signatures, getting everybody to agree on those programs is
difficult. So while it is nice to be able to choose between one
newer idea that we would advocate for is an automatic default
to the better of a given program in a given year, whichever is
more beneficial based on conditions on the ground.
Mr. Bishop. But you have sufficient tools for the producers
to really--do they have sufficient information upon which to
make their decision on but which one of the programs to choose?
Mr. Flansburg. Probably. In a given year, there is guidance
that comes from grower organizations and FSA. But sometimes,
the hassle of changing between them is not worth the benefit of
trying to predict what the given year is going to do price-wise
and weather-wise.
Mr. Bishop. Okay. Let me ask, given the level of expected
commodity prices this year compared to previous years, along
with the higher input prices, do you anticipate that there will
be higher levels of interest among farmers electing the Price
Loss Coverage in order to be able to also purchase the
Supplemental Coverage Option in crop insurance? Or have
producers opted more into the ARC since the PLC seems unlikely
to trigger for most traps again?
Mr. Satterfield. Well, I think that is exactly right. I
would concur with what they have said. I think when you get the
choice between the two, the PLC program that seems to work
better with rice, specifically, and then maybe in the ARC in
the soybeans, just concerning what I have on my own farm. But
yes, I think the option for the supplemental coverage will work
in there as well.
Mr. Moore. In U.S. canola--sorry, excuse me.
Mr. Bishop. Go ahead, Mr. Moore.
Mr. Moore. U.S. canola, it supports definitely adding the
Supplemental Coverage Option for ARC and PLC for both of them.
Right now, it is currently, I believe, just for PLC. I would
have to check that data, but it is one or the other. I can't
remember. There is not a clear guideline on why that is not
available for both. For our farm, it is difficult to navigate
through that because of the different counties that we have
within Georgia and how that works. And so we have certain
counties that are going to do certain things.
Mr. Bishop. Can you talk about the role of marketing
assistance loans and facilitating the marketing of your
respective commodities? My time is going short, so if you could
be brief.
Mr. Holladay. I would just say that the Marketing
Assistance Loan is an integral part of cotton in particular,
but in terms of low prices and moving cotton and being able to
get money off of that crop in the interim as you market it and
be able to get it in the marketplace, it is very helpful to
different productions.
Mr. Haag. In the corn situation where we are at right now,
$2.02 at the marketing loan, it is not very feasible for
farmers to go into it because of the price of being up where we
are at. The back wood corn was a lot cheaper. You saw a lot
more farmers using that program back then than they do now.
Mr. Moore. For farmers who have storage, we have storage on
our facility, we are able to utilize that to help out with cash
flow throughout the year, and so we do utilize the Marketing
Loan Program.
Mr. Bishop. I think my time has expired. Thank you very
much.
The Chairman. Okay. I am going to give a roster update real
quick since it has changed a little bit. I have Miller and then
Rose on our side. And on your side I have Budzinski and then
Davis.
Mrs. Miller, you are now recognized for 5 minutes.
Mrs. Miller of Illinois. Thank you. You are getting into
the Illinois farmers here. It is great to be here. Thank you to
all of you.
I do want to start out by saying that over the past few
years, farmers have really faced increased input costs. And now
more than ever it is important that we protect our crop
insurance and ensure that farmers have a strong safety net.
That is very important to the producers in my area.
So, Mr. Haag, thank you for being here. And, as a farmer, I
know how important it is to grow export markets around the
world. Would you discuss how the farm bill could increase
agriculture exports?
Mr. Haag. That is a very good question. And exporting is a
very important item with the corn growers because of the amount
of the crop that we grow every year. So with having the crop
insurance, but with the exporting with the farm bill, that is
where it is important for the MAP and FMD programs to have an
increase in there for how much good they do for overseas
countries to get our product over there. That is very
important.
Mrs. Miller of Illinois. Thank you. And I just want to say
that H.R. 648 (Agriculture Export Promotion Act of 2023) is
something that I support and that the producers in my district
are counting on us, on the Administration being aggressive in
their trade policy.
And you also mentioned in your testimony that NCGA supports
increased flexibility within conservation. Could you please
explain how giving farmers more flexibility will ultimately
improve farm conservation practices?
Mr. Haag. That is one of the major things that have
happened in the farming process from when I started farming to
where we are today. The farmers are taking better care of the
land. They are more worried about the conservation. If they
have some lighter ground or whatever, they will put it in the
Conservation Reserve Program and keep it there where they use
their heavier ground, then, to make sure they still have the
cropland for that. But farmers are very concerned about the
conservation, and down the road, we will be also.
Mrs. Miller of Illinois. Thank you. And I do want to make
it public that the farmers are the great conservationists, and
they are responding to new information and new practices and
implementing them. And I am glad that we are giving them the
flexibility because people's geography and their climate is a
little bit different in every area.
So I hear from growers in my district that it is vital to
strengthen and protect crop insurance. How important is
continued innovation and development of new approaches to crop
insurance tools? For example, corn growers had the recent
split-apply nitrogen endorsement.
Mr. Haag. That is just one of the items that your State of
Illinois came up with here a number of years ago. And we are
finding out even in my home State of Minnesota that we are
doing--we on our farm, we do split applications of nitrogen. We
are not getting the credit that you do in Illinois, but we are
still using it because we are finding out how much more
beneficial it can be in growing our crop.
Mrs. Miller of Illinois. And it is great that we are not
penalizing but we are incentivizing some of these practices.
Thank you so much.
The Chairman. The chair now recognizes Ms. Budzinski for 5
minutes.
Ms. Budzinski. Thank you, Mr. Chairman. And thank you,
Ranking Member. It is great to be with all of you today. I
appreciate your testimony. I had a question actually for Mr.
Haag around biofuels. Specifically, I am also from Illinois and
care very deeply about how we have opportunities to be
expanding the usage of biofuels. I am really proud to be one of
the co-leads in the House on the reintroduction of the Next
Generation Fuels Act of 2023 (H.R. 2434). And so what one of
the questions I had for you was, as we expand investments in
these biofuels in that market, can you speak to where we are
from a capacity standpoint in terms of production and what
steps we might need to take to scale up production for
alternative fuels?
Mr. Haag. Well, that is one thing with the American corn
farmer, you give him the challenge of growing more corn, we are
up to that challenge of growing more corn, just from the
technology that we have been provided in the last 10 years of
that product of corn, where we can average and what we can do
right now. It is amazing what we can do; but, like I say, the
American corn farmer there, if biofuels is important to us and
if we can increase and get in to the--like you mentioned the
Next Gen Fuel Act to show that we can perform just as well as
some of the EVs, yes, we will compete with them in that. So the
challenge is there for the farmer. He will take that challenge
on because it is amazing what we get out of the ground right
now with using less of everything and how we are still taking
care of the ground.
Ms. Budzinski. So they are up to the challenge. That is
great. Wonderful. Well, I also had a question related to
energy, and this is really for anyone on the panel. The past
couple of years have seen a sharp rise in energy costs given
the global pressures on prices here at home. Can you discuss
what issues you all are facing following the rise in energy
prices and how it is affecting operations?
Mr. Holladay. Thank you for that question. Energy is tied
to everything nearly; but, as producers, what we have is
anything coming to our operations we are importing all of these
resources to grow these crops. Everything on them is tied to
some sort of transport cost. That is the bottom level. Then we
are using the fuel to produce the crops. And then we are using
on the crops that we are growing that is directly linked to
energy. So energy prices have a main line to everything that we
do.
Mr. Moore. So, as a U.S. canola producer in the Southeast,
there has actually been a lot of news that has been hitting the
cycle in the last 2 months about producing biofuels or
renewable diesel from canola stock or winter canola. And so one
thing that we can do in Georgia and Tennessee in the Southeast
is that we can double crop that, so we can basically triple our
oil production per acre with soybeans and canola combination.
And so that rotation is what is exciting about securing that
energy source.
Mr. Satterfield. And I would say that is a huge concern at
all levels, especially as you talk about with your input costs.
Last year, at a time in your most critical irrigation time we
were paying $4.55 for farm diesel. So, I mean, just every time
the truck pulled into your farm, it was $16,000-$18,000
depending on the size of the truck that you were dealing with,
and they were pulling in fairly regularly. So it adds up pretty
quick. I mean, and it is a little different regionally or
different states, but where I am, we went from about $400 a ton
of urea for rice to about $1,200 a ton, so just a great
increase in these prices that are just exponential of where
they have been.
Mr. Flansburg. And I am here to speak primarily for pulse
crops, but I can say that the cost of fuel while it is a top
line number that is easy to look at, is not the biggest cost on
our farm. The biggest cost on our farm is fertilizer, which is
also driven by the cost of energy, so I mean, it is multitudes
more than the cost of fuel. And so one of the advantages that
our crop has is that, without having to use nitrogen-based
fertilizers that we import onto the farm, pulse crops are an
inexpensive option relatively to grow because we don't have to
expend that same energy output for fertilizer onto them, so
they are good rotation crop in that sense and reducing energy
use.
Ms. Budzinski. Thank you very much. I will yield back my
time. Thank you.
The Chairman. Thank you.
The chair now recognizes the chair of the full Committee,
Mr. Thompson.
Mr. Thompson. Mr. Chairman, thank you so much. Ranking
Member, thanks again for this hearing, and thanks to all of our
witnesses.
Many of you mentioned Federal crop insurance in your
testimony. As you well know, there have been attempts in
Congress to gut the program by imposing an adjusted gross
income means testing, payment limits, things like that,
including through an amendment to the debt ceiling bill filed
just this week. Can each of you speak to how these kinds of
proposals would impact the crop insurance program as a whole
and your operation in particular?
Mr. Haag. Well, that would be a major disaster if something
like that would happen to us, Mr. Chairman, because with crop
insurance, if we start having limitations, you might have some
of your larger farmers not taking the crop insurance, well,
then you have less people involved in crop insurance. That is
going to make it more expensive for that younger farmer then to
get going. It is going to put his inputs up higher. So we need
to keep the crop insurance right where it is at, make sure that
we don't have the issues like you just mentioned coming forth.
So the stronger we can keep that net available for the farmer,
the better off farmers we are.
Mr. Thompson. Mr. Holladay?
Mr. Holladay. Thanks for that question. I will answer that
real simply. As cotton growers, we rely on insurance products,
some regions more than others. On my operation, my daughter has
been a full partner in our operation since she graduated from
college, and I would have advised her not to farm if I thought
those would be implemented because that is limiting something
that we are using as a true safety net, but it is well below
the cost, you can't make money off of it, but it can keep you
in business long enough to make it to the next wreck.
Mr. Thompson. Right.
Mr. Holladay. Basically, and that is how important it is
how important it is to our operation, our family operation to
not have those kind of harmful things happen to insurance
because I don't think they are justifiable from any aspect. On
the insurance side, I don't think you can--just the integrity
of the program and when you are putting limits on it like that.
I think it goes all the way to the other end of the spectrum.
Mr. Thompson. Mr. Flansburg?
Mr. Flansburg. Yes, thank you for the question, and it is
entirely critical to our operation to have strong crop
insurance back into what we do. I am in the fortunate situation
of not having an operating line on our farm currently, but if I
wanted to go to the bank and I said, ``Hey, I would like to get
a loan so I can farm, but I really don't want to buy
insurance,'' that is not even an option.
Mr. Thompson. Right.
Mr. Flansburg. So access to credit is, at this point,
dependent on having access to that insurance. And, really, it
is a way to minimize the cost of the program and to minimize
the risk. If you are coming in without access to finances,
insurance is critical. Our acceptance in our industry is really
high. We have producers buying revenue insurance at 80 to 90
percent rates now. It is an important, important tool to us.
Mr. Thompson. Very good. Mr. Satterfield?
Mr. Satterfield. So, as I said, crop insurance in some
instances does certainly have a place in rice, maybe not so
much you are dealing with a 100 percent irrigated crops. You
don't have as many yield variations as you do in other crops.
We have worked to try to improve that, except in extreme
circumstances, it is just not a really good safety net for
rice.
Mr. Thompson. Mr. Moore?
Mr. Moore. Mr. Chairman, thank you. So for canola actually,
we received a crop insurance adjustment this year because our
canola died. It was 8 and 30 mile an hour wind with no cover.
It kills canola. It can. And so this is the first time that we
had experienced that with canola. Luckily, we had that crop
insurance to be able to get us through. I think the part for us
is that it is cash flow, so we are double cropping a lot of
stuff. So we have our winter crops that come in with cash flow
that comes in, in May and June, and so if we don't have that,
then we are not able to move for our summer crops that are
going into the ground. So crop insurance allows us to be able
to take advantage of the dual season and protect our cash flow.
Mr. Thompson. I had another question, but I am going to
phrase it as a request actually. Great commodity groups, great
organizations, lots of great members. I have been around to
visit a few of them, looking forward to seeing a few more in my
travels. I would just encourage your help in educating Members
of Congress about the importance of the farm bill as you make
visits or back home where you invite Members or their staff
onto the farm. So that is just incredibly important, any way
that you can to help us. We have a significant number, over \1/
2\ of the Members of Congress in the 118th have not been here
for a farm bill. And, quite frankly, some folks who have been,
it wouldn't hurt to do a little additional education with some
of them.
So thanks so much, Mr. Chairman. I yield back.
The Chairman. All right. Thank you, Mr. Chairman.
Before I go to Mr. Davis, on the Republican side, I have
Finstad and then Rose. And I now recognize Mr. Davis from North
Carolina for 5 minutes.
Mr. Davis of North Carolina. Thank you so much, Mr.
Chairman, and to Ranking Member Brown, and to our full
Committee chair. It was great seeing you in North Carolina in
the East. I think we had a great visit, so thank you.
And good morning to all of the witnesses who are here
today, and thank you for coming from across the country to join
us.
My district includes North Carolina's Inner Banks region,
and that is vulnerable to flooding. Earlier this year, USDA
unveiled the expanded Hurricane Insurance Protection-Wind Index
endorsement to be offered by their Risk Management Agency this
year. President Haag, can you speak, please, to the importance
of new programs like Hurricane Insurance Protection to provide
certainty for corn producers, especially those producing
specialty varieties like blue corn that their operation will
survive natural disasters?
Mr. Haag. I didn't quite get everything that you mentioned
there, sir.
Mr. Davis of North Carolina. Yes, I was wondering if you
could please speak to the importance of new programs like
Hurricane Insurance Protection to provide certainty for corn
producers, especially those producing specialty varieties like
blue corn.
Mr. Haag. Right. I got you now. Yes, anything that we can
do to add new ideas to crop insurance is very beneficial
because a number of years ago they brought one in with the
wind. Well, that helped the State of Iowa then for that
derecho, so anytime we can add new ideas to crop insurance, we
as farmers are much better off. And we just want to make sure
we don't take the good things away right now, but adding new
things is great.
Mr. Davis of North Carolina. And I have heard from cotton
producers in my district about the rising cost of farm
equipment and continued pressure on supply chains. Chairman
Holladay, in a volatile economic environment, what kinds of
investments do producers have to forego when they are not able
to tailor their risk management options and lack access to
vital programs like the STAX income protection plan?
Mr. Holladay. Well, thank you for that. When you have a
situation like we have right now with a huge input cost,
everything becomes a big factor, so there is not any one thing
that is not extremely important. And then having the ability to
take STAX out with PLC and removing that prohibition will be a
very great thing. We adopted the STAX program when the Brazil
case was engaged and when the WTO ruling came out against us as
a placeholder for us to survive until we could be a part of
this program again. And with that, we had to in that
negotiation--and it evolved forward. It was a situation where
you couldn't participate in PLC and STAX at the same time, and
that would be very helpful to get that switched.
The investments that we make on an annual basis are all
impacted by our safety net because you are not going to make
any future investments. If you don't have some security, and
that is what, basically this Committee is our security that
stands between us and the subsidization of other countries and
various other things like natural disasters.
Mr. Davis of North Carolina. And, Chairman Holladay, can
you also speak, please, to the importance of the Economic
Adjustment Assistance for Textile Mills Program and keeping
manufacturing and cotton production jobs here at home?
Mr. Holladay. It is very important. One thing we don't need
to do is lose any more textile industry. It was basically
destroyed. We need to have the ability to do some things in
this country, and the textile industry was nearly gone. And
that is probably one of the reasons that we helped keep that
industry going, and a good example of that is they were able to
switch and make personal protective equipment during the COVID
virus in this country as textile mills in this country. And the
support of those mills is important, and it is important as a
security measure as well.
Mr. Davis of North Carolina. Again, thank you, and we yield
back, Mr. Chairman.
The Chairman. Thank you. The chair now recognizes Mr.
Finstad for 5 minutes, and then it is Mr. Rose for 5 minutes.
Mr. Finstad. Thank you, Chairman Scott and Ranking Member
Brown, for holding this important hearing today. And thank you
to all the witnesses. And thank you, Chairman Thompson, for
your leadership on the Agriculture Committee.
And I want to extend a special welcome and thank you to a
fellow John Deere-driving Minnesota corn farming brother farmer
of mine, Tom Haag, for being here today. I also want to just
thank you for your leadership. And, we are really proud of you
in Minnesota to have you on the national stage leading the
National Corn Growers, so thanks for being here.
I am a proud fourth generation corn and soybean farmer from
southern Minnesota, really excited and honored to be raising
the fifth generation. And I have been saying this over and over
again, and I really believe it to my core that our role here in
Congress is really important that we pass a really strong farm
bill. But we have to make sure that it is done for the farmer,
by the farmer, and it is done for rural America, by rural
America. And so for you all being here today, it really helps
us do that. It is so great to hear all of your stories, hear
your backgrounds, and a little bit about your operations,
fourth generation, fourth generation, fifth generation. And
really, it speaks to, not just the quality of people that are
involved in our profession, but also the stewardship and the
love of the land. And what we do really is beyond you and I. It
is about our kids and our grandkids and those next generations
that we want to pass our farms onto, so it is really important
that we get it right. And so for you being here, it helps us
get it right.
So let's talk a little bit about the farm safety net. We
have heard quite a bit about crop insurance. I am honored to
have put together an ag advisory committee that is really
helping me on the ground figuring out what is really important
for the next farm bill and how I can be an effective
Representative to farmers in southern Minnesota.
And I hear over and over again crop insurance, right, crop
insurance, protecting crop insurance. So, as a farmer, I know
you mentioned the relationship with the lender. I see it
firsthand. You don't even get across the desk with a lender
without being able to start with what is your crop insurance
exposure, what are you at? And that conversation then goes from
there, but it also doesn't end there. It ends at the very end
when you are making those marketing decisions. And so I see it,
I hear it, and I know it is something that we are going to work
hard on.
I guess I would just maybe very simply just, Tom, I will
look at you, Mr. Chairman of the National Corn Growers, what is
the biggest challenge that you see from a corn grower's
perspective right now?
Mr. Haag. I think one of the biggest things that we see
right now is that we have a lot of opposition that want to take
a lot of the tools out of our toolbox? We are better stewards
of the ground. When I started farming as a young--growing up as
a farm boy, the traditions we were doing then to the ground to
where we are right now, I live about 2\1/2\ hours north to you,
and we are doing vertical tillage and leaving more corn on the
stalks on the ground that I would say that would never work,
but it is working. So, I mean, just taking tools away from us
would be our biggest hindrance if they were to limit the amount
of nitrogen we were supposed to be using, the amount of
fertilizer that we are--otherwise, we are going to be putting
on would be a major concern to the corn farmer.
Mr. Finstad. Yes, thank you for that. And I know Eden
Valley very well, and it is the Garden of Eden that you get to
farm in, so you are a lucky man.
Mr. Haag. Thank you.
Mr. Finstad. I will, maybe just further emphasize what you
are saying. And I know you, I know farmers in your
neighborhood, I know farmers in southern Minnesota, and we
didn't need government to tell us to do the things that you
just talked about. We knew that adapting to technology, looking
at the advancements with equipment and the way we have taken
care of our farms was good for us and good for generational
moves, and so I appreciate the effort that you have.
Just a quick last question I have, and just a yes or no
from each and every one of you. FSA loans, turning to all of
you, I hear concerns from Minnesota farmers that FSA loan size
limitations have not kept up with the rising prices of farmland
and farm inputs. The current caps make it difficult for
farmers, especially beginning farmers, to access FSA guarantee
loans for land purchases and operating expenses. Quick yes or
no up and down the line, do you think farm country would
benefit from modernizing these loan limits in the farm bill?
Mr. Haag. Yes, I do.
Mr. Holladay. Yes.
Mr. Flansburg. Yes.
Mr. Satterfield. Yes.
Mr. Moore. Yes.
Mr. Finstad. Thank you, Mr. Chairman. I yield back.
The Chairman. The chair now recognizes Mr. Rose for 5
minutes.
Mr. Rose. Thank you, Chairman Scott and Ranking Member, for
holding this important hearing. And thanks to our witnesses for
being here. I want to pick up a little bit on what Chairman
Thompson said earlier and just begin by thanking you and your
members for all that you do to make this country self-
sufficient and strong. And I think as we think about the 2023
Farm Bill, it is important to remember that we live in a time
when we enjoy the most bountiful, inexpensive, safest supply of
food and fiber in the history of humankind. And it is a credit
to American farmers that you are able to do that battling
through the challenges that you have, so I commend you for
that.
I will begin with Mr. Haag. In your written testimony, you
talk about the importance of marketing assistance loans as a,
quote ``an important risk management tool,'' close quote. Can
you expand a little on how these loans work and why they are
important to the agricultural community?
Mr. Haag. It is a loan that the farmer can take out, and it
is important to have that in order for putting your crop in,
for getting your inputs, and all that. So that marketing loan
that we would get through the government, it is vital yet. So,
I mean, I don't know how to really explain how good it is, but,
I mean, it is there, and we need to continue to have it.
Mr. Rose. And in part, I asked the question, and some of
the questions that I am going to ask will be aimed at trying to
educate those who might be listening about why we have farm
programs. As an old ag policy student years ago at Purdue, I
learned why we have the programs we do, why we support farmers,
and why it is so important to maintain a supply of food and
fiber here at home. And so really, that is what I am trying to
get at is to give you a chance to kind of broadly explain why
that Marketing Assistance Loan Program is so important, so
thank you for that.
Shifting gears a little bit, over the last 6 years, the
Federal Government has paid out over $93 billion in ad hoc aid
to producers. For any of you that would like to jump in, do you
feel like the ad hoc payments are an efficient risk management
tool?
Mr. Holladay. No, they are not an efficient--I mean were
they well-needed? Yes. Could we identify the need and can we
justify them? Absolutely. But a risk management tool should
step in when things are going south and let you--and they
should be predictable. They should be something that you can
bank on. Ad hoc disaster, it saved us over the past couple of
years, but it is not something that is predictable, and it is
not something we can bank on it. And we need to move away from
those as quickly as possible. The problem is, is can we get the
money? Do we have the political will to get the money to put in
the baseline because that ad hoc is not baseline. And the money
that has been keeping us healthy out there is not something we
can use to write the farm bill like you all know, but from an
education standpoint, we need baseline expansion to be able to
write a farm bill that works properly.
Mr. Rose. Thank you. Anyone else want to add to that?
Mr. Satterfield. I would agree totally with that. The ad
hoc assistance is something that, sort of when you are looking
back and not looking forward, something that after the disaster
has happened and the cost of it as well, with a stable, well-
maintained, consistent farm safety net, that is something that
you can take--I think the thing that I would like to just leave
with you more than anything is what you can take to your
banker. I mean, if you have a safety net that is in place, you
know what is going to be there, it makes for a much better
conversation with your lenders. The ad hoc assistance is good
in these disaster situations and other times that come up. But
as a long-term goal, we would much rather have a clear, concise
safety net that we can depend on and dependable and know it is
there.
Mr. Rose. Thank you. Anyone else? Go ahead.
Mr. Holladay. I would just add that the significant number
in ad hoc disaster payments is just a symptom of the amount of
money that we don't have in the farm program safety net.
Mr. Moore. Thank you. Mr. Rose, I think it is important to
talk about the goals of it as well, and so the goal of risk
management is to be able to farm the next year to be able to
cover your cost, to be able to continue to be creative, and to
have national security through our food and our agriculture.
And so as long as we have those safety net programs, those are
important to us. We can't predict the weather, and so that is
where the ad hoc comes in.
Mr. Rose. Thank you. I see my time has expired. I yield
back.
The Chairman. All right. I will give a roster update. I
have Moore, Duarte, Nunn, Alford, Johnson. So the chair now
recognizes Mr. Moore for 5 minutes.
Mr. Moore of Alabama. Thank you, Mr. Chairman. Thank you to
all witnesses for being here. I have a Judiciary hearing going
too, so I am kind of running back and forth.
But, farming has always kind of been a difficult
profession, and the past year has been tougher than most on
many of the farmers I talk to, cotton farmers and peanut
farmers alike. But we have all heard about various weather
challenges that producers have been facing, but I would like to
hear a little more, Mr. Holladay, about the input costs. I know
the farmers, ranchers, foresters are certainly feeling a pinch
in their margins, regardless of commodity or region. Would you
expand on that for me, Mr. Holladay?
Mr. Holladay. Yes. I mean, just specifically on fertilizer
prices alone, we went up three times, and where the big news is
fertilizer prices are coming down, we are about twice what we
were to start with. So, when you are up 300 percent and down
half that. It is not all that exciting. It is better. You have
a cost per acre. You basically raise your cost per acre by $100
to $150 an acre across the board. And if you are just figuring
your major inputs, by the time you get everything cost
associated with it, you are having to make an above-average
crop at a very good price to make everything work. And that is
not a sustainable situation, so we are having to use every
efficient tool we have just to get there and make it work.
Mr. Moore of Alabama. Yes, I was talking to my cousin. He
is a young farmer, and he just went back to our farm and he was
telling me he planned I think he told me $3.13 a gallon for
diesel fuel for the whole year, going into this planting
season, and it certainly hasn't worked out for him of course.
Are there any other issues? I know fertilizer, certainly, that
is an issue, fuel costs. What else are we seeing? Inflation in
general just hitting all the family farms?
Mr. Holladay. Yes. But when you look at a farm operation,
eight percent, they talk eight percent inflation, I mean, it is
30 to 50 percent when you look at a farming operation because
you buy everything at retail, sell everything at cost. That is
what producers do. So you buy full price everything, you sell
everything at cost. And everything that comes to you has a
transport load. Everything that comes to you has their
transport load, and the person next to them, transport loads,
so energy prices have a great deal with what is going on with
the supply chain shortages and some of the increasing prices.
But just because it can't get here quick enough, it has been
absolutely huge. So the last 2 years have been an anomaly
that--we have the potential to get better, but the hangover
effect seems to be lasting quite a while.
Mr. Moore of Alabama. Yes, I figured that as well, the
hangover effect as just some of the inflation and spending we
did at the end of the year still going to continue to hit.
Yes, sir. Mr. Flansburg, would you like to hit on that?
Mr. Flansburg. Yes, if you don't mind me saying. Thanks for
the question. And, certainly, there are a lot of costs
associated with farming outside of energy and fuel. And, one of
those is availability of parts, the availability of new
equipment. I have heard from dealers that we have about \1/2\
the combine production each year that we used to in terms of
number of machines produced, so getting headers to the farm has
been near impossible to get a new header. So, just equipment
availability even is hard. Chemical costs have gone up a lot in
addition just because of supply chain issues. So it is not just
those baseline energy inputs. It is all things
And, being the farmer that I am, my newest combine is a
2003, so I am not exactly stimulating the local ag economy with
new equipment purchases.
Mr. Moore of Alabama. I hope you are a really good
mechanic.
Mr. Flansburg. We will see come harvest.
Mr. Moore of Alabama. Yes. All the time we are working on
stuff. I get it.
Anyway, Mr. Chairman, I am going to yield back. I got about
50 seconds, but I will yield back. Thank you.
The Chairman. All right. Thank you. You can actually work
on a 2003 piece of equipment, and you can't work on the new
ones.
Mr. Duarte, 5 minutes.
Mr. Duarte. Thank you, Mr. Chairman.
Well, thank you guys for being here today. I am a farmer
also, almond and wine grape farmer, as well as a nursery, so I
sympathize. I have seen it.
First take, someone might say, ``Well, gee, doesn't supply
and demand just kind of regulate markets, and if we just let
supply and demand take care of it, wouldn't that just all work
itself out in the long run?'' But we know that is not all that
is affecting us these days. So I would like you to talk to a
few things that I see out there and just let us know how they
are affecting yourselves. And I won't ask any specific one of
you. You are doing a pretty good job cooperating.
Retaliatory agricultural tariffs, America puts an
antidumping suit on Indian steel producers, and all the sudden
farmers are paying the price for it back here in the United
States. Have you had specific impacts in your commodities and
markets due to these?
Mr. Flansburg. If I could just speak to that.
Mr. Duarte. Sure, please, Mr. Flansburg.
Mr. Flansburg. Thanks for the question because this is one
of the most important things to me as far as maintaining market
access goes. When those tariffs came in and we started to get
into this bout with India, we went from India being our largest
trading partner to virtually nonexistent. And so our price of,
let's say, large chickpeas we sold for over 40 prior to those
tariffs going in, and the price dropped it down to 13 a pound.
So, it was disastrous for our market. So any way we can
maintain access to those markets, I feel we as American farmers
can compete with anybody in the world and deliver a superior
product, so having those trade agreements in place and free
trade, we are all for it.
Mr. Duarte. Where does India get its chickpeas now that you
are sidelined?
Mr. Flansburg. Well, some of them are grown there,
certainly. But, one of the biggest competitors for all our
products, lentils especially, peas, et cetera, is Canada. And,
they are still at a trade advantage to us, and we are still
subject to those trade restrictions due to tariffs.
Mr. Duarte. So a little loss of the Indian market puts an
extra supply back in our market, and a commodity, a little bit
of extra supply can mean catastrophically lower prices. And
that, you just said, went from 40 a pound in a balanced market
situation all the way down to 13 a pound. Does that cover the
cost of production?
Mr. Flansburg. No, no. And so that is where those marketing
loans came in for me. So, I look at when I have to take a
marketing loan because of bad prices, it allows me to wait for
prices to go down further and sell later, so----
Mr. Duarte. Well, great. Well, thank you, Mr. Flansburg.
Does anyone have a better example or even as good an
example as Mr. Flansburg's? Because I know the almond growers
and the walnut growers in my district certainly do. But that is
excellent.
Can I ask another question about logistics? We have had a
lot of agricultural commodities back up in the last couple of
years just because of--call it COVID-related, but who really
knows? Just we couldn't get containers to the port. We couldn't
get our logistics problem solved. Do any of you have a good
example of how that has impacted your market and left
commodities on the market that softened prices and had other
economic impacts on you?
Mr. Holladay. Well, nearly every bale that I grow is going
overseas, so during that whole process, it impacts the world
market when you look at shipments when it comes to cotton in
the U.S. So when we slow down at the ports and when we slow
down and our trucking industry is strained, when our
infrastructure is strained, whether it is COVID or whatever
reason you want to pick out the hat, it is incredibly
detrimental to not only cotton; but, anything that ships, which
is nearly everything. But it has had an impact because you
increase the volatility of a market in a place you don't really
have to increase it if you can't move it properly.
Mr. Duarte. Thank you. That is great. Non-tariff barriers,
it seems like a lot of the crop protection tools that we want
to use here in America that are very sustainable, very safe,
and very effective tools, very proven, are being banned because
of material residues, issues over in the EU particularly. Are
any of you backed up with inventory because of MRLs?
Mr. Flansburg. Yes, so I have seen it affect us on the farm
just related to glyphosate. There is demand for non-glyphosate
products. So one of the problems we have, too, is just to get a
chickpea crop off without some form of desiccation, and so
alternative chemistries to be used for that are even worse.
Let's put it that way. So yes, that that puts us at a
disadvantage when MRLs aren't consistent.
Mr. Duarte. Thank you very much. I yield back.
The Chairman. The chair now recognizes Mr. Nunn for 5
minutes.
Mr. Nunn. Thank you very much, Mr. Chairman.
And thank you for the group for being here today. We were
hard at work all through last night on the Rules Committee
protecting some of the things that are very important to
communities like ours. Here in my home State of Iowa, biofuels
being a huge part of it and making sure that we have success,
going forward, really is a team effort. So I am happy that we
are leading that here in the Majority.
But speaking across the aisle here, Representative Nikki
Budzinski from Springfield--I am from Des Moines--so two
Midwestern communities that both have a great opportunity for a
homegrown energy source. And she highlighted the sale of year-
round E15. Now, sitting in your seat just a week ago was the
Administrator from the EPA, who still can't give us an answer
after months of asking about what the requirements are to
change 2023 use of year-round E15. So, Mr. Haag, I think you
recognize, as the National Corn Growers Association here, that
E15 year-round fuel sales is only 5 days away from being taken
away from consumers at the pump. Look, I got a little family.
That is going to be 17 per gallon on our family minivan,
probably even more on the truck. Could you talk to us a little
bit about what the impact is going to be on corn growers
specifically if we don't have year-round E15, which is clearly
a bipartisan priority, but we are hearing nothing back from the
EPA on a solution to fix it?
Mr. Haag. Well, one of the things what it would affect us
as corn growers is that it would be less grind for the corn. We
are producing five percent. Right now we are at 50 percent more
with E15. And, in my State of Minnesota, we have had the
infrastructure there for E15, and we are the largest user of
E15, my state is, so, I mean, that would be a huge thing that
the consumer is used to using it. It is a better quality
gasoline for the engines. It is cleaner air for us to breathe,
so it would be in my opinion a huge mistake if we take this
petroleum E15 away from the consumer right now, just because
even what you mentioned, we saved money last year. It was a
perfect example to have it last year. Gas prices have come down
but not a lot, so it would still be a savings to the consumer.
Mr. Nunn. Yes, I could not agree with you more. And we in
Iowa look forward to selling you as much corn as possible up
there in Minnesota and getting it in the tank. It is a team
effort on this, and I think this is something collectively we
need to continue to pressure the Administration. I invited the
Administrator to come out and he can drive his EV. I will drive
my truck. I will invite him out in February, and we will see
who goes further. But we will be there to pick him up when it
runs out.
Look, I want to move next to Agriculture Risk Coverage
Program, the ARC, for county. In your testimony, you touched on
the devastation farmers and rural communities suffered in the
2020 derecho that hit the Midwest. Again, both our states'
experienced and all of our communities experienced the damage
that can be done. In my community, the ultimate cost was $1.5
billion in the middle of the growing season. As a result, the
Agriculture Risk Coverage Program across our state--however,
there are several farmers in our district that don't feel like
ARC goes quite far enough. So my question to you is, can you
describe how the current maximum payment rate for ARC limits
assistance and what we could do to help address or fix these?
Mr. Haag. I think a lot of that had to do with--we
mentioned that benchmark, if we can increase that just that ten
percent would help a lot because if we would increase it more,
it is going to cost more money in our farm bill, which we don't
know if we have that or not. But I think if we can just get
that ten percent up there and then you also take, what, 86
percent of the benchmark there that you don't get the full 100
percent there, so if we could get the ten percent, plus that
other increase of up to 100 percent, it maybe wouldn't--what
was going to say here? It would make you probably heal, but it
will still make you a lot better off if we can increase that
than where we are right now.
Mr. Nunn. Than you would have been before, I think you are
absolutely right on that. Is there anything we can do to help
the producers navigate or at USDA put some safeguards on there?
Because I think the Chairman has highlighted correctly, we
don't want to be writing a blank check to USDA that they could
use on potentially anything else. We would take advice on any
safeguards you would have either for the farmer or that we can
do with USDA.
Mr. Haag. That is a good question because I think that the
more conversations that the farmers get to our organization,
what we can do to improve is a big thing because that is where
we always stress with corn growers, we are grassroots, we start
from the bottom up, and the more information we can get from
the local farmer, the better off our organization can be.
Mr. Nunn. I very much agree. Good luck in your planting
season.
Thank you, Mr. Chairman. I yield back.
The Chairman. The chair now recognizes Mr. Alford. Then it
will be Mr. Johnson.
Mr. Alford. Thank you so much, Mr. Chairman and Ranking
Member. Thank you for having us and this great panel here
today.
From my conversations with Missouri producers, we have
really heard how crop insurance and the farm bill safety net
programs are a vital risk management tool for many producers.
We put together a great advisory group to keep us updated on
the most important issues to them, and one of the things they
are talking about is lenders requiring farmers to carry
insurance. Generally, it works well in most years. But could
each of you talk about your experience with crop insurance and
what type of policy you typically carry? Are there any changes
or improvements you would like to see, and we will start with
you, Mr. Haag, and work our way down.
Mr. Haag. One of the things that when I started using crop
insurance, it was things that--that was back in the early days
when the government required us to do it from the 1988 drought,
okay? Then all sudden, you get into it and you get into it.
Well, then all of a sudden when your son starts to get involved
with farming, the first thing he does is sit down with his loan
officer and go over all the details of what they need for
money, and that is where we can set our percentage of where we
need to be at for crop insurance. We basically run in our
area--or my son and I at 80 percent for corn and 80 percent for
soybeans. That is the magic number to move up a little bit
more. It is more expensive than--there isn't that much more
back to us, so that is where we are at is that 80 percent.
Mr. Alford. Mr. Holladay?
Mr. Holladay. I think we are the same, but we are at 70
percent. But, we are highly volatile, very arid country. I
think the ways to improve it would be, it costs the most--
anything that is going to trigger is what costs the most, and
that level above you that you can't afford is where you need to
be, somewhere in that top tier. And the cost of that moving up
the scale, especially in highly volatile areas where you need
it the most is you just can't afford to get there. So higher
subsidy rates for higher levels of coverage and continuing to
develop new products, I think the best thing about crop
insurance is that there are new products developing as we
speak. Producers, grower organizations, independents,
everybody, they can find a data set that is insurable within
agriculture, it is something that we could look at and see how
many people might be using it and have value in it. And it is a
very good concept, and it is working well, but that higher
level of coverage is where you need to be.
Mr. Alford. I want to skip down, running out of time here.
I want to talk about the credit situation with the rest of you.
What is it like in your part of the country? Are bankers
typically able to make the loans that you need?
Mr. Flansburg. They are for me, and from what I hear around
the area, yes. We tend to have a fairly stable yield from year
to year, but in certain cases, we don't, like 2021. So, yes, in
my experience, they are.
Mr. Alford. Mr. Satterfield?
Mr. Satterfield. I would say an area that is getting
harder, especially after years like last year, I have heard
stories about lenders not renewing loans and some instances
where people with the high input costs like you referenced
earlier and not being able to show the particular, the profits
that the banker wants to see. But again, I will go back to with
the farm safety net, having it in place, it is a very handy
tool that your lender--he wants to look at something that he
knows he can depend on, with that farm safety net as well.
Mr. Alford. Mr. Moore?
Mr. Moore. So for us personally, we are highly diversified
in what we do on our farm, and so our lenders have still been
working with us pretty well. The requirements of documentation
has been increased over the past 2 years. The amount of labor
it takes to be able to get the documents and everything ready
to go has increased for us, so we have dedicated staff that
actually works through that. So it is hard to do that as an
individual farmer, the amount of work that was having to go
through, but as for us, we have had to hire another person that
helps us with that.
Mr. Alford. Thank you to the panel once again. And, Mr.
Chairman, I yield back.
The Chairman. The chair now recognizes Mr. Johnson for 5
minutes.
Mr. Johnson. Thank you, Mr. Chairman.
There has been a little conversation about base acre
updates today, but I guess I would ask each of you, does your
organization have a stand on mandatory base acre update versus
optional? And what should this Subcommittee keep in mind as we
are moving forward? Mr. Haag, we can start with you.
Mr. Haag. Thank you for that question, Mr. Johnson. As of
NCGA right now, we are basically having our book that we are
keeping with the base acres. We know that your State of South
Dakota and there are other states that would like to increase
them and everything like that, which would be great. But the
biggest thing then comes down is how much money do we have in
order to increase that for that farmer. South Dakota is due to
growing corn compared to some of the other states where they
had that base acreage before, but I understand where South
Dakota is coming from. But if we can find new money, we are for
increasing that base acres for the farmer.
Mr. Holladay. From the National Cotton Council's
standpoint, the consensus we have is to remain where we are at
this point. The talk amongst us achieving that consensus was
the vast amount of money it would take to increase the bases
and move around within those bases and get that done on a
voluntary basis would be probably unachievable at this time.
But at this point right now, as a group, we have decided not to
advocate for that to change.
Mr. Flansburg. Yes, our group is in favor of an update on a
voluntary basis to our base acres. And since the last base
update in 2014, really, a lot of our crops have gone into
growing regions where there was once summer fallow. And so
instead of having a lower number of acres in that case that
were actually in production, and many now have pulse crops on
them across the northern tier, so it is important to us to have
that be a voluntary option.
Mr. Satterfield. I would concur with Mr. Flansburg as with
his commodity. USA Rice, I think the consensus is a voluntary
base update, and I think if you pointed to the fact that there
are more base acres in rice that are being used, I would point
to the fluctuation of acres. You have states that go through
really big periods of fluctuation due to weather and planting
rotations and whatnot, but we would be for the voluntary.
Mr. Moore. And the same for U.S. Canola, we believe in a
voluntary update if there is one. And so we like producers
having the choices to make in making those choices, voluntary
update.
Mr. Johnson. Well, I want to thank the associations and the
groups that are open to a base acre update. It seems to me that
we talk all the time about how dynamic American agriculture is.
We laud that as important, that we want technology, we want
innovation. Of course, that technology and innovation over time
is going to mean that the types of crops grown in certain
places will change. I don't know that our support system
framework is well-served by freezing that data into yesteryear,
and I think we want to continue to have that conversation as we
move forward.
Mr. Chairman, thank you, and I yield back.
The Chairman. Thank you, Mr. Johnson. I appreciate your
diligence in being here.
And we have concluded our questions for the first panel of
our hearing. I want to thank all of you for being here. We
again are going to reconvene at 2:00 p.m. or as soon as
possible after votes, which hopefully will be at 2:00 p.m. And
so we are adjourned until we call back in. Thank you.
[Recess.]
The Chairman. All right. The Committee will now come to
order.
And to introduce the first witness of our second panel
today, I am pleased to yield to the gentleman from Illinois,
Mr. Bost.
Mr. Bost. Thank you, Mr. Chairman. I want to thank you
all--to all the witnesses for being here today. But I am very
proud to introduce a constituent and a longtime friend, and he
was actually on my ag advisory board when I first came to
Congress. Daryl Cates is currently serving as the President of
the American Soybean Association. Daryl is a fourth generation
farmer from Columbia, Illinois, who raises soybeans, corn,
wheat, and double crop beans on his family farm with his
father. He has been a true leader and a trailblazer in
agricultural industry for now over 30 years and having served
in multiple leadership roles with Illinois Soybean Association,
the United Soybean Board and the American Soybean Association.
Daryl, I appreciate you being here. I appreciate your
friendship. I appreciate everything you have done for the
Illinois 12th District and working with me and everything you
have done for American agriculture. And we are glad to have you
here today.
Mr. Cates. Thank you, Congressman Bost.
The Chairman. And our next----
Mr. Cates. And it has been a privilege to be here and all
the work that you do for us in southern Illinois. I appreciate
it. Good afternoon----
The Chairman. Hang on 1 second.
Mr. Cates. Okay.
The Chairman. From him, not you.
The next witness is Mr. Patrick Frischhertz, owner of St.
Louis Planting and Chairman of the American Sugar Cane League
National Legislative Committee. Our third witness is Mr. Brent
Cheyne, who is President the National Association of Wheat
Growers. The next witness joining us is Mr. Craig Meeker, the
Chairman of the National Sorghum Producers, and our fifth and
final witness of today on this panel is Mr. Daniel McMillan of
Southern Grace Farms. He is testifying on behalf of the U.S.
Peanut Federation.
So thank you all for joining us. And you each have 5
minutes. The timer in front of you will count down to 0, at
which point the time has expired.
Mr. Cates, please begin.
STATEMENT OF DARYL CATES, PRESIDENT, AMERICAN SOYBEAN
ASSOCIATION, COLUMBIA, IL
Mr. Cates. Good afternoon, Chairman Scott, Ranking Member
Brown, and distinguished Members of the Subcommittee. Thank you
for the invitation to provide testimony as you develop the 2023
Farm Bill. My name is Daryl Cates, and I am a soybean farmer
from Columbia, Illinois. I am testifying on behalf of the
American Soybean Association in my current role as President.
ASA represents more than 500,000 U.S. soybean farmers
across the 30 primary soybean-producing states. Nationally,
U.S. soybean farmers produced over 4 billion bushels on over 87
million planted acres last year. I have a simple message to
share with you today. Soybean farmers need your help in the
next farm bill. We need help with two priorities in this
Subcommittee's jurisdiction: protecting crop insurance and
improving the Title I farm safety net for soybeans. We must
protect crop insurance. Crop insurance is the most effective
and important component of the farm safety net for soybean
farmers. It helps us manage risk and secure operating credit
from lenders each year. ASA urges you to protect crop insurance
from harmful amendments that may arise.
We must improve the Title I safety net. While crop
insurance provides risk management when the crop is in the
ground, Title I provides necessary protection beyond that
period. A predictable, effective farm safety net is needed for
the duration of the next farm bill. In a February report, USDA
projected a 20.7 percent decline in net cash farm income in
2023 relative to 2022. This is cause for concern for farmers.
Soybean growers experienced firsthand the challenge of an
ineffective safety net during the trade war with China in 2018
and 2019. The largest importer of soybeans in the world is
China. Even with ongoing efforts to diversify and open new
markets, almost \1/3\ of all soybeans grown in the U.S. are
destined for China. During the height of the trade war with
China in 2018, U.S. soy stopped flowing to the Chinese market
in our peak export period that fall. Soybeans prices dropped
significantly. But we received no PLC benefits and little from
ARC programs. USDA stepped in with an ad hoc temporary support
to farmers. If a trade war that shrunk soybean demand by over
30 percent hardly triggered the farm safety net provided in the
current farm bill, it is difficult to envision a scenario that
would provide meaningful assistance without significant
improvements to the current reference price and program
elements of ARC and PLC.
Another challenge impacting the accessibility and
effectiveness of the farm safety net is the significant
disparity in recent soybean plant acres compared to base acres
on which ARC and PLC benefits are provided. In 2022, soybeans
were planted nationally on 87.5 million acres. By comparison,
soybean base totals were 53.2 million acres. Over 30 million
acres of soybeans were not protected by the soybean provisions
of ARC and PLC in 2022. An option for farmers to voluntarily
update program acres based on a more recent historical time
period would provide soybean farmers, including beginning
farmers, greater access to the soybean safety net.
ASA urges improvements in the Title I farm safety net
components of ARC and PLC for soybeans. Making improvements to
the Title I farm safety net will require funding. We know that
budget challenges are real and will be difficult to navigate.
We appreciate that this Committee sent a strong bipartisan
letter to the Budget Committee requesting funding for a
successful farm bill reauthorization. ASA also led a letter
included in my written statement to the Budget Committee signed
by 400 organizations regarding the need for sufficient
resources to write a meaningful farm bill. We ask that you keep
agriculture in mind as budget discussions move forward on
multiple fronts.
I have highlighted only two areas of interest today given
the Subcommittee's jurisdiction. Additional priorities can be
found in my written statement.
Thank you for hearing from farmers today. We appreciate
your efforts to develop the 2023 Farm Bill and the opportunity
to share testimony today.
[The prepared statement of Mr. Cates follows:]
Prepared Statement of Daryl Cates, President, American Soybean
Association, Columbia, IL
Good afternoon, Chairman Scott, Ranking Member Brown, and
distinguished Members of the Subcommittee. It is a privilege to join
you and offer testimony as you develop the 2023 Farm Bill.
I am a soybean farmer from Columbia, Illinois, and am here today
representing the American Soybean Association in my current role as
President. Founded in 1920, ASA represents more than 500,000 U.S.
soybean farmers on domestic and international policy issues important
to the soybean industry and has 26 affiliated state associations
representing the 30 primary soybean-producing states. Farmers produce
soybeans in nearly every state represented by Members of this
Subcommittee.
Nationally, U.S. soybean farmers produced 4.28 billion bushels on
over 87 million planted acres in 2022. Our soybean farmers help provide
countless products needed and enjoyed by consumers, including healthy
edible oils and other food ingredients, protein-rich livestock feed,
and clean-burning biofuels, among others. A strong farm economy based
on market opportunities for soy at home and abroad, an efficient
transportation and infrastructure system that helps maintain
competitiveness, and a safety net for challenging times, are all
critical to our success.
As the farm bill reauthorization process advances, we thank you for
holding this hearing.
Farm Bill Priorities & Budget
ASA's farm bill priorities released publicly in May 2022 were
developed with significant input from farmers.
In preparation for the farm bill reauthorization, ASA started the
process of gathering feedback from farmers in 2021. Educational
sessions for our board members and state soy affiliate staff were held,
and an in-depth farm bill survey was administered to soybean growers.
In early 2022, ASA held 12 virtual farm bill listening sessions--over
25 hours--with interested soybean farmers and state soy affiliates
across soy's 30-state growing region.
Feedback gathered from the survey and listening sessions, combined
with written comments and policy resolutions, contributed to ASA's farm
bill priorities document, which is attached to my testimony.
Much attention has been dedicated to the first priority item listed
regarding the budget: ``Increased budget authority for the next farm
bill is justified in this current environment marked by economic and
geopolitical volatility. Additional resources are needed to address
needs and interests throughout this comprehensive piece of
legislation.''
We appreciate that both the House and Senate Agriculture Committees
recognize this and sent strong bipartisan letters to the Budget
Committees acknowledging the needs and challenges in agriculture in
recent years and the opportunity the 2023 Farm Bill provides to make
meaningful improvements. ASA led a letter signed by 400 national,
regional, and state organizations to Budget Committees with a
consistent message, and this letter is attached to my testimony.
Without a doubt, the Federal budget challenges are very real and
complex to navigate. We ask that you keep needs in agriculture top of
mind as budget discussions progress. Sufficient budgetary resources
will be needed to craft a new bipartisan, comprehensive piece of
legislation.
ASA's farm bill priorities in this Subcommittee's jurisdiction
include protecting crop insurance and its private sector delivery
system and improving the farm safety net for soybeans. Other priorities
outside of this Subcommittee's jurisdiction are also highlighted below.
Crop Insurance
Authorized by a separate statute, crop insurance does not need to
be reauthorized in conjunction with the farm bill. However, we
recognize that amendments to crop insurance may be offered that have a
positive or negative impact on farmers like me who rely on it every
year to manage risk.
In 2022, U.S. soybean farmers paid over $1.4 billion for crop
insurance protection, according to USDA Risk Management Agency (RMA)
data. This risk management program allows farmers to select coverage
that meets our needs each year and responds in a timely manner when
losses are triggered. The competitive private sector delivery system
allows farmers to find the best service providers for our operations.
ASA urges you to protect crop insurance from harmful amendments. It
is the most effective and important component of the farm safety net
and valuable in securing operating credit each year. This risk
management tool must remain affordable and effective.
Title I Farm Safety Net
While crop insurance provides risk management when the crop is in
the ground, Title I provides necessary protection beyond that period.
The 2023 Farm Bill presents an opportunity to address deficiencies in
the Title I farm safety net that were revealed during recent economic
disruptions. A predictable, effective farm safety net is needed for the
duration of the next farm bill, especially when considering USDA's
February 2023 Farm Income Forecast projection of a 20.7% decline in net
cash farm income in 2023 relative to 2022.
Soybean growers experienced firsthand the challenges of an
ineffective safety net during the trade war with China in 2018-2019 and
urge improvements in the Title I farm safety net components of
Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) for
soybeans.
Soybeans have long been U.S. agriculture's top export crop. Foreign
markets were destinations for more than 50% of U.S. soy production
through whole beans, meal and oil in the last marketing year, as is
historically consistent in recent years. China is the largest importer
of soybeans in the world, so our commercial export relationship with
China is critically important. Even with ongoing efforts to diversify
and open new markets, almost \1/3\ of all soybeans grown in the United
States are destined for China under normal trade conditions.
During the height of the trade war with China in 2018, U.S. soy
stopped flowing to the Chinese market in our peak export period that
fall. Soybean prices dropped significantly, but we received no PLC
benefits and little from the ARC program. USDA stepped in with ad hoc,
temporary support to farmers through the Market Facilitation Program
(MFP).
If a trade war that shrunk soybean demand by over 30% hardly
triggered the farm safety net provided in the current farm bill--a
Title I safety net that has been declining over the past 20 years in
real terms--it is difficult to envision a scenario that would provide
meaningful assistance without significant improvements to the current
reference price and program elements of ARC and PLC. Adjustments to the
soybean reference price and improvements to ARC would provide soybean
farmers a more effective safety net.
Another challenge impacting the accessibility and effectiveness of
the farm safety net is the significant disparity in recent soybean
planted acres compared to base acres, the historical acreage on which
ARC and PLC benefits are provided.
In 2022, soybeans were planted nationally on 87.5 million acres. By
comparison, soybean base totals 53.2 million acres. Over 30 million
acres of soybeans were not protected by the soybean provisions of ARC
and PLC in 2022. While some of these soybean acres may have been corn
or wheat base, for example, these other crops may not correlate well
with the losses being experienced on the farm, such as during the trade
war. Some beginning farmers have little base on their farms, and
greater adoption of no-till conservation practices has enabled farmers
to cultivate row crops in new areas that have no base. An option for
farmers to voluntarily update program acres based on a more recent
historical time period would provide soybean farmers--including
beginning farmers--greater access to the soybean safety net.
ASA supports these specific improvements to increase the
effectiveness, accessibility, and reliability of the Title I farm
safety net:
Increasing the soybean reference price for calculating ARC
and PLC, which could be achieved through a statutory reference
price change, adjustments to the effective reference price, or
a combination of these
Adjusting the ARC calculations
Providing the option (not requirement) to update base acres
to reflect a more recent, defined period of time while allowing
new acres to enter the program.
It is important to note that a combination of remedies to address
these deficiencies is needed. For example, if an option to update base
acres is allowed, it may not be exercised if the reference price for
soybeans remains where it is currently set.
Additional ASA Priorities
We appreciate the opportunity to share additional farm bill
priorities outside of this Subcommittee's jurisdiction.
Trade
The long-term success of U.S. soy abroad would not be possible
without the foresight of Congress in creating public-private
partnership programs at USDA to assist trade associations in promoting
our products on a global stage. ASA is a longtime cooperator of these
programs, particularly the Market Access Program (MAP) and the Foreign
Market Development Program (FMD). Utilizing MAP and FMD funds, ASA has
leveraged those dollars to increase market access, address technical
barriers to entry, and create demand for U.S. soy. Trade promotion
programs are helpful in diversifying and expanding agricultural
exports; this is particularly important as we consider rising tensions
with China, the leading export market for many U.S. agricultural
products.
A 2016 study commissioned by the U.S. Soybean Export Council shows
that international marketing activities conducted on behalf of U.S.
soybean growers increased soybean exports each year by an average of
993,600 metric tons (MT), or nearly 5%. For soybean meal and soybean
oil, the average annual growth over that period was estimated to be
somewhat larger at 15% (808,600 MT) for meal and 24% (149,600 MT) for
oil.
These numbers translate to an additional $29.60 in export revenue
per $1 spent on international promotion. At the producer level, that
additional export revenue translates into a cost benefit ratio of
$10.10 of additional grower profit per $1 spent on international
promotion. While this research was undertaken in advance of the 2018
Farm Bill, the results remain unchanged: International marketing
activities contribute directly to increased exports and grower revenue.
The programs authorized in Title III of the farm bill, from the
Agricultural Trade Promotion and Facilitation Program (ATPFP) to
international food aid programs, are important for the long-term
success of U.S. soybean growers. For a full accounting of ASA's
priorities in Title III, we would like to share ASA's prepared written
statement \1\ that was presented to the Subcommittee on Livestock and
Foreign Agriculture on April 6, 2022.
---------------------------------------------------------------------------
\1\ https://soygrowers.com/wp-content/uploads/2023/04/ASA-Written-
Statement-to-LFA-Subcommittee-on-Farm-Bill-Title-III-April-2022.pdf.
---------------------------------------------------------------------------
ASA supports doubling the minimum annual mandatory funding for MAP
to $400 million and FMD to $69 million.
Check-off
Over 30 years ago, Congress passed the Soybean Promotion, Research,
and Consumer Information Act, creating the United Soybean Board (USB)--
an agricultural research and promotion program funded and managed
directly by soybean farmers under the oversight of USDA's Agricultural
Marketing Service. This program, also referred to as the soy ``check-
off,'' finances research, promotion, and education initiatives, all of
which are aimed at improving yield, sustainability, and demand for U.S.
soy products.
I had the honor of being appointed by USDA Secretary Edward Madigan
to serve on the first board of the United Soybean Board in 1992. Since
then, I have been continuously impressed by the lengths to which USB
has gone to ensure good stewardship of the dollars my fellow farmers
and I have entrusted to the check-off.
Check-off-driven initiatives have brought a return on investment--
$12.34 for every farmer dollar invested in the check-off--to growers
like me, who are then better able to support our families, employees,
and rural communities. Examples of check-off successes include the
establishment of the soy-based biodiesel industry; development of high
oleic soybeans, which have improved use in the food and industrial
sectors; creation of the Soy Sustainability Assurance Protocol to
verify use of sustainable farming practices for foreign buyers; and
mapping of the soy genome. As a result of these successes and the
check-off's farmer-led model and transparent governance, farmers are
overwhelmingly supportive of the existing soy check-off structure: In
the last USDA-led Request for Referendum in 2019, only 0.13% (just
about \1/10\ of 1 percent) of eligible soybean farmers called for a
referendum--many, many fewer than the 10% that would prompt a
reconsideration of the check-off's structure.
ASA urges protection of the check-off from harmful amendments in
the farm bill to ensure continued success.
Conservation
Soybean farmers are committed to improving soil and water and
leaving the land better than they found it. ASA conducted a survey
several years ago and learned that, on average, our growers implement
14 conservation practices and spend more than $15,000 each year on
conservation. On many farms, that is a substantial amount--especially
during times like these with high input costs.
For years, farm bill conservation programs have been in place to
help farmers cover these costs and mitigate the risks associated with
implementing new practices. Unfortunately, farmer demand for voluntary,
incentive-based working lands programs like the Environmental Quality
Incentives Program (EQIP) and the Conservation Stewardship Program
(CSP) always outpaces available funding: Between 2010 and 2020, just
31% of farmers who applied to EQIP and 42% of those who applied to CSP
were awarded contracts.
As you develop the next farm bill, we respectfully request the
Committee's attention in adequately funding these programs to meet
demand. ASA also encourages you to consider directing funding to
programs and practices that address cropland soil quality and health,
water quality and quantity, and that provide regulatory predictability
and save input costs; to develop climate smart provisions that focus on
total on-farm ecosystem services, not just additionality; to emphasize
working lands programs over land retirement programs; and to consider
incentives that encourage adoption of precision agriculture
technologies, the use of which has a wide range of environmental and
productivity benefits.
We ask the Committee to work with appropriators to ensure NRCS--as
well as other USDA agencies--has the staffing, training, and technology
in place to fully implement these programs and deliver high quality
service to its farmer customers. During Commodity Classic this spring,
NRCS expressed eagerness to bring on staff quickly but also shared that
it takes a multi-year time commitment to train staff adequately for
farmer field visits. When the 2023 Farm Bill is enacted, we do not want
it to languish in the implementation phase due to staffing concerns.
Above all, we ask that you remember that, when it comes to
conservation, there is no one-size-fits-all solution. Farmers grow
soybeans across the country, from New York down to Florida and west to
North Dakota and Texas. The farm bill's conservation programs must be
flexible enough to accommodate this country's wide range of
conservation needs, crops, soil types, farming practices, and weather
systems.
ASA looks forward to working with the Committee as conservation
provisions are developed.
Energy
The energy title provides important assistance for the development
and production of biofuels--one of the biggest market opportunities for
soy. In addition to environmental benefits, biomass-based diesel adds
significant value to U.S. agriculture through increased demand for both
soybean oil and rendered animal fats. USDA Rural Development energy
programs, first authorized through the 2008 and 2014 Farm Bills,
provide loan and grant opportunities for the development of renewable
energy, including soy-based biofuels.
ASA supports the continued authorization of energy programs that
support soy-based biofuel production, like the Biorefinery, Renewable
Chemical, and Biobased Product Manufacturing Assistance Program, which
can provide loan guarantees of up to $250 million for development of
advanced biofuels; and the Advanced Biofuel Payment Program, which
assists advanced biofuel producers--many of whom drive rural economies
through local investments and employment.
In addition to biofuel-specific programs, ASA supports the
continued success of the Rural Energy for America Program (REAP), which
provides guaranteed loan and grant financing to agricultural producers
and rural small businesses for renewable energy projects. While these
projects can cover more than just biofuels, ASA is supportive of USDA
funding that backs energy production grown by U.S. farmers. For
example, last year an Iowa biodiesel facility received funding to
retrofit a facility to generate an additional 15 million gallons of
production--enough to power 22,000 vehicles annually. This plant
supports local Iowa soybean growers as well as the surrounding
community.
ASA supports authorization of the Higher Blends Infrastructure
Incentive Program (HBIIP) in the 2023 Farm Bill. Developed under the
authority of the USDA Secretary, HBIIP provides funding to expand
infrastructure to deploy biofuels nationwide for consumers. Providing
additional availability for B20 and other biofuels blends will benefit
both the consumer and the environment.
Biobased
In addition to biofuels, the energy title also provides important
resources for the bioeconomy through the BioPreferred Program, which
celebrated its 20th anniversary last year. The BioPreferred Program
supports bioproduct purchases for Federal agencies and contractors, as
well as through the USDA Certified Biobased Products label.
There are over 1,000 soy-based bioproducts, many of which were
developed by the soy check-off and benefit from enrollment in the
BioPreferred Program. These products, made with sustainably grown soy
protein and oil, range from industrial lubricants and asphalt sealants
to tires, paint, and artificial turf. Consumers and the public continue
to increase demand for sustainably produced products; even Federal
agencies and institutions, including NASA, the Pentagon, the
Smithsonian, and Badlands National Park, utilize countless soy biobased
products.
There are economic and environmental advantages to using soy in
manufacturing and consumer goods. Soybeans are renewable and abundant.
As mentioned earlier in my testimony, last year U.S. growers produced
over 4.2 billion bushels of soybeans, which has helped reduce America's
dependence on foreign oil. Soy-based bioproducts also create jobs.
Released in 2021, USDA's most recent report on the economic impact of
the U.S. biobased products industry found American-made biobased
products added $470 billion and over 4.6 million direct and indirect
jobs to the U.S. economy.
ASA supports reauthorization of the BioPreferred Program, and
providing adequate funding will improve brand awareness and utilization
of biobased products across the Federal Government.
Research
Investments in research through Title VII are needed for the
continued growth and innovation of U.S. soybean growers. Whether the
research is carried out at land grant universities through the Hatch
Act or through USDA's Research, Education, and Economics (REE) mission
area (including the Agricultural Research Service, the Economic
Research Service, the National Institute for Food and Agriculture, and
the Foundation for Food and Agriculture Research), all the interlocking
components of this title have an impact on soybean growers.
Investments in research allow soybean growers to increase
production and efficiency while ensuring a high-quality, affordable
product for buyers and consumers. Investments can lead to new
innovations such as soybean varieties better equipped to combat plant
pests and diseases, improve nutritional content, adapt to a changing
global climate, and increase yield without requiring increased inputs
such as fuel and fertilizer.
ASA supports increased investment in soybean-centric research--be
that biobased products, input management, or new and stronger seed
varieties. These will benefit not just soybean growers but the entire
value chain.
Conclusion
The 2023 Farm Bill is critically important to soybean farmers and
many others. ASA supports an on-time, meaningful, comprehensive, and
sufficiently funded 2023 Farm Bill.
We appreciate your efforts to develop the 2023 Farm Bill and the
opportunity to share testimony today. We look forward to working with
you to craft meaningful legislation.
Attachment 1
ASA Priorities for the 2023 Farm Bill
May 25, 2022
As the House and Senate Agriculture Committees lay the foundation
for the 2023 Farm Bill, the American Soybean Association shares these
initial priorities which will be further refined into more specific
requests by early 2023. These priorities reflect feedback gathered from
12 virtual farm bill listening sessions held this year, an in-depth
farm bill survey administered to soybean growers in late 2021, and
current policy resolutions.
General
Increased budget authority for the next farm bill is
justified in this current environment marked by economic and
geopolitical volatility. Additional resources are needed to
address needs and interests throughout this comprehensive piece
of legislation.
Congress should maintain the agricultural and nutrition
titles in the next farm bill.
Review of USDA staffing, technological capabilities and
cybersecurity, and pathways for knowledge transfer should occur
to ensure readiness for farm bill implementation. Gaps should
be prioritized to receive appropriations or farm bill
implementation funding.
Policy should support innovation in data collection, data
analysis, and internal data sharing between USDA agencies,
while emphasizing the confidentiality and nonpublic disclosure
of individual producer data.
Farm Safety Net
Crop insurance is the most effective and important component
of the farm safety net and must remain affordable.
The Title I farm safety net components of Agriculture Risk
Coverage (ARC) and Price Loss Coverage (PLC) programs must be
improved for soybeans. Strong consideration should be given to
increasing the soy reference price combined with an option for
farmers to update base acres. Planting flexibility must be
maintained.
Marketing assistance loans must be maintained, and
consideration should be given to increasing marketing loan
rates.
Program eligibility should not be restricted through means
testing.
As a condition of receiving Title I and crop insurance
benefits, farmers are required to meet specific environmental
standards such as protecting water quality, wetlands or soil
health. These should be maintained but not augmented.
If a standing disaster assistance program is created, the
financial protection provided by Title I programs and crop
insurance should not be reduced to fund the disaster program,
and it must not undercut or disincentivize participation in
crop insurance.
Conservation
Conservation programs must remain voluntary, incentive-based
and flexible; one size does not fit all. Early adopters must be
fully eligible for conservation programs. Regulatory burdens
regarding program enrollment and adaptive management should be
reduced.
While all resource concerns are important, funding should be
directed to programs and practices that address cropland soil
quality and health, water quality and quantity, regulatory
certainty and saving input costs. Funding should be directed to
working land programs over land retirement programs, and the
Environmental Quality Incentives Program (EQIP) should take
priority over the Conservation Stewardship Program (CSP).
Conservation Reserve Program (CRP) acres should remain
approximately unchanged from current levels. Rental rate limits
should remain the same or increase. Haying and grazing
provisions should be revisited, both for mid-contract
management and under emergency scenarios.
Climate-smart provisions should reward farmers for overall
ecosystem services provided and year-round ground cover, not
just additionality. Growing Climate Solutions Act provisions
should be included if not already passed.
Incentives to encourage use of precision agriculture
technologies and specialized equipment to implement certain
conservation practices should be considered.
Trade
The Market Access Program (MAP) and Foreign Market
Development Program (FMD) are successful public-private
partnerships which are cooperative, cost-share programs between
private industry groups representing farmers and USDA. Annual
funding should be doubled to $69 million for FMD and to $400
million for MAP.
USDA's export credit guarantee program (GSM-102) and the
Facility Guarantee Program (FGP) should continue and be fully
utilized.
International food aid programs should allow for increased
flexibility for monetization requirements.
Energy
Authorization and funding for the Bioenergy Program, the
Biodiesel Fuel Education Program, and Biobased Market Program
(BioPreferred Program) should be included.
When considering on-farm renewable energy programs, priority
should be placed on energy projects that utilize soybeans and
other crops.
Rural Development
Statutory authority and funding should be provided for the
Higher Blends Infrastructure Incentive Program.
Reliable broadband coverage remains out of reach for many in
rural America, yet it is essential for precision agriculture
technologies, farm efficiencies and community connectivity. The
Broadband-ReConnect program should align with the goals of
other broadband programs supported through the bipartisan
infrastructure law.
Research
Increased investment should be provided in priority areas
strategic to soy interests.
Nutrition
Opportunities to promote soy as a food ingredient should be
included.
Attachment 2
March 14, 2023
Hon. Sheldon Whitehouse, Hon. Jodey [C.] Arrington,
Chairman, Chairman,
U.S. Senate Committee on [the] U.S. House Committee on [the]
Budget, Budget,
Washington, D.C.; Washington, D.C.;
Hon. Chuck Grassley, Hon. Brendan [F.] Boyle,
Ranking Minority Member, Ranking Minority Member,
U.S. Senate Committee on [the] U.S. House Committee on [the]
Budget, Budget,
Washington, D.C.; Washington, D.C.
Dear Chairmen Whitehouse and Arrington and Ranking Members Grassley
and Boyle:
As you develop the Fiscal Year 2024 budget in this farm bill
reauthorization year, we write to express our strong support for
providing the Senate Committee on Agriculture, Nutrition, and Forestry
and House Committee on Agriculture with sufficient budgetary resources
to write a new bipartisan, multi-year, comprehensive, and meaningful
piece of legislation.
Just as there are many pressures on the Federal budget, there are
many pressures on U.S. farmers and others throughout the agricultural
supply chain who provide food, feed, fuel, fiber, and other products to
consumers across the United States and abroad.
According to the U.S. Department of Agriculture (USDA),
international sales of U.S. farm and food products reached $196 billion
in 2022. The leading market for these products is marked with
geopolitical volatility: China. During the trade war with China that
began in 2018, U.S. agriculture endured significant market impacts,
which unfortunately revealed gaps in the farm safety net. If a trade
war with our largest trading partner hardly triggered the farm safety
net provided in the current farm bill--a Title I safety net that has
been shrinking over the past 20 years--it is difficult to envision a
scenario that would provide meaningful assistance without significant
improvements. Continuing rising tensions with this important trading
partner underscore the need in the next farm bill for a more
meaningful, predictable farm safety net and the need to invest more
into trade promotion programs to help diversify agricultural markets.
Market volatility with China is only one example of the many
disruptions impacting U.S. agriculture during the life of the current
farm bill. The Russian invasion of Ukraine, COVID-19 and other supply
chain disruptions, non-tariff trade barriers erected by multiple
countries, and devastating natural disasters have tested the
effectiveness of current farm policy. Increased production input costs
have as well, with USDA projecting that most expense categories will
remain above their 2021 levels in 2023 both in nominal and inflation-
adjusted dollars. These projected high input costs, coupled with lower
projections for many crop cash receipts, are cause for concern for farm
country: USDA's February 2023 Farm Income Forecast publication projects
a 20.7 percent decline in net cash farm income in 2023 relative to
2022.
Projections such as this, when realized, often result in financial
stress and calls for ad hoc or supplemental disaster assistance to
farmers and ranchers--that is, assistance outside of the farm bill. In
fact, between 2018-2021, ad hoc assistance made up approximately 70% of
direct farm payments due to challenges described above. Ad hoc
assistance is necessary in times of need but is not a timely, reliable,
or predictable safety net for farmers and ranchers. The upcoming farm
bill reauthorization provides an opportunity to address very real needs
in agriculture and rely less on off-budget ad hoc assistance.
In addition to needs highlighted above, farm bill budget resources
are needed for protecting and enhancing crop insurance to assist with
volatile weather and crop loss, improving access to voluntary
conservation incentives, addressing rural development needs, investing
in research for innovation and competitiveness, providing opportunities
to help the nation become more energy independent and food-secure, and
supporting solutions to address logistics challenges.
Sufficient budgetary resources will be needed to craft a new
bipartisan, multi-year, comprehensive, and meaningful piece of
legislation. As you work to build the Federal budget for Fiscal Year
2024, we seek your support for providing sufficient resources to the
committees to craft the next farm bill.
Sincerely,
National Associations Iowa Corn Growers Association
Agricultural Retailers Association Iowa Farm Bureau Federation
Amcot Iowa Soybean Association
American Agri-Women Kansas Agribusiness Retailers
Association
American Association of Crop Kansas Association of Wheat Growers
Insurers
American Association of Veterinary Kansas Corn Growers Association
Medical Colleges
American Bankers Association Kansas Cotton Association
American Cotton Producers Kansas Cotton Ginners
American Cotton Shippers Kansas Farm Bureau
Association
American Farm Bureau Federation Kansas Grain and Feed Association
American Farmland Trust Kansas Grain Sorghum Producers
Association
American Feed Industry Association Kansas Pork Association
American Pistachio Growers Kansas Soybean Association
American Pulse Association Kentucky Corn Growers Association
American Seed Trade Association Kentucky Small Grain Growers
Association
American Society of Agronomy Kentucky Soybean Association
American Society of Farm Managers Louisiana Agricultural Consultants
and Rural Appraisers Association
American Society of Plant Louisiana Bankers Association
Biologists
American Soybean Association Louisiana Cotton and Grain
Association
American Sugar Alliance Louisiana Farm Bureau Federation
American Sugarbeet Growers Louisiana Independent Cotton
Association Warehouse Association
American Veterinary Medical Louisiana Rice Producer Group
Association
AmericanHort Maine Farm Bureau Association
Aquatic Ecosystem Restoration Maine Potato Board
Foundation
Aquatic Plant Management Society Malheur County Onion Growers
Association
Association of Equipment Maryland Bankers Association
Manufacturers
Biotechnology Innovation Maryland Farm Bureau
Organization
The Breakthrough Institute Maryland Grain Producers
Association
Cherry Marketing Institute Massachusetts Association of Lawn
Care Professionals
Corn Refiners Association Massachusetts Farm Bureau
Federation
Cotton Growers Warehouse Michigan Agri-Business Association
Association
Cotton Warehouse Association of Michigan Corn Growers Association
America
Cottonseed and Feed Association Michigan Farm Bureau
Council of Producers and Michigan IPM Alliance
Distributors of Agrotechnology
Crop Insurance and Reinsurance Michigan Soybean Association
Bureau
Crop Insurance Professionals Mid-Atlantic Soybean Association
Association
Crop Science Society of America Midwest Council on Agriculture
CropLife America Midwest Forage Association
Delta Waterfowl Minnesota Agri-Growth Council
Ducks Unlimited Minnesota Area II Potato Council
Farm Credit Council Minnesota Association of Wheat
Growers
Farm Journal Foundation Minnesota Canola Council
The Fertilizer Institute Minnesota Corn Growers Association
Global Cold Chain Alliance Minnesota Crop Production Retailers
Hop Growers of America Minnesota Farm Bureau Federation
Independent Community Bankers of Minnesota Soybean Growers
America Association
International Certified Crop Mississippi Farm Bureau Federation
Advisers
International Dairy Foods Mississippi Rice Council
Association
International Fresh Produce Mississippi Soybean Association
Association
National Alfalfa and Forage Missouri Corn Growers Association
Alliance
National Alliance of Independent Missouri Farm Bureau
Crop Consultants
National Association of Missouri Independent Bankers
Conservation Districts Association
National Association of Landscape Missouri Rice Council
Professionals
National Association of State Missouri Soybean Association
Departments of Agriculture
National Association of Wheat Montana Agricultural Business
Growers Association
National Barley Growers Association Montana Farm Bureau Federation
National Black Growers Council Montana Independent Bankers
National Christmas Tree Association Montana Potato Improvement
Association
National Coalition for Food and Nebraska Agri-Business Association
Agricultural Research
National Corn Growers Association Nebraska Cooperative Council
National Cotton Council Nebraska Corn Growers Association
National Cotton Ginners Association Nebraska Dry Bean Commission
National Cottonseed Products Nebraska Dry Pea and Lentil
Association Commission
National Council of Farmer Nebraska Farm Bureau
Cooperatives
National Council of Textile Nebraska Independent Community
Organizations Bankers
National Farmers Union Nebraska Soybean Association
National Grain and Feed Association Nebraska Wheat Board
National Grange Nebraska Wheat Growers Association
National Milk Producers Federation Nevada Farm Bureau Federation
National Onion Association New Mexico Farm and Livestock
Bureau
National Peach Council New York Corn and Soybean Growers
Association
National Pork Producers Council New York Farm Bureau
National Potato Council New York Green Industry Council
National Sorghum Producers Nezperce Prairie Grass Growers
Association
National Sunflower Association North Carolina Bankers Association
The Nature Conservancy North Carolina Christmas Tree
Association
North American Blueberry Council North Carolina Cotton Producers
Association
North American Meat Institute North Carolina Egg Association
North American Millers' Association The North Carolina Peanut Growers
Association
North American Renderers North Carolina Small Grain Growers
Association Association
Pheasants Forever North Carolina Soybean Producers
Association
Quail Forever North Carolina State Grange
Rural and Agriculture Council of North Carolina SweetPotato
America Commission
Society of American Florists North Central Weed Science Society
Soil Science Society of America North Dakota Corn Growers
Association
Specialty Crop Farm Bill Alliance North Dakota Grain Growers
Association
Supporters of Agricultural Research North Dakota Soybean Growers
(SoAR) Foundation Association
U.S. Apple Association Northarvest Bean Growers
Association
U.S. Beet Sugar Association Northeast Dairy Producers
Association
U.S. Canola Association Northeastern Weed Science Society
U.S. Cattlemen's Association Northern Canola Growers Association
U.S. Durum Growers Association Northland Potato Growers
Association
U.S. Peanut Federation Northwest Agricultural Cooperative
Council
U.S. Poultry & Egg Association NYS Agribusiness Association
U.S. Rice Producers Ohio AgriBusiness Association
U.S. Sweet Potato Council Ohio Corn and Wheat Growers
Association
USA Dry Pea & Lentil Council Ohio Farm Bureau
USA Rice Ohio Soybean Association
Weed Science Society of America Oklahoma Agribusiness Retailers
Association
Wine Institute Oklahoma Cotton Council
State and Regional Associations Oklahoma Farm Bureau
Agribusiness Association of Iowa Oklahoma Grain and Feed Association
Agricultural Council of Arkansas Oklahoma Seed Trade Association
Alabama Bankers Association Oklahoma Sorghum Growers
Alabama Cotton Commission Oklahoma Soybean Association
Alabama Farmers Federation Oklahoma Wheat Growers Association
Alabama Soybean and Corn Olive Oil Commission of California
Association
Alaska Farm Bureau Oregon Association of Nurseries
Almond Alliance Oregon Bankers Association
Arizona Cotton Ginners Association Oregon Cattlemen's Association
Arizona Cotton Growers Oregon Dairy Farmers Association
Arizona Farm Bureau Federation Oregon Farm Bureau
Arkansas Community Bankers Oregon Hop Growers Association
Arkansas Farm Bureau Federation Oregon Potato Commission
Arkansas Rice Federation Oregon Wheat Growers League
Arkansas Rice Growers Association Oregon Women for Agriculture
Arkansas Soybean Association Oregonians for Food and Shelter
BankIn Minnesota Pacific Coast Renderers Association
Bluegrass Community Bankers Pacific Egg and Poultry Association
Association
California Agricultural Irrigation Pacific Seed Association
Association
California Alfalfa & Forage Palmetto AgriBusiness Council
Association
California Association of Wheat Panhandle Peanut Growers
Growers Association
California Bean Shippers PennAg Industries Association
Association
California Cherry Growers and Pennsylvania Association of
Industry Association Community Bankers
California Citrus Mutual Pennsylvania Cooperative Potato
Growers
California Community Banking Pennsylvania Farm Bureau
Network
California Cotton Ginners and Plains Cotton Growers, Inc.
Growers Association
California Farm Bureau Federation Plant California Alliance
California Fresh Fruit Association PNW Canola Association
California Grain & Feed Association Potato Growers of Michigan, Inc.
California Pear Growers Puget Sound Seed Growers
Association
California Pork Producers Red River Valley Sugarbeet Growers
Association Association
California Rice Commission Rhode Island Farm Bureau Federation
California Seed Association Rolling Plains Cotton Growers
California Specialty Crops Council San Joaquin Valley Quality Cotton
Growers
California State Floral Association Snake River Sugarbeet Growers
Association
California Sweetpotato Council South Carolina Corn and Soybean
Association
California Table Grape Commission South Carolina Farm Bureau
Federation
California Warehouse Association South Carolina Peach Council
California Women for Agriculture South Dakota Agri-Business
Association
Carolinas Cotton Growers South Dakota Corn Growers
Cooperative Association
Colorado Association of Wheat South Dakota Farm Bureau
Growers
Colorado Corn Growers Association South Dakota Soybean Association
Colorado Farm Bureau South Dakota Wheat Growers
Association
Colorado Potato Legislative South Texas Cotton and Grain
Association Association
Community Bankers Association of Southeastern Cotton Ginners
Georgia Association, Inc.
Community Bankers Association of Southern Cotton Ginners Association
Illinois
Community Bankers Association of Southern Cotton Growers, Inc.
Kansas
Community Bankers Association of Southern Crop Production
Ohio Association
Community Bankers Association of Southern Idaho Potato Cooperative
Oklahoma
Community Bankers of Iowa Southern Rolling Plains Cotton
Producers Association
Community Bankers of Michigan Southern Weed Science Society
Community Bankers of Washington Southwest Council of Agribusiness
Connecticut Farm Bureau Association St. Lawrence Cotton Growers
Association
Corn Growers of North Carolina Synergistic Hawaii Agriculture
Council
Cotton Producers of Missouri Tennessee Bankers Association
Dairy Producers of Utah Tennessee Corn Growers Association
Delaware Farm Bureau Tennessee Farm Bureau Federation
Delta Council Tennessee Soybean Association
Empire State Potato Growers Texas Agri-Women
Florida Agri-Women Texas Association of Dairymen
Florida Cotton Producers Texas Corn Producers Association
Association
Florida Farm Bureau Federation Texas Cotton Ginners Association
Florida Fruit & Vegetable Texas Farm Bureau
Association
Florida Rice Growers Texas Grain Sorghum Association
Food Producers of Idaho Texas Rice Producers Legislative
Group
Georgia Agribusiness Council Texas Soybean Association
Georgia Corn Growers Association Texas Wheat Producers Association
Georgia Cotton Commission Vermont Bankers Association
Georgia Farm Bureau Federation Vermont Feed Dealers and
Manufacturers Association
Georgia/Florida Soybean Association Virginia Agribusiness Council
Georgia Fruit and Vegetable Growers Virginia Association of Community
Association Banks
Georgia Urban Agriculture Council Virginia Cattlemen's Association
Grain and Feed Association of The Virginia Christmas Tree Growers
Illinois Association
Hawaii Farm Bureau Federation Virginia Cotton Growers
Hop Growers of Washington Virginia Crop Production
Association
ICBA of New Mexico Virginia Farm Bureau
Idaho Alfalfa and Clover Seed Virginia Grain Producers
Growers Association Association
Idaho Grain Producers Association Virginia Peanut Growers Association
Idaho Hay and Forage Association Virginia Soybean Association
Idaho Hop Growers Association Washington Association of Wheat
Growers
Idaho Noxious Weed Control Washington Farm Bureau
Association
Idaho Nursery & Landscape Washington Friends of Farms and
Association Forests
Idaho Oilseed Commission Washington Mint Growers Association
Idaho Onion Growers' Association Washington Potato and Onion
Association
Idaho-Oregon Fruit and Vegetable Washington State Potato Commission
Association
Idaho Pest Management Association Western Agricultural Processors
Association
Idaho Potato Commission Western Alfalfa Seed Growers
Association
Illinois Corn Growers Association Western Association of Agricultural
Experiment Station Directors
Illinois Farm Bureau Western Growers
Illinois Fertilizer and Chemical Western Peanut Growers Association
Association
Illinois Soybean Association Western Plant Health Association
Independent Bankers Association of Western Society of Weed Science
New York State
Independent Banks of South Carolina Wild Blueberry Commission of Maine
Independent Community Bankers of Wisconsin Corn Growers Association
Colorado
Independent Community Bankers of Wisconsin Pork Association
South Dakota
Independent Community Banks of Wisconsin Potato and Vegetable
North Dakota Growers Association
Indiana Bankers Association Wisconsin Soybean Association
Indiana Corn Growers Association Wyoming Ag Business Association
Indiana Farm Bureau Wyoming Bankers Association
Indiana Soybean Alliance Wyoming Wheat Growers Association
CC:
Members of the Senate Committee on [the] Budget
Members of the House Committee on [the] Budget
Members of the Senate Committee on Agriculture, Nutrition, and Forestry
Members of the House Committee on Agriculture
The Chairman. Thank you. Mr. Frischhertz?
STATEMENT OF PATRICK A. FRISCHHERTZ, J.D., GENERAL MANAGER, ST.
LOUIS PLANTING, INC.; MEMBER, BOARD OF DIRECTORS, AMERICAN
SUGAR CANE LEAGUE, PLAQUEMINE, LA; ON BEHALF OF AMERICAN SUGAR
ALLIANCE; AMERICAN SUGARBEET GROWERS ASSOCIATION
Mr. Frischhertz. There we go. Good afternoon, Chairman
Scott, Ranking Member Brown, and Members of the Committee.
Thank you for the opportunity to testify before you today on
behalf of the American Sugar Alliance. It truly is an honor to
be here.
My name is Patrick Frischhertz. I was born and raised in
southern Louisiana. My family grows sugarcane, soybeans, wheat
in Plaquemine, Louisiana, where my wife and I are raising our
two children. I currently serve on the Board of Directors for
the American Sugar Cane League and our local Farm Bureau
office.
This hearing is timely and important for sugarcane and
sugarbeet farmers because Title I of the farm bill represents a
critical safety net for our farming families and the employees
of sugar processors throughout the country. The U.S. sugar
industry generates more than 151,000 jobs across 24 states and
contributes more than $23 billion annually to the U.S. economy.
American consumers also benefit from a high-quality, safe,
reliable, and affordable source of sugar. That natural sugar is
used as a sweetener, preservative, and bulking agent in 70
percent of U.S. food manufacturing. Additionally, our industry
meets some of the highest labor and environmental standards in
the world. By continuing to improve our farming practices, we
have made huge strides in efficiency and sustainability. As
evidence, we have increased sugar production by 14 percent on
eight percent fewer acres over the last 20 years.
Today, I would like to make three quick points. First,
American farmers are threatened by less-efficient, subsidized,
dumped foreign sugar that usually sells well below the
exporter's cost of production. This makes the world's sugar
market the most distorted and unreliable commodity market in
the world. Due to existing trade agreements, the United States
is already the world's third largest importer, accounting for
about 30 percent of U.S. need. Yet, as global supply chain
disruptions from the pandemic and the war in Ukraine have
taught us, we must not become even more dependent on foreign
suppliers. This is why an effective sugar policy which
maintains a strong domestic industry is essential to the food
security of our nation.
My second point is that sugar policy is structured to
operate at zero cost to the taxpayers. It has operated at zero
costs for 19 of the past 20 years, and is expected to do so
again this year. USDA even projects the program to operate at
zero costs for the next 10 years. That said, loan rates for raw
sugar, refined beet sugar have not kept up with the rising
costs of production. I can attest that its operating margins
for producers are being squeezed due to the increases in input
costs. For example, farmers today are paying 87 percent more
for diesel and 141 percent more for fertilizer when compared to
December of just 2018.
The bottom line is that the current loan rate levels no
longer provide a realistic safety net for our producers. Since
the early 1980s, we have lost 68 processing facilities. We are
saddened to see an additional facility in northeastern Montana
closing down this year. This did not occur because of a weather
disaster, but rather because high production costs make it very
difficult to stay in business. Once a facility closes down, it
does not reopen. Having low rates that are closer to the actual
cost of production would provide a more effective safety net
for our producers. As such, we would support examining how the
farm safety net could be updated for all Title I commodities to
better match actual operating costs for producers.
My third point is our producers are exposed to severe
weather disruptions. While farmers do have some insurance
products available, those tools are not as well-developed or
affordable as some other commodities. For sugarbeets policies
are limited to yield-based coverage. They do not benefit from a
revenue-based product. For sugarcane, the Hurricane Insurance
Program has been an invaluable addition, but a prevented
planting provision is needed. We would encourage the Committee
to provide particular help to crops that might not have access
to more successful crop insurance options.
Additionally, our producers have participated in WHIP+ and
ERP in the past. We are thankful that USDA is working with
Texas sugarcane farmers and beet farmers on disaster aid. We
are certainly receptive to new efforts to providing standing
disaster relief in ways that do not undermine crop insurance.
As a Louisianan, I would also like to make sure that all of
our growers are eligible for disaster assistance, regardless of
which mill they ship cane to. Sugar policy can provide an
adequate economic safety net for American farmers at zero cost
to the taxpayers. It is critical that strong policy remains in
place to counter heavily subsidized and unreliable foreign
sugar suppliers whose environmental and labor standards simply
do not match up to our own.
On behalf of more than 11,000 sugarcane and sugarbeet
farmers in the U.S., as well as the employees in our processing
facilities, I thank you for supporting sound U.S. sugar policy,
and I look forward to any questions you may have.
[The prepared statement of Mr. Frischhertz follows:]
Prepared Statement of Patrick A. Frischhertz, J.D., General Manager,
St. Louis Planting, Inc.; Member, Board of Directors, American Sugar
Cane League, Plaquemine, LA; on Behalf of American Sugar Alliance;
American Sugarbeet Growers Association
Good morning, Chairman Scott, Ranking Member Brown, and Members of
the Committee. Thank you for this opportunity to testify before you
today on behalf of the American Sugar Alliance concerning the upcoming
farm bill.
My name is Patrick Frischhertz. I was born and raised in southern
Louisiana and am a graduate of Louisiana State University and the
Loyola University of New Orleans, School of Law. My family farm
produces sugarcane, soybean, and wheat in Plaquemine, Louisiana--where
my wife, Sara, and I are raising our two children, Elliott and Sophie.
I currently serve on the Board of Directors for the American Sugar Cane
League and as the Chairman of its National Legislative Committee. I
also serve on the Board of Directors of the Iberville Parish Farm
Bureau Office and as the Vice President of a family company that
manages farmland in and around Iberville Parish.
The U.S. sugar industry generates more than 151,000 jobs across two
dozen states and contributes more than $23 billion annually to the U.S.
economy (see figure 1. Map of the U.S. sugar industry).\1\
---------------------------------------------------------------------------
\1\ Fischer, B., Herbst, B., Outlaw, J., and Raulston, J.M. (2022)
``Economic Impact of the U.S. Sugar Industry,''Agricultural and Food
Policy Center, Texas A&M University, June. (available at https://
sugaralliance.org/wp-content/uploads/2022/06/Sugar-Report.pdf)
---------------------------------------------------------------------------
American consumers benefit from a safe, high-quality, reliable,
sustainably produced,\2\ and affordable source of an essential
ingredient in the nation's food supply. Sugar is used as a natural
sweetener, preservative, and bulking agent in 70 percent of U.S. food
manufacturing.
---------------------------------------------------------------------------
\2\ See https://sugaralliance.org/producing-sugar-sustainably/
sugar-sustainably-sweet-stories.
---------------------------------------------------------------------------
Our farmers, millers, processors, and refiners have built a strong
and resilient supply chain for American sugar.\3\ Our product is stored
and distributed from 90 strategically located facilities throughout the
nation ready for delivery when and where needed according to the
specifications required by our customers. Unlike some other food items,
sugar was readably available on grocery store shelves throughout the
pandemic. That success is attributable to U.S. sugar policy and the
heroic efforts of our farmers and factory workers.
---------------------------------------------------------------------------
\3\ We documented that supply chain resilience for American sugar
supplies at our submission to USDA this past spring (available at
https://www.regulations.gov/comment/AMS-TM-21-0034-0437).
---------------------------------------------------------------------------
Outsourcing more of our sugar supply to other nations not only puts
our farmers at risk, but also makes it even more difficult for our food
companies to produce and supply the consumer products demanded by a
growing segment of U.S. households that are looking for such things as
sustainability and other environmental attributes in their food. Our
industry meets some of the highest labor and environmental standards in
the world. Using best practices and continuous improvement, our sector
has made huge strides in sustainability, mainly through productivity
gains in soil fertility, investment in advanced technologies,
mechanization, improved beet seed and sugarcane genetics, and refining
efficiencies. In fact, over the past 20 years, we have increased sugar
production by 14 percent on eight percent fewer acres, through improved
yields while lowering pesticide use.
Many of the jobs and businesses generated and supported by the U.S.
sugar industry are in highly vulnerable and economically distressed
rural areas and urban areas where good blue-collar jobs have become
harder and harder to find.
This hearing is timely and important for sugarcane and sugarbeet
farmers because Title I of the farm bill--the Commodity Title--
represents a critical safety net for our farm families and the many
employees of sugar mills, processors, and refineries throughout the
country.
I will make four main points today.
First, efficient U.S. sugar producers are threatened by less
efficient foreign, subsidized and dumped sugar that usually sells well
below the exporters' cost of production. This makes the world sugar
market the most distorted, volatile and unreliable commodity market in
the world (see figure 2. World's largest sugar exporters). There are no
signs of that changing in the foreseeable future.
Due to existing U.S. commitments under multilateral and bilateral
trade agreements, the United States is the third largest importer in
the world of this essential commodity, with those imports accounting
for approximately 30 percent of U.S. needs. Yet, as the global supply
chain disruptions resulting from the global pandemic, Russia's war in
Ukraine and a variety of global climatic events have made clear, we
must not become even more dependent on foreign suppliers for essential
goods particularly for food, energy, computer chips, and the like. This
is why an effective sugar policy, which maintains a strong domestic
industry, is essential to the food security of our nation.
Second, U.S. sugar policy is structured to serve American farmers,
consumers, food manufacturers, and taxpayers as it operates no cost to
the U.S. Treasury. U.S. sugar policy has operated at zero cost to
taxpayers 19 of the past 20 years and is expected to do so again this
year. USDA projects zero cost for the program over the next 10 years,
as well. The one time in the past 2 decades the program did not operate
at zero cost was due to Mexico's dumping of sugar onto the U.S. market
at below Mexico's production costs, which the International Trade
Commission unanimously held violated U.S. trade law. That problem has
been effectively addressed to the satisfaction of all parties through
the existing antidumping and countervailing duty Suspension Agreements.
Nevertheless, the loan rates for raw cane sugar and refined beet
sugar have not kept up with inflation nor the rising costs of
production (see figure 3. Rising input costs). Operating margins for
sugar producers are being squeezed each year, due to rising labor,
fuel, seed, fertilizer, equipment costs and interest rates that affect
both field and factory returns. Today our growers are paying 87% more
for diesel fuel, 141% more for fertilizer, and 33% more for machinery
compared to December 2018. And while some of those prices have come
down marginally from last year, they still remain high and have the
potential to rise again depending on global geopolitics. Current
freight, rail, and ocean shipping rates continue to remain high and can
be amplified by supply chain disruptions, such as those resulting from
Russia's war in Ukraine. The bottom line is that if sugar were sold at
the current safety net levels, most of the domestic industry would not
be economically sustainable. The safety net must be increased in this
farm bill for long term stability top provide secure supplies for
American consumers.
In addition, sugar farmers are worried about increasing challenges
of managing weeds and crop pests with fewer crop protectants, the
rising cost of labor and availability of guestworkers, the uncertainty
caused by repeated wetland rules that do not seem driven by science but
by politics, and difficulties in securing adequate truck and rail for
handling for our product.
The current loan rate levels no longer provide a realistic safety
net for our producers. Since the early 1980's we have seen 68
processing facilities close and most outside investors exited the
remainder of the industry due to the high risk and low returns. It was
our family farmers who stepped up to rescue the industry from further
closures of their factories, mills, and refineries (see figure 4.
Facility closures). Now many of those are struggling.
We are saddened to see an additional processing facility in
northeastern Montana closing down this year--not because of a weather
disaster, but because the current economic environment with high costs
of sugar production making it difficult to stay in business. Once a
facility closes down it doesn't reopen, and it leaves behind workers
that need to relocate and a town that has lost a large part of its
economic and tax base.
Having loan rates that are closer to our actual costs of production
would provide a more effective safety net for our producers and provide
a signal to our cooperatives and companies that during the next
downturn in prices, the floor price will actually provide a meaningful
portion of their production costs. As such, we would support examining
how the farm safety net could be updated in the next farm bill for all
Title I commodities to better match actual operating costs for
producers.
Third, sugarcane and sugarbeets, like most crops, are grown in
areas that experience weather disruptions. While sugarcane and
sugarbeets are resilient, risk protection is needed given the exposure
to strong hurricanes, freezes, and frequent and more intense droughts
or excess rainfall. Sugarcane and sugarbeet farmers do have some
insurance products available to them, but those crop insurance tools
are not as well developed or affordable as for some other commodities.
For sugarbeets, polices are limited to yield-based coverage and do not
benefit from a revenue-based product like other commodities, nor do
they have enterprise units available for purchase. For sugarcane, the
Hurricane Insurance Program (HIP) has been an invaluable addition, but
a prevented planting provision is needed. Participation and coverage
levels for sugarcane lag significantly behind other crops so better
addressing sugarcane's unique perils would be helpful. Price election
methods that are more closely tied to the futures prices for sugar
should also be updated to better reflect current market prices.
Sugarbeet and sugarcane farmers have participated in WHIP+ and ERP
previously and are considering how their losses in 2021 and 2022 might
be eligible for the most recent ERP program. We are thankful that USDA
is working with Texas sugarcane farmers, who are also in D.C. this
week, and beet farmers on disaster aid. Unfortunately, USDA estimates
that only $3.7 billion is available for over $10 billion in disaster
needs for 2021 and 2022.
For those reasons and because this Committee has signaled an
interest in developing additional risk management programs to
complement crop insurance, we are certainly receptive to new efforts to
provide standing disaster coverage in ways that do not undermine crop
insurance and possibly even encourage greater participation and
coverage levels. Under any standing disaster program, we would
encourage the Committee to provide particular help to crops that might
not have access to more successful crop insurance coverage options or
for which the program has just not operated optimally. As a Louisianan,
I would also like to make sure that all of our growers are eligible for
disaster assistance regardless of what mill they deliver their cane to.
Last, the current Title I sugar policy can provide an adequate
economic safety net for American sugarcane and sugarbeet farmers,
provided it is kept up to date and so long as there remains in place
effective responses to foreign sugar-producing countries' subsidizing
and dumping. Without those responses, we would effectively outsource
our sugar supply to heavily-subsidized and unreliable foreign sugar
suppliers whose environmental and labor standards simply do not measure
up to our own. That would be the opposite of strengthening supply
chains and contrary to providing a safety net to American producers.
Under that scenario, farmers, consumers, and taxpayers would all lose.
On behalf of the more than 11,000 sugarcane and sugarbeet farmers
in the United States as well as the employees in our mills, processors,
and refineries, I thank you for supporting sound U.S. sugar policy and
strongly opposing harmful proposals that would undermine the success of
this policy.
We encourage and welcome the Members and staff of the Committee to
visit our farms and factories. We look forward to working with you and
other stakeholders committed to strengthening American food and
agriculture as this Committee continues to hear from producers as you
weigh options for improving the farm bill.
Thank you for your consideration and your support for American
sugarcane and sugarbeet family farmers. It is critical that the full
Agriculture Committee repel attempts by special interests to weaken
U.S. sugar policy and outsource American farms to Brazil, India, and
other countries that heavily subsidize sugar production. I look forward
to any questions you might have.
Patrick Frischhertz, Louisiana sugarcane grower,
Representing the American Sugar Alliance.
Figure 1. U.S. Sugar Industry
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Figure 2. World's Largest Sugar Exporters: All Subsidize
Shares of Global Exports, 5 Year Olympic Average (2018/19-2022/23)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Data: Export data--USDA/FAS, November 2022; 2022/23 forecast.
Prices--International Sugar Organization, Domestic Sugar
Prices--a Survey, May 2019.
Subsidies--USDA/FAS attache reports, press reports, country
studies. May not add due to rounding.
Figure 3. Since 2010: Farmers' Costs Have Soared
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Data: Bureau of Labor Statistics (BLS), producer price
indices (PPI).
Figure 4. With Flat Sugar Prices Since 1985: More Than Half of U.S.
Sugar-Producing Operations Have Shut Down
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: American Sugar Alliance, 2022.
The Chairman. Mr. Cheyne?
STATEMENT OF BRENT CHEYNE, PRESIDENT, NATIONAL ASSOCIATION OF
WHEAT GROWERS, KLAMATH FALLS, OR
Mr. Cheyne. I thank the Chairman, Ranking Member, and
Members of the Subcommittee for the opportunity to testify and
provide a wheat farmer perspective on the 2023 Farm Bill. My
name is Brent Cheyne. I am a farmer from Klamath Falls, Oregon,
where I operate a century certified farm with my son. We pride
ourselves in creating a quality product, and my son is
committed to carrying on the family business and the family
tradition of working hard and being a good steward of the land.
I also currently serve as the President of the National
Association of Wheat Growers. NAWG is a federation of growers
from 28 states that represent wheat producers' needs and
interests in Washington, D.C. Our members feel it is essential
to testify before the Subcommittee today.
The importance of the safety net has played out on my farm
as we have experienced severe drought in one of the driest
grain-producing areas in the country. This year, we have gotten
relief with moisture, replenishing our topsoil. However, thanks
to years of drought, our subsoil remains dry. While we are
thankful for the moisture we have received, major wheat-
producing areas like the Great Plains are experiencing a
historic drought. Farmers throughout our organizations
indicated that crop insurance estimators have been zeroing
wheat acres throughout the plains, and the USDA is projecting
the smallest winter wheat crop since the 1960s.
Farming is a risky business, requiring a strong safety net.
Wheat farmers rely on the certainty of the crop insurance
program. In turn, the American people can depend on American
farmers who are able to continue to withstand natural disasters
and produce the most stable and affordable food supply in the
world. NAWG's number one priority is protecting crop insurance.
In my experience, crop insurance is vital to protect farmers
and support businesses in rural America. Many banks are now
requiring crop insurance in place before giving a loan. This
ensures the farmers and small businesses that supply them are
all protected.
My farm utilizes a yield protection policy with a coverage
of 80 percent. We have a stake in the premiums, and it helps
protect us in case of a disaster or yield loss. NAWG requests
that Congress make a significant increase to the PLC reference
price, as well as enhancements to crop insurance. The statutory
reference price for wheat has remained unchanged and has fallen
far short of the cost of production since its introduction.
Prices have now risen to the point where it would take a 62
percent decrease or nearly \2/3\ of our price before being
caught by the safety net of PLC. When prices fall that far,
there is effectively no safety net at all for farmers.
Cuts to crop insurance have already made it a less-
effective program. It is very expensive to obtain a desirable
level of coverage. While I would like to insure my farm at 85
percent levels, the premiums are so expensive that I have
chosen not to be able to afford them. Congress should take a
hard look at this issue and make the program more affordable at
higher levels of coverage.
The cuts made in 2014 led to a need for additional
assistance. My written testimony shows the funding that went to
wheat farmers through ad hoc programs. Those funds were
necessary to make up for the shortcomings but were received
long after the disaster took place. Wouldn't it be more
fiscally responsible for us to use those funds in a
predictable, effective manner?
NAWG knows that our requests require money and appreciates
the desire of Congress to be fiscally conservative with our tax
dollars. However, the farming safety net makes up only \2/10\
of 1 percent of spending. The witnesses today joined with 400
other agricultural organizations in a letter to the Budget
Committee requesting more resources. It is essential that we
make more investments in this farm bill to overcome these
challenges.
Wheat farmers across the country are experiencing high
prices but at extreme risk. My written testimony shows that the
impact of inflation, high interest rates, and severe drought
are already having on farmers' bottom line. High prices are
meaningless when there is nothing to harvest, which many
farmers in winter wheat-producing areas of our country are now
experiencing this year. We ask Congress to act now to enhance
the safety net and move away from ad hoc programs.
I thank you for the opportunity to testify before you at
this hearing, and I look forward to your questions and very
much look forward to working with you on the 2023 Farm Bill.
[The prepared statement of Mr. Cheyne follows:]
Prepared Statement of Brent Cheyne, President, National Association of
Wheat Growers, Klamath Falls, OR
Chairman Scott, Ranking Member Brown, and Members of the
Subcommittee, thank you for the opportunity to testify before this
General Farm Commodities, Risk Management, and Credit Subcommittee. My
name is Brent Cheyne, a farmer from Klamath Falls, Oregon where I
operate a certified Century Farm with my son who will carry on the
family tradition of working hard and producing a quality product. Thank
you for holding this hearing today to discuss the 2018 Farm Bill and
the changes we'd like to see in the 2023 Farm Bill.
NAWG is a federation of 20 state wheat grower associations and
industry partners that work to represent the needs and interests of
wheat producers before Congress and Federal agencies. Based in
Washington, D.C., NAWG is grower-governed and works in areas as diverse
as Federal farm policy, environmental regulation, the future
commercialization of emerging technologies in wheat, and uniting the
wheat industry around common goals. Our members feel it is important to
provide testimony before this Subcommittee today as we look forward to
the reauthorization of the farm bill this year. This hearing is
particularly timely as many of us here were at Commodity Classic last
month discussing the needs for the upcoming farm bill.
Wheat Overview
Nationwide, there are six different classes of wheat, each of which
is grown for different uses in different geographic regions and
climates, using a variety of agronomic practices, and facing different
challenges. These varieties of challenges, uses, and growers make
creating a one-size-fits-all program for wheat particularly difficult.
In my home State of Oregon, there are just over 36,000 farmers
operating over 15 million acres. My state grows Soti White wheat on
over 700,000 acres making it the largest row crop grown in Oregon. Soti
White wheat is used primarily in Asian-style bakery products as well as
cakes and pastries.
According to the April 11 crop production report from the USDA
National Agricultural Statistics Service (NASS), all wheat planted
areas increased by over 4 million acres. However, this information was
coupled with an April 2 report from USDA NASS that noted that ``more
than \1/3\ of the winter wheat was rated in very poor to poor
conditions'' in Kansas, Texas, Oklahoma, and Nebraska. In other words,
the largest area of winter wheat production is in bad shape. The report
also noted that only 28 percent of the nation's winter wheat was rated
good to excellent condition, the lowest figure since 1996.
This hearing is of utmost importance as we keep those figures in
mind. Under the current safety net, with those types of weather
challenges impacting a significant portion of wheat farmers, many
farmers will fall through the net. When falling from these heights,
farmers will get injured. This testimony outlines the changes made in
the previous farm bills, NAWG's requests for the 2023 Farm Bill, and
lays out the economic conditions that make improving the safety net
necessary.
Changes and Decreases to the 2014 and 2018 Farm Bill
The 2014 Farm Bill made cuts to the overall spending of the farm
bill, especially in the Commodity Title. When accounting for
sequestration cuts, the 2014 [] Farm Bill eliminated a total of $26.8
billion in spending, including $12.7 billion in the commodity title.
These cuts widened the holes in the safety net that have allowed
farmers to fall through over the last decade, leading to widespread
calls for ad hoc disaster programs. Since the introduction of the
Market Facilitation Program in 2018-19, disaster programs have spent
far more than the original cuts to the 2014 Farm Bill, out of
necessity, thanks to the shortcomings of the current safety net.
Between the Coronavirus Food Assistance Programs (CFAP) and Emergency
Relief Program (ERP) alone, wheat farmers received over $2.5 billion
for an average of $850 million per year. These were needed programs
that helped wheat farmers overcome a bad agricultural economy, low
yields, and low prices.
While these programs were extremely helpful and necessary, they did
not come without challenges. Unlike Title I programs and crop
insurance, ad hoc disaster programs cannot be counted on given their
nature. They are often funded a year or 2 after the disaster, and it
can take many months for USDA to roll out the program. This drag in
payment timelines often threatens to put farmers experiencing disasters
out of business. Further, the complicated nature of forcing the USDA to
create a new program to address disasters makes the program itself
complicated. Staff at the local Farm Service Agency (FSA) offices are
often given a crash course in a complicated program and then have to
explain it to the farmer. This uncertainty and inconsistency can cause
headaches and confusion and impact a farmer's relationship with their
FSA office.
It is time that Congress lessened its reliance on ad hoc disaster
programs and firms up the safety net to give farmers the confidence to
produce the safest, most secure, and cheapest food system the world has
ever seen.
NAWG Asks
Since the fall of 2021, our membership has reviewed the [2018] Farm
Bill programs and subsequent ad hoc programs through our internal
committee structure and solicited individual grower feedback through a
survey. These efforts culminated in our Board of Directors making 2023
Farm Bill recommendations in the summer of 2022 and expanding upon
those priorities at Commodity Classic early last month. This testimony
will provide a reiteration of our major asks in the Commodity and Crop
Insurance Titles and will justify these asks.
NAWG's number one priority is protecting the crop insurance title.
The economic challenges outlined below and the ad hoc programs over the
last half decade demonstrate the short-sighted nature of cutting crop
insurance as a budget saving tool. Further cuts will jeopardize the
partnership between the Federal Government and the private insurance
industry that delivers an essential risk management tool. We encourage
this Subcommittee to avoid further cuts and even look at ways to
enhance the program through better affordability.
My farm is a great demonstration of the challenges that farmers
face when it comes to crop insurance affordability. My son and I
utilize a yield protection policy on our farm with coverage of 80
percent. This means that in a qualified loss, we are only covered up to
80 percent of our average production history (APH). In a year of total
loss, only being covered up to 80 percent only goes so far in
protecting our farm. While my son and I would like to elect a higher
coverage, moving up to an 85 percent coverage level nearly doubles the
premiums that we pay. This is unaffordable for us and many similar
farmers. Paying for maximum coverage levels is usually far too
expensive for most farmers. Congress should take a hard look at this
issue and make efforts to increase the affordability of higher coverage
levels.
It's also important to understand that the crop insurance program
is not just valued by farmers but the entire rural community. Many
banks refuse to extend lines of credit without farmers enrolling in
crop insurance. This is done as a form of protection for banks
themselves. Crop insurance allows farmers to pay their bills to input
dealers, seed suppliers, cooperatives, and buy groceries and local
grocery stores, even in years where production or prices fall. Crop
insurance is not just important to farmers, it's essential to the
survival of rural America.
One specific improvement NAWG is proposing is the separation of
Enterprise Units (EU) by continuous and fallow cropping systems.
Currently, farmers must combine fallow and continuous wheat acres. As a
result, you can have a fallow APH and a continuous APH that are
reported separately but must have a blended unit in an EU. This dynamic
ends up hurting farmers in arid areas when crop insurance needs to be a
safety tool for their protection. Our solution would use precedent
language in previous farm bills that make changes to EUs to allow
insuring wheat EUs by fallow and continuous while still offering a
combined option. This legislation would benefit farmers and help them
be better able to insure their wheat and their livelihood.
In the commodity title, NAWG recommends a meaningful increase to
the statutory reference price for Price Loss Coverage (PLC) and
changing the parameters on the effective reference price calculation.
These recommendations would allow for a stronger Title I program that
can more effectively protect farmers, and better adjust to market
conditions. This is especially important with the substantial increases
in the cost of production. Using USDA's Commodity Costs and Returns
data from October 3, 2022 (the most recent available), after factoring
in overhead costs like labor, cost of living, and opportunity costs,
wheat farmers lost $64.47 per acre. Meanwhile, wheat farmers didn't see
a PLC payment because the Marketing Year Average (MYA) price was
already inflating. Data for 2022 comes out next week and will likely
show that wheat farmers lost even more money in 2022 despite the
increasing commodity prices due to increases in inflation and input
costs, which the testimony will delineate. With the MYA price projected
at $8.90 per bushel, the $5.50 reference price means that wheat farmers
would have to see a 62 percent decrease in prices before seeing a
government payment. That's a precipitous drop. The effectiveness of the
safety net is largely dependent on how big the fall will be. The
statutory reference price established in the 2014 Farm Bill is outdated
and doesn't work for this economy.
Another area of focus in improving the Title I program would be to
modify the parameters of the effective reference price. The effective
reference price and its adjustment mechanism could be improved to
provide a better safety net for wheat farmers. The current effective
reference price is capped at 115 percent of the statutory reference
price, with a maximum level of $6.33 per bushel for wheat.
Additionally, the 85 percent factor on the moving average should be
reexamined and increased to 90 or 95 percent. Overall, having an
adjustment that takes years to occur is too slow with the current
volatility of commodity markets and the ever-increasing cost of
production and the Committees should consider making this mechanism
more responsive to market conditions.
We do not propose increasing the reference price to guarantee a
profit for wheat farmers. It would simply mitigate some of the
substantial risks involved in the industry and help protect from the
serious increases in unavoidable costs that farmers face.
While the cost of this farm bill will come under intense scrutiny,
it is impossible to separate the cost of the ad hoc programs and the
farm bill. The cuts made in previous farm bills created the need for
these additional programs, at tremendous cost. As mentioned previously
in my testimony, the CFAP and ERP programs alone provided an average of
$850 million per year over 3 years, with CFAP providing almost $1.5
billion in 1 year and ERP providing just over $1 billion over 2 years.
If made permanent, these programs would cost over $8.5 billion on
average over their 10 year lifespan. This does not even include the
spending made in Market Facilitation Program (MFP) or the iterations of
the Wildfire and Hurricane Indemnity Program (WHIP and WHIP+).
Meanwhile, raising the reference price--for example--by $1 would cost
$14.6 billion over that same 10 year timeframe according to some
estimates. As we consider reauthorization, it is important we work to
strengthen our farm bill safety net that provides timely, effective,
and dependent protection.
NAWG recognizes several of these priorities would require securing
additional budget authority to craft the next farm bill. To this end,
NAWG appreciates the Budget Views and Estimates letter that Chairman GT
Thompson and Ranking Member David Scott sent to the Budget Committee
last month. We thank their bipartisan leadership and echo many of the
sentiments raised in that letter, in particular the need to update
Title I, restore the effectiveness of our risk management tools to move
away from ad hoc, and protect crop insurance. Following the Budget
Views and Estimates letter, NAWG joined over 400 agricultural
organizations requesting additional resources so that this Committee
can write a farm bill that provides an adequate farm safety net for
rural America. NAWG appreciates the desire of Congress to be fiscally
conservative with our tax dollars. However, the farming safety net
makes up only \2/10\ of 1 percent of Federal spending. In a world faced
with increasing global hunger, massive increases in input costs,
unprecedented market volatility, and large government expenditures, now
is the time to invest in the farm bill, not limit agricultural
spending.
Economics in Wheat Country
Wheat farmers are currently enjoying a strong farm economy,
although it has its challenges. Higher prices have bolstered cash and
farm income in recent years, putting farmers in a decent position to
weather economic storms. However, challenges in the form of inflation,
interest rates, and weather are already impacting our growers as farm
income is projected to decrease in 2023.
Prices
Wheat farmers have been through a lot economically over the last
decade, experiencing near record highs and lows in net farm income and
prices, while dealing with trade and market disruptions thanks to
COVID-19, trade wars, and the Russian invasion of Ukraine. The
volatility has been coupled with multiple years of natural disasters in
the form of drought, causing historically low production in spring
wheat in 2021, followed by historically low production in winter wheat
in 2022. Forecasts predict another year of historically low winter
wheat production once again in 2023. The USDA is projecting the lowest
yields in winter wheat since the 1960's. Currently, the agricultural
economy is strong but is facing significant headwinds that have led to
economists forecasting decreases in 2023.
The past 2 marketing years have given wheat farmers much needed
relief as prices have risen significantly. After seeing 6 straight
years of low prices, low enough to trigger the already-too-low Title I
Reference Prices, wheat prices have recovered to a point where wheat
farmers can actually be profitable. This year, the MYA price is
projected at a record $9.00, up from the 2021-22 MYA price of $7.60.
These prices have given wheat farmers an opportunity to make valuable
investments in their businesses. However, significant headwinds in the
form of inflation, interest, input prices, and weather conditions
threaten to, at least partially, negate these record prices.
Wheat Marketing Year Average Price
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Net Income
These increases in prices are reflected positively in net cash
income for farm businesses. Net cash income is the cash available to
farmers to draw down debt, pay taxes, cover family living expenses, and
invest. Thanks to these high prices, farmers have seen historically
higher than normal net cash income.
Percent Change from 10 year Average of Farm Business Net Cash Income
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
From historically low cash income in 2015 to historically high
income in 2021, increased prices, high yields, and disaster payments
have helped wheat farmers survive those bleak years. However, as the
charts below show, Net Cash Income is forecasted to not only decrease
from historical highs in 2023 but come down to historical averages.
This is due to the turbulence I have described in the agricultural
economy. This volatility makes it difficult for wheat growers to plan
into the future and have consistency in budgeting for and marketing
their wheat crop.
Net Cash Income for Wheat
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Inflation and Interest Rates
Like the rest of the economy, farmers have felt the belt-tightening
pressures of increasing inflation and interest rates. Inflation, caused
by increased government spending, supply chain pressures, monetary
policy, and the war in Ukraine, hit the highest rate that young farmers
have seen in their lifetime, the highest since the 1980's. The chart
below from the Bureau of Labor Statistics shows the heights the
inflation rate hit in late 2022. While inflation has eased somewhat,
the economy still suffers from the highest inflation rate of the 21st
Century.
12 Month Percentage Change, Consumer Price Index, Selected Categories,
Not Seasonally Adjusted
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: U.S. Bureau of Labor Statistics.
These inflation rates have shown themselves in numerous ways for
farmers, but most notably in the additional costs of farm inputs. For
example, one analysis that a wheat farmer in Southwest Kansas made on
his own 308 acres of no-till fallowed wheat showed that the price per
acre of crop protection tools more than tripled between 2021 and 2022.
When multiplied across the entire 308 acres, this was an increase
of $27,981.80. This is only one part of the story as fertilizer, labor,
and equipment parts and repairs are not included in that estimate.
These increased costs for crop protection tools are only a small
fraction of the entire set of bills that wheat farmers are now paying.
The increased inflation is coupled with increasing interest rates
as the Federal Reserve has attempted to reduce inflation. The chart
below from the Federal Reserve Bank of St. Louis demonstrates the
abnormally elevated Federal funds rate at levels unseen since the 2008
financial crisis. The Federal funds rate is the suggested interest at
which banks lend money to each other set by the central bank.
FRED--Federal Funds Effective Rate
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Shaded areas indicate U.S. recessions.
Source: Board of Governors of the Federal Reserve System
(U.S.).
fred.stlouisfed.org.
The important difference between the recent increases in inflation
rates and the previous highs in the 1980s and 2008 is the recent trend
of near zero interest rates. Near zero interest rates make money more
available and decreases the cost of obtaining loans. Farming is a
business that often relies on operating loans. Meanwhile, the risky
nature of agriculture, means their annual operating notes may run at
higher interest rates than the rate at which banks lend to each other.
This is demonstrated in the chart below from the Federal Reserve Bank
of Kansas City.
Chart 1. Average Fixed and Variable Interest Rates on Agricultural
Loans *
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
* Average interest rate across all Districts with applicable
data. Includes Chicago, Dallas, Kansas City, Minneapolis, St.
Louis Districts.
Note: St. Louis survey began Q2 2012. Chicago District survey
includes only fixed operating and real estate loans.
Sources: Federal Reserve District Surveys of Agricultural
Credit Conditions.
According to the Kansas City Fed, in the fourth quarter, ``Interest
rates on farm loans jumped to decade highs as benchmark rates rose
further. The average rate charged on agricultural loans at banks in
reporting Federal Reserve Districts increased nearly 150 basis points
from the previous quarter and were about 300 basis points higher than
the same time a year ago. Rates rose to the highest level since 2008
and pushed up financing costs considerably.'' On my farm, we were just
quoted for our operating note at eight percent but were told that next
year's rate would be over ten percent, something we have anecdotally
heard across the country. Farmers that have enjoyed near zero interest
rates now have to deal with the additional costs of capital and the
increased prices thanks to inflation.
Many farmers depend on these operating loans to continue to farm.
Farming is not only risky, but also very expensive, with a new combine
harvester costing almost $1 million. After years of near-zero interest
rates on operating notes, these increased interest rates make it more
expensive for farmers to use the capital they need to implement
conservation practices, invest in new equipment, and stay in business.
Weather Conditions
Agriculture is uniquely dependent on the weather. While other
industries can continue to thrive through excess drought or rain,
farmers' crops are completely dependent on the weather. The last 5
years have put intense production pressure on both spring and winter
wheat for farmers throughout the United States. The 2021-22 crop year
saw the lowest all wheat production since 2003 and marked only the
second time in fifty years that all wheat production failed to reach
1.7 billion bushels. Meanwhile, 2022-23 is projected to be the smallest
winter wheat crop since 1963 because of the significant drought
conditions. The charts below show the drought monitors for August 2021
and April 2023, respectively, demonstrating the intensity of droughts
throughout various regions of the wheat growing area and its impact on
both spring and winter wheat.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Conclusion
As the House Agriculture Committee continues to have these hearings
and begins drafting the 2023 Farm Bill, I look forward to working with
the Members of this Subcommittee, their staff, and the other witnesses
here today to help craft a farm bill that works for wheat growers and
all of American agriculture. Farmers play a key role in helping sustain
our rural communities and feeding the world. As the farm bill process
continues, I would urge judicious and expeditious review of authorized
programs and work to ensure a full reauthorization of farm bill
programs prior to the expiration of the current farm bill on September
30, 2023, so that producers have certainty about the structure of the
safety net moving forward.
We look forward to continuing to work with you to ensure a strong
U.S. farm economy. Thank you again for this opportunity.
The Chairman. Thanks, Mr. Cheyne.
Mr. Meeker?
STATEMENT OF CRAIG MEEKER, CHAIRMAN, NATIONAL SORGHUM
PRODUCERS, WELLINGTON, KS
Mr. Meeker. Thank you, Chairman Scott and Ranking Member
Brown, for the opportunity to speak to the Subcommittee today.
My name is Craig Meeker, and I am a sixth generation farmer
near Wellington, Kansas, where I farm with my father, my wife,
and my three children, who I hope to see as the next generation
on our farm. We grow sorghum, wheat, cotton, corn, soybeans,
and I raise a small cow-calf operation as well. I am honored to
serve as the Chairman of the National Sorghum Producers Board
of Directors. It is an honor to be here, and I hope my
testimony as a farmer is helpful, and on behalf of NSP, we
thank you.
I would like to begin by giving a brief state of the
sorghum industry. Sorghum farmers are facing exceptional
drought and have been for multiple years now. During the 2022
growing season in Kansas, parts of the state that usually
receive 15" to 20" of annual rainfall have observed about 7"
the entire year. The national average sorghum yield for this
past year is the lowest our industry has had since the 1960s.
While sorghum is drought-tolerant, it is not drought-immune,
and we continue to experience erratic weather patterns,
bringing intense drought to my region. In my rotation, each of
my crops has a purpose and it provides benefits for the next
crop. Sorghum functions as my resource-conserving crop due to
its inherent drought tolerance.
In addition to the historic drought impacting our
operations, market volatility, inflationary pressures, high
expenses, coupled with lower projections for crop cash receipts
are only adding to the stress and uncertainty of agricultural
production today. We are fortunate to have tools that can help
sorghum producers through these extreme events beyond our
control and in order to stay in business like Title I, crop
insurance, and Congressionally authorized ad hoc assistance at
various times. But due to the increasing severity of these
challenges, we believe farmers and ranchers need a stronger
farm safety net to provide predictability and certainty for
producers and lenders.
It is also clear that more resources will be necessary to
enact a strong farm bill this year, and there is simply a major
shortfall in the safety net funding. The cost of production has
similarly increased, rising at nearly 50 percent and almost 100
percent in other cases. While the changes in the 2018 Farm Bill
have been helpful, given the level and speed at which costs
have increased, statutorily, PLC reference prices are now far
too low to provide effective support in light of many of the
risks facing farmers in 2023.
The same is true of marketing loans, which remain an
important cash flow tool for farmers that are now much too low
relative to the current risk. We are grateful for the wisdom of
this Committee trying to tie in reference price to the market
in the 2018 Farm Bill, as it will create some improvements to
the level of certainty and confidence of sorghum farmers.
However, given spiraling costs of inputs, there is need for
improvements, and we strongly believe sorghum reference price
should be adjusted upward to provide a relevant safety net.
Crop insurance is vital for sorghum farmers, and, when
available, the tool has been critical in helping us manage the
ongoing drought conditions decimating the Sorghum Belt.
Availability of products and rating, however, have very real
local impact on plantings, and we believe the Committee can
take measures to improve this area. For example, due to
sorghum's ability to deal, withstanding short periods of
drought and heat better than most other crops, farmers tend to
deploy sorghum more aggressively when production outlook is
bleak. This fact exposes the crop to extra environmental
stresses and high-risk situations as a result. Sorghum
transitional yield suffer, as do product ratings cost to
participate compared to other crops.
Fortunately, RMA announced a new crop insurance option last
year for our irrigated sorghum farmers. It is now available for
the 2023 growing season. The option benchmarked sorghum to corn
at a higher guarantee for less money and will be available as a
pilot for farmers in certain counties in Kansas, Oklahoma, and
Texas. We continue to work closely with RMA and look forward to
working with this Committee to build upon these efforts to
provide meaningful solutions to sorghum farmers.
Backing out of the big picture, sorghum is always competing
for acreage to supply our growing market. Most of the
competition is with soybeans and corn in the North and cotton
in the South. With respect to cotton in the South, options are
available for higher levels of coverage and higher levels of
premium cost-share that aren't available to sorghum. We would
like to achieve parity. Sorghum needs the ability to buy
insurance products at similar high levels to compete for acres.
We believe this option will serve farmers and foster usage for
better resources and times and produce that opportunity for
producers.
I am thanking this Committee for all that you have done and
all that you will do in the future, and we look forward to
working with you and being a resource. Thank you for your time.
[The prepared statement of Mr. Meeker follows:]
Prepared Statement of Craig Meeker, Chairman, National Sorghum
Producers, Wellington, KS
Introduction
Thank you, Chairman Scott and Ranking Member Brown, for the
opportunity to testify today before the Subcommittee on General Farm
Commodities, Risk Management, and Credit. My name is Craig Meeker and I
am a sixth generation farmer near Wellington, Kansas, where I farm with
my father, wife and three children. We grow sorghum, wheat, cotton,
corn, and soybeans, and we raise a small cow-calf herd. I am a graduate
from Wichita State University. Previously, I served as Chairman of the
National Sorghum Producers' (NSP) Legislative Committee, and I am a
graduate of the Leadership Sorghum program. Today, I serve as the
Chairman of the NSP board of directors to which I was first elected in
2018. I am humbled to be here today, and I hope my testimony as a
family farmer and on behalf of NSP will be helpful to you as you begin
work crafting the 2023 Farm Bill.
State of the Sorghum Industry and our Economy
Farmers across the Sorghum Belt like me must contend with limited
annual rainfall throughout our semi-arid region and that is why
sorghum, which is drought and heat tolerant, is such an excellent fit
for the economic sustainability of our operations. However, sorghum
producers are currently facing exceptional and prolonged drought and
have been for multiple years now. For instance, during the 2022 growing
season in Kansas, parts of the state that usually receive 15-20" of
annual rainfall only observed a little more than 7" of rain the entire
year. The national average sorghum yield was the lowest our industry
had seen since the 1960s, and in a survey to our producers many of them
expect to contend with drought again in the 2023 growing season.
In my rotation, each one of my crops has a purpose and provides
benefits for the next one. Sorghum specifically functions as my
resource conserving crop due to its inherent drought tolerance and
ability to produce with minimal inputs. But while sorghum is drought-
tolerant, it is not drought immune, and we continue to experience
erratic weather patterns including intense drought in my region. In
addition to historic drought impacting our operations, market
volatility, inflationary pressures and higher expenses, coupled with
lower projections for crop cash receipts, are only adding to the stress
and uncertainty of agricultural production today.
Efficacy of the Farm Safety Net
We are fortunate and thankful to have tools at the ready that can
help sorghum producers through these extreme events beyond our control
in order to stay in business, including Title I, crop insurance, and
Congressionally-authorized ad hoc assistance that has been provided at
various times. However, due to the increasing severity of these
challenges, we believe farmers and ranchers need a stronger farm safety
net to provide predictability and certainty for producers and lenders.
It is also clear that additional resources will be necessary to
enact a strong farm bill this year as there is simply a major shortfall
in safety net funding compared to historical levels. For brief context,
the 2008 Farm Bill had a safety net baseline of $85 billion. Adjusted
for inflation, that figure would be roughly $121 billion in 2023
dollars, nearly double what the current baseline is today. Cost of
production has similarly increased, rising at least 50 percent in most
cases and upwards of 100 percent in others.
We strongly agree with this Committee in its recent Budget Views
and Estimates letter from March 9, 2023, that timely investment now
into the farm safety net--which accounts for a modest \2/10\ of 1
percent of Federal spending--provides enormous economic returns for
rural communities and our national economy while helping to avoid
costly and unbudgeted ad hoc programs from having to fill the gaps over
the next 10 years.
PLC Reference Prices
Right now, the farm safety net is not adequate. While the changes
in the 2018 Farm Bill have been helpful, given the level and speed at
which costs have increased, statutory PLC reference prices are now far
too low to provide effective support in light of the many risks facing
farmers in 2023. The same situation is true of marketing loans, which
remain an important cash flow tool for farmers but are now much too low
relative to current risk. We continue to believe the sorghum reference
price and marketing loan rates must be adjusted upward to remain
relevant to U.S. sorghum farmers as we work to maintain productivity
through extremely turbulent times.
The good news is with stronger commodity prices over the 2020, 2021
and 2022 crop years, at least, the level of support provided by both
ARC and PLC will be enhanced. We are grateful for the wisdom of this
Committee in tying the reference price to the market in this way. It
will create some improvement to the level of certainty and confidence
of sorghum farmers. However, given spiraling costs of inputs, there is
work to be done on improvements in this regard. To reiterate, we
strongly believe the sorghum reference price needs to be adjusted
upward to provide a relevant safety net.
As you know, Title I policies have generally been decoupled from
production since 1996. This is policy we support as we would never want
to put USDA back into the position of dictating what is planted where.
We also caution against the creation of any base updating models that
will influence production against market and agronomic demands by
incentivizing farmers to build base rather than plant for the needs of
the market and the needs of their farm.
Crop Insurance
While Title I is mostly decoupled from plantings to maximize
planting flexibility, there are other programs that serve different
purposes that are narrowly tailored to production on the farm while
still entirely market-oriented. I am speaking of the Crop Insurance
Program, which is a program we very strongly support. In fact, sorghum
producers bought crop insurance on 77 percent of their acres over the
last 5 years, and the tool has been absolutely invaluable in helping us
manage the ongoing drought conditions decimating the Sorghum Belt. It
is based on market prices in the year, so it does not have any kind of
distorting effect. It is also based on premium cost share so farmers
have serious skin in the game. Availability of products and rating,
however, can have a very real local impact on plantings, so there
remains some more work to be done to improve in this area.
For example, drought-tolerant, resource conserving crops like
sorghum should be rewarded under the program. Due to sorghum's water-
sipping qualities, the crop can offer farmers flexibility with their
groundwater resources where sorghum is grown under irrigation. Sorghum
also promotes soil health in rotations that benefit subsequent crops.
However, due to sorghum's ability to withstand short periods of
drought and heat better than most other crops, farmers tend to deploy
sorghum more aggressively when the production outlook is bleak. This
exposes the crop to extra environmental stress. So, in effect, sorghum
transitional yields, which are proxy yields for a farmer's individual
yield history when first transitioning to a crop he or she has never
grown before, ultimately suffer and become an obstacle for sorghum
production as well as for groundwater resource management.
Fortunately, in November 2022, RMA announced a new crop insurance
option for irrigated sorghum farmers that is now available in the 2023
growing season. The option will be available as a pilot program to
farmers in select counties in Kansas, Oklahoma, and Texas over the
Ogallala Aquifer. We continue to work closely with RMA and look forward
to working with this Committee to build upon these recent efforts that
provide meaningful solutions for sorghum farmers.
Program Parity
Backing out to the big picture, sorghum is always competing for
acreage to supply our markets, which are growing and demanding more of
this product as a resource conserving ingredient. Most of that
competition is with soybeans and corn in the northern portion of the
Sorghum Belt and cotton in the South. For corn and soybeans, their
rating is simply better in many places for reasons stated above. This
is something we are working on and being creative to address, to the
benefit of all farmers, whatever crop they grow. With respect to
cotton, there are options available for higher levels of coverage at
higher levels of premium cost-share that are not available for sorghum
where we also need to work to achieve parity. Sorghum needs the ability
to buy insurance products at higher levels like this to compete for
acres. Again, we believe this option will serve all farmers and foster
a better use of resources over time.
Knowing that this Committee is looking at ways to address
predictable weather disasters through improvements in the farm bill, we
suggest that providing a special cost-share policy for sorghum is a
worthy pursuit. From a sorghum perspective, this option could help
address our parity and acreage competition concerns and provide a more
predictable and timely level of protection against widespread weather
disasters compared to ad hoc assistance programs like ERP.
There are a lot of details that would need to be considered in
fashioning these policies and NSP staff stand ready to work with you on
these very important matters. We want policy that is improved for
sorghum producers, and really all producers who are putting it on the
line each year to make a positive difference for this world.
Conclusion
Mr. Chairman, in closing, I want to thank you again for the
opportunity to testify and to let you know that our farmer members of
the National Sorghum Producers appreciate the task you have before you.
While we have focused on aspects of Title I and crop insurance today,
these farm policy cornerstones have significant impacts on other
important areas to our industry like research, rural development,
bioenergy, trade promotion and market development--all important pieces
to a larger puzzle that underscore the value of the farm safety net and
its central necessity toward ensuring farmers like me and my family are
able to continue to farm from one season to the next.
Thank you again for the opportunity to testify today, and we look
forward to working with the House Agriculture Committee and our fellow
commodity organizations to make meaningful improvements to the farm
bill.
The Chairman. Mr. McMillan, you are a long way from Berrien
County, but let's see what you have to say.
STATEMENT OF DANIEL T. McMILLAN, PRODUCER, SOUTHERN GRACE
FARMS, ENIGMA, GA; ON BEHALF OF UNITED STATES PEANUT FEDERATION
Mr. McMillan. Chairman Scott, Ranking Member Brown, and
Members of the Subcommittee, thank you for the opportunity to
appear before you today to provide the peanut producers'
perspective on the 2023 Farm Bill. My name is Daniel McMillan,
and I am an eighth generation farmer from Enigma, Georgia. I am
here today representing the United States Peanut Federation.
My family has weathered much over the course of our 250
years as American farmers. The COVID-19 pandemic triggered a
series of events on our farm. Since 2020, we have seen supply
chain disruptions, inflation on key farm inputs, and labor
shortages. Prior to 2020, the peanut industry was already in
the throes of difficult variables such as low prices, much of
which was a result of trade issues, a reduced market in China,
and a non-tariff trade barrier in the European Union, followed
by the United Kingdom.
In addition to the financial impact of low market prices
and increased input costs, peanut farming requires high-cost
specialized equipment on top of traditional equipment. This
specialized equipment is extremely expensive to purchase and
maintain, resulting in additional financial stressors on our
farms.
Dr. Stanley Fletcher of Abraham Baldwin Agricultural
College and Professor Emeritus at the University of Georgia has
developed and maintained a peanut-representative farm from 2001
to today. We currently have 22 representative farms spread
across the country. Dr. Fletcher reviewed the peanut
representative farm's crop year 2021 cost of production as
compared to 2022 costs and found a significant increase. The
total cost of production increase per ton from 2021 to 2022 was
26 percent. Prior to the 2021 representative farm update, the
peanut reference price of $535 per ton provided an effective
safety net for growers. However, according to Dr. Fletcher, the
reference price has not been a functional safety net since the
2021 crop year. Total variable input costs such as seed,
fertilizer, and fuel have increased 33 percent when comparing
2021 to 2022. Our 2021 cost of production was $546 per ton, and
Dr. Fletcher reports our 2022 cost of production at
approximately $668 per ton.
In my home area, we saw fertilizer costs double from 2021
to 2022. Some products tripled in costs. Currently, fertilizer
prices are changing week to week, preventing us from making
informed management decisions. Crop protectant prices remain
high, which can pressure farmers to look for cheaper options,
sometimes to the detriment of the crop. Labor costs continue to
increase, and we are still facing cost increases and business
disruptions resulting from problems with the supply chain.
We have seen 6 month delays in mechanical repairs for
tractors and trucks. Due to the short supply of tractors, even
rental tractors have become scarce. We saw costs for one of our
rental tractors rise from $2,000 per month in 2019 to $3,500 a
month in 2023 for the same tractor. These are all increases
that make it difficult to plan and budget.
I am proud to be an American peanut grower because of the
high nutritional value peanuts provide to our nation and world.
Peanuts are one of the cheapest sources of protein for
consumers and contain 19 essential vitamins and minerals. Not
far from our farm is a processing facility for MANA Nutrition.
MANA is a nonprofit organization known for the production of a
ready-to-use therapeutic food through its fortified peanut
paste.
My family and peanut growers across the country want to be
a part of the solution for hunger in the world. But what do we
need from the 2023 Farm Bill? First, the U.S. Peanut Federation
supports an increase in the reference price in the 2023 Farm
Bill. Growers, shellers, and buying points are unified in their
support of the Price Loss Coverage Program as included in the
2018 Farm Bill with a reference price increase. While the 2018
Farm Bill's Price Loss Coverage Program has worked for peanut
growers, the rise in input costs and costs of production
necessitates a reference price increase if this program is to
remain relevant as a farm safety net.
Second, the U.S. Peanut Federation supports a voluntary
base update that includes growers with and without peanut base
acres.
Thank you for the tireless work you are doing on the 2023
Farm Bill. My family greatly appreciates your support of the
American farmer. You have provided farmers the safety net that
has helped our farms to survive. The safety net is one of the
many tools that made it possible for me to have a future on our
farm after I finished college because, quite frankly, without
it, there might not have been a farm to come back home to.
Thank you for allowing me to testify today.
[The prepared statement of Mr. McMillan follows:]
Prepared Statement of Daniel T. McMillan, Producer, Southern Grace
Farms, Enigma, GA; on Behalf of United States Peanut Federation
Chairman Scott, Ranking Member Brown, and Members of the
Subcommittee, thank you for the opportunity to appear before you today
to provide the peanut producers' perspective on the 2023 Farm Bill. My
name is Daniel McMillan. I am an eighth-generation farmer from Enigma,
Georgia. We grow peanuts, cotton, timber, some fruit crops, and raise
cattle. Our family operates a peanut buying point in our small
community, and we are part owners, along with 195 other peanut
families, in a shelling facility.
I am here today representing the United States Peanut Federation
(USPF). USPF is comprised of the Southern Peanut Farmers Federation,
the American Peanut Shellers Association, and the National Peanut
Buying Points Association. The Southern Peanut Farmers Federation
includes the peanut grower organizations in Georgia, Alabama, Florida,
and Mississippi.
My family has weathered many events over the course of our 250
years as American farmers. Throughout this time, we have seen several
wars, the Great Depression, natural disasters, high interest rates in
the 1980's, and a national pandemic--on top of the simple, every day
challenges of each growing season.
The COVID-19 pandemic triggered a series of events on our farm.
Since 2020, we have seen supply chain disruptions, inflation on key
farm inputs, and labor shortages. Prior to 2020, the peanut industry
was already in the throes of difficult variables such as low prices--
much of which was a result of trade issues; a reduced market in China
and a non-tariff trade barrier in the European Union (EU), followed by
the United Kingdom (UK). The EU and UK are some of our premium markets.
(see Attachment A)
In addition to the financial impact of low market prices and
increased input costs, peanut farming requires high cost, specialized
equipment on top of traditional equipment such as tractors, trucks,
cultivator, plows, etc. This specialized equipment includes:
Peanut Pickers
Peanut Diggers
Peanut Carts
Peanut Lifter
Peanut Reshaker
Twin Row Planters and Layoff Rigs
Dedicated Sprayer Rig
This specialized equipment is extremely expensive to purchase and
maintain resulting in additional stressors on our farms.
Dr. Stanley M. Fletcher, Professor of Policy at the Center for
Rural Prosperity and Innovation at Abraham Baldwin Agricultural College
and Professor Emeritus at the University of Georgia, has developed and
maintained peanut representative farms from 2001, prior to the 2002
Farm Bill, to today. We currently have twenty-two representative farms
(see Attachment B) spread across the country. They cover all of the
peanut areas from Virginia to New Mexico.
Since the 2018 Farm Bill, we have seen inflation increase
significantly. Dr. Fletcher reviewed the peanut representative farms'
crop year 2021 cost of production as compared to 2022 costs and found a
significant increase. The total cost of production increase per ton was
26.31% percent from 2021 to 2022. Prior to the 2021 representative farm
update, the peanut reference price of $535 per ton provided an
effective safety net for growers. However, according to Dr. Fletcher,
the reference price has not been a functional safety net since the 2021
crop year. Total Variable Input Costs (TVIC) inputs such as seed,
fertilizer, fuel, crop insurance, etc., have increased 33.48% when
comparing 2021 to 2022. (see Attachment C). Our 2021 cost of production
was $545.97 per ton, and Dr. Fletcher reports our 2022 cost of
production at approximately $668 per ton.
I would like to provide anecdotal evidence supporting the
representative farms Cost of Production analysis. In my home area, we
saw fertilizer cost double from 2021 to 2022. Some products tripled in
costs. Currently fertilizer prices are changing week to week preventing
us from making informed management decisions. Commonly used fertilizers
include diammonium phosphate (DAP), Potash, and Urea. When comparing
the 2021 and 2022 crops, our farm saw the following increases in price
for basic fertilizer needs:
------------------------------------------------------------------------
2021 Price per Ton 2022 Price per Ton
------------------------------------------------------------------------
DAP $714.60 $1,209.60
Potash $425.60 $956.25
Urea $528.60 $1,281.25
------------------------------------------------------------------------
Crop protectant prices remain high which can pressure farmers to
look for cheaper options sometimes leading to the detriment of the
crop. Labor costs continue to increase. We use H-2A workers and have
seen a 14% increase in labor costs through the recent U.S. Department
of Labor Adverse Effect Wage Rate (AEWR) changes. We are still facing
cost increases and business disruptions resulting from problems with
the supply chain. This past week, we went to a local parts store to buy
a bundle of small metal sweeps for a field cultivator. A simple wear
part cost $2 each in 2021 but today is $6 each. We have had up to 6
month delays in mechanical repairs for some tractors and trucks. Due to
the short supply of tractors, even rental tractors have become scarce.
We saw costs for one of our rental tractors move from $2,000 per month
in 2019 to $3,500 per month in 2023 for the same tractor. These are all
increases that make it difficult to plan and budget.
I am proud to be an American peanut grower because of the high
nutritional value peanuts provide to our nation and world. The Peanut
Institute has released data highlighting the health value of peanuts in
reducing heart disease, Alzheimer's disease, Type 2 diabetes, and some
cancers. Peanuts, one of the cheapest sources of protein choices for
consumers, contain 19 essential vitamins and minerals. (see Attachment
D)
Not far from our farm is the processing facility for MANA
nutrition. MANA is a nonprofit organization known for the production of
a ready-to-use therapeutic food (RUTF) through its fortified peanut
paste. MANA has recently expanded their facility in Georgia. MANA's
mission statement is ``We are here to end malnutrition.'' My family and
peanut growers across the country want to be part of the solution for
hunger in the world.
What do we need from the 2023 Farm Bill?
First, the U.S. Peanut Federation supports an increase in the
reference price in the 2023 Farm Bill. Growers, shellers and buying
points all support the Price Loss Coverage Program as included in the
2018 Farm Bill with a reference price increase. While the 2018 Farm
Bill's Price Loss Coverage program has worked for peanut growers, the
rise in input costs and cost of production necessitates a reference
price increase if this program is to remain relevant as a farm safety
net.
Second, the U.S. Peanut Federation supports a voluntary base update
that includes growers with and without peanut base acres. While the
2014 Farm Bill allowed for base updating for peanut growers that
already had base on their farms, it excluded many young farmers and new
production areas. Our economists estimate that a voluntary base update,
using the latest 5 year Olympic average, will include approximately
112,000 peanut acres nationally. (see Attachment E)
I would like to thank the Committee Members who have worked on
prior farm bills and those of you here today for the tireless work you
currently are doing on the 2023 Farm Bill. My family greatly
appreciates your support of the American Farmer. You have provided
farmers a safety net that has helped our farms to survive. The safety
net is one of the many tools that made it possible for me to have a
future on our farm after I finished college. Quite frankly without it,
there might not have been a farm for me to come back to.
Thank you for allowing me to testify today.
Attachment A
U.S. Shelled Peanut Exports 2016-2022
------------------------------------------------------------------------
Total Shelled Calendar Marketing
Peanut Unit Year Quantity Year Quantity
------------------------------------------------------------------------
World Total 1 Peanuts 2016 624,625 2015/16 572,783
MTSHL
World Total 1 Peanuts 2017 437,000 2016/17 472,565
MTSHL
World Total 1 Peanuts 2018 447,409 2017/18 450,687
MTSHL
World Total 1 Peanuts 2019 471,564 2018/19 424,054
MTSHL
World Total 1 Peanuts 2020 630,108 2019/20 609,340
MTSHL
World Total 1 Peanuts 2021 457,368 2020/21 532,575
MTSHL
World Total 1 Peanuts 2022 431,268 2021/22 431,573
MTSHL
------------------------------------------------------------------------
U.S. Peanut Exports (MTSHL)
(2016-2022 Calendar Year)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Foreign Agricultural [Service].
U.S. Peanut Exports (MTSHL)
(2016-2022 Marketing Year)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Foreign Agricultural [Service].
Attachment B
Areas Represented by the 22 United States Representative Peanut Farms
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Attachment C
United States Peanut Cost of Production
Stanley M. Fletcher, Professor of Policy, Center for Rural Prosperity
and Innovation, Abraham Baldwin Agricultural College; Professor
Emeritus, University of Georgia
The U.S. peanut representative farms development started in 2001
prior to the 2002 Farm Bill. These representative farms have been
maintained for 20 years and have been extensively utilized for peanut
policy in each farm bill. These representative farms cover all the
peanut areas from Virginia to New Mexico based on production share as
seen in the map. If a state production share equals to a partial
representative farm, a whole farm was developed for that state. These
farms were updated during the summer of 2021 with 2021 cost of
production. Due to the recent peanut production in the Northeast
Arkansas/Southeast Missouri, a new representative farm is planned to be
developed during 2023.
Areas Represented by the U.S. Peanut Representative Farms
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
A cash flow analysis is performed to indicate what the cash flow is
required to produce a ton of peanuts. The cash flow costs are divided
into three categories: TVIC (total variable input cost), QVIC (quasi
variable input cost-whole farm cost allocated to a crop acre) and loan
payments. A peanut farmer has three different loans during the crop
season. They are the operating loan, an equipment loan, and a land
loan. Over the years of updating the representative farms, it has been
found that producers not able to cover all their cash flow cost have
been rolling the deficit into their land loan and that percentage has
been increasing over time.
Table 1. U.S. Peanut Cost of Production
------------------------------------------------------------------------
2021 U.S. Rep Potential 2022
Farm COP COP
------------------------------------------------------------------------
Expected Yield 2.38 tons/acre 2.38 tons/acre
TVIC \1\ $713.52/acre $952.41/acre
QVIC \2\ $388.33/acre $439.30/acre
Total Variable Cost (TVC) = TVIC + QVIC $1,101.86/acre $1,391.71/acre
Loan payments (equipment and land notes) $198.91/acre $198.90/acre
Total Cost = TVC + Loan payments $1,300.76/acre $1,590.61/acre
Total Cost per Ton $546.54/ton $668.32/ton
------------------------------------------------------------------------
\1\ Seed, fertilizer, micronutrients, lime & gypsum, inoculants,
chemicals, wild hog, cover crop, growth regulators, custom
application, consultants, irrigation fuel, tractor fuel, drying,
cleaning, hauling, check-offs, crop insurance, and interest on
operating loan.
\2\ Taxes, accounting/legal, fleet liability insurance, repairs
maintenance and supplies, truck fuel & lube,phone, utilities, DTN,
GPS, apps, labor cost and land rent.
Based on the U.S. representative peanut farms, the average total
cash flow cost per ton for the 2021 peanut crop was $546.54/ton. Given
the significant increase in the 2022 cost of production, Texas A&M AFPC
reported selected input cost increase and FAPRI's inflation factors for
the other input costs were utilized to adjust the 2021 cash flow costs
by the expected increase in input costs. The projected 2022 peanut
total cash flow cost to produce a ton of peanuts is $668.32/ton.
Attachment D
The Nutritional Value of Peanuts
Background
Peanuts are botanically classified as a legume, being an edible
seed enclosed in a pod.[1] However, because of its
composition, peanuts are also described as nuts for nutritional
purposes. According to the Agricultural Marketing Resource Center, the
total U.S. peanut production in 2021 measured 6.4 billion
pounds.[2] Of that, about 60% was used for peanut butter
production, while about 15% was crushed for peanut oil.[2]
Peanuts and peanut butter account for close to \2/3\ of all nut
consumption in the United States.[1] Dollar for dollar,
peanuts and peanut butter are less expensive than almost all nut and
meat proteins. Pairing the affordability with a very long shelf life,
peanuts and peanut butter are excellent staples for most pantries.
Studies have consistently shown that peanut products, when eaten daily,
can significantly decrease the risk of heart disease and
diabetes.[1, 3, 4] They also satisfy hunger, help manage
weight, and promote health.[1] Peanuts and peanut butter are
nutritious, affordable, and sustainable. A serving of peanuts is 1
ounce, or a handful, and a serving of peanut butter is 2 tablespoons.
Peanut Per Capita Consumption
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: USDA & Census Data. Excludes Peanut Oil.
Nutritional Value
Peanuts contain a variety of compounds that promote health
including protein, heart-healthy fats, fiber, micronutrients, and
antioxidants.
Protein
A 1 ounce serving of peanuts--about a handful--is considered a good
source of protein based on the United States Department of Agriculture
Standard Legacy. Peanuts and peanut butter provide 7 grams of high
quality, plant-based protein.[5] Protein is vital for
growing children and adults, being integral for muscle growth,
immunity, and bone development.[6, 7] Since the protein in
peanuts is plant-based, it carries with it additional components
promoting positive health benefits like fiber and unique bioactives,
unlike animal protein.
Heart-healthy fats
The 2020-2025 Dietary Guidelines for Americans suggests cooking and
purchasing products made with oils higher in polyunsaturated and
monounsaturated fat rather than butter, shortening, or coconut or palm
oils.[8] More than 80% of the fats in peanuts are from
heart-healthy unsaturated fats.[5] The American Heart
Association recommends replacing saturated fats for poly- and mono-
unsaturated fats to lower risk of cardiovascular disease and
inflammation.[9]
Fiber
Peanuts are a good source of fiber, which promotes digestion, heart
health, and blood sugar control.[5] Over \1/3\ of the
carbohydrates in peanuts is fiber and according to the 2020-2025
Dietary Guidelines, more than 90 percent of women and 97 percent of men
do not meet recommended intakes for dietary fiber.[8]
19 vitamins and minerals
Peanuts and peanut butter contain more than 19 vitamins and
minerals that are integral to growth, development, metabolic function,
and immunity.[5] These micronutrients work by multiple
mechanisms and are likely having synergistic effects on health status.
Peanuts and peanut butter are excellent sources of niacin, molybdenum,
and manganese and are also good sources of folate, copper, and vitamin
E.[5]
Antioxidants
Research has identified numerous types of bioactive compounds in
peanuts and in their skins that may add functionality and health
benefits beyond basic nutrition.[1] For example,
antioxidants like resveratrol and p-coumaric acid have been associated
with improved vascular function, better cognition, and lower stress and
anxiety.[10, 11] These and other bioactive nutrients have
been recognized for their disease-preventive properties and are also
thought to promote longevity. Packaged together with vitamins,
minerals, healthy fats, protein, and fiber, peanuts are a complex plant
food that promote health and wellness.
References
1. Arya, S.S., A.R. Salve, and S. Chauhan, Peanuts as functional
food: a review. J. Food Sci. Technol., 2016. 53(1): p. 31-41.
2. Agricultural Marketing Research Center. Peanuts. 2022.
3. Aune, D., et al., Nut consumption and risk of cardiovascular
disease, total cancer, all-cause and cause-specific mortality: a
systematic review and dose-response meta-analysis of prospective
studies. BMC Medicine, 2016. 14(1): p. 207.
4. Becerra-Tomas, N., et al., Nut consumption and type 2 diabetes
risk: a systematic review and meta-analysis of observational studies.
Am. J. Clin. Nutr., 2021. 113(4): p. 960-971.
5. USDA. Standard Legacy, Peanuts. 2022; Available from: https://
fdc.nal.usda.gov/fdc-app.html#/?query=peanuts.
6. Devries, M.C. and S.M. Phillips, Supplemental protein in support
of muscle mass and health: advantage whey. J. Food Sci., 2015. 80
Suppl. 1: p. A8-a15.
7. Shang, N., et al., Protein and Peptides for Elderly Health. Adv.
Protein Chem. Struct. Biol., 2018. 112: p. 265-308.
8. U.S. Department of Agriculture, Health and Human Services.
Dietary Guidelines for Americans, 2020-2025. 9th ed. 2020.
9. Lichtenstein, A.H., et al., 2021 Dietary Guidance to Improve
Cardiovascular Health: A Scientific Statement From the American Heart
Association. Circulation, 2021. 144(23): p. e472-e487.
10. Parilli-Moser, I., et al., Consumption of peanut products
improves memory and stress response in healthy adults from the
ARISTOTLE study: A 6-month randomized controlled trial. Clin. Nutr.,
2021. 40(11): p. 5556-5567.
11. Thaung Zaw, J.J., P.R. Howe, and R.H. Wong, Long-term effects of
resveratrol on cognition, cerebrovascular function and cardio-metabolic
markers in postmenopausal women: A 24-month randomised, double-blind,
placebo-controlled, crossover study. Clin. Nutr., 2021. 40(3): p. 820-
829.
Attachment E
2023 Peanut Potential Base Increase Comparing 2019 Base
The sum of the Olympic average of 2018-2022 certified acres minus
2019 commodity base by county.*
---------------------------------------------------------------------------
* Negative numbers are reported as 0 in the calculations.
Peanuts
Alabama................................................. 2,096.41
Arkansas................................................ 29,048.31
Colorado................................................ 0.08
Florida................................................. 21,136.11
Georgia................................................. 22,269.77
Indiana................................................. 0.93
Louisiana............................................... 1,271.54
Minnesota............................................... 0.62
Mississippi............................................. 6,085.41
Missouri................................................ 15,748.29
Nebraska................................................ 97.64
New Mexico.............................................. --
North Carolina.......................................... 12,103.49
Oklahoma................................................ --
South Carolina.......................................... 2,867.58
Texas................................................... 70.87
Virginia................................................ --
---------------
Grand Total........................................... 112,797.05
The Chairman. All right. At this time, Members will be
recognized for questions in order of seniority, alternating
between Majority and Minority Members in order of arrival for
those who joined us after the hearing convened. You will be
recognized for 5 minutes each in order to allow us to get to as
many questions as possible.
I am now going to yield to Chairman Thompson for the first
5 minutes.
Mr. Thompson. Well, I thank the Chairman for yielding. And,
gentlemen, thank you for being here. Thank you for your
leadership, and thank you for your written testimony and your
oral testimony.
I am going to repeat a question I asked on the first panel
to get your take on this question. Many of you mentioned
Federal crop insurance in your testimony. And, as you well
know, there has been attempts in Congress to gut the program by
imposing AGI means testing, payment limits, et cetera,
including through an amendment to the debt ceiling bill filed
just this week. Can each of you speak to how these kinds of
proposals would impact the crop insurance program as a whole
and your operation in particular? We will start with Mr. Cates.
Mr. Cates. Well, the crop insurance is vitally important.
There is no question. I remember when I started farming, we
didn't have crop insurance. And if I would have had a 2012 back
when I started farming, it would have been a disaster,
especially with all the loans that I had taken out to be able
to farm. It would have been very hard to go forward during that
time frame. So it is very crucial that we keep the crop
insurance intact, and it is just something that we need to be
able to go forward and to be able to guarantee.
Mr. Thompson. So some of these, what I consider to be
misguided, attempts to implement just adjusted gross income
means testing or payment limits, if that was to go in place,
what kind of an impact would that have on you and on the
industry?
Mr. Cates. I think it would have a big impact overall on
all farmers, especially when you do have payment limitations
because, I mean, there are larger farmers that even though they
are larger and have more income, they also have greater risk
because of their largeness so it is important.
Mr. Thompson. Yes. Thank you.
Mr. Frischhertz?
Mr. Frischhertz. Thank you for the question. So for
sugarcane in particular, we are not eligible for ARC or PLC.
But the sugar program, sugar policy acts as our safety net, and
without that, we do not have sugarcane to farm on our property.
We will be exposed to heavily subsidized dump sugar prices that
are well below the cost of production. We do utilize ARC for
our soybeans that go into our fallow ground. And as a young
farmer just getting into farming, I can't borrow money without
these insurance options. Without them, I am sunk.
Mr. Thompson. All right. Thank you. Thanks for reflecting
on the sugar policy because that also in a misguided way comes
under attack. Our U.S. sugar industry is all family-owned, so
we are going to support foreign families or American farm
families? So thank you.
Mr. Cheyne?
Mr. Cheyne. Thank you, Mr. Chairman. Our take on it is
instead of listening to any cuts into the farm insurance
program, we should actually actively be advocating for
strengthening and improving all aspects of the crop insurance
program. As we look at historical weather patterns or
potentially, if you can believe the long-range forecasters, and
I am sure we all do, the Wheat Belt, the Great Plains could be
set for another weather pattern like the Great Depression and
the Dust Bowl. So as this potentially unfolds, our farmers are
under greater peril because in wheat we have six classes of
wheat grown the width and breadth of the nation. And any cuts
to crop insurance would be disastrous to the American farmer
and the food supply, food security, and I am afraid ultimately
national security.
Mr. Thompson. Very good.
Mr. Cheyne. So therefore, we would urge you to please do
everything you can to help the farmers before you here today
make a good program better.
Mr. Thompson. Very good. I don't have much time left, but I
do want to check with our last two witnesses. Mr. Meeker?
Mr. Meeker. Keep it short and sweet. If it wasn't for
Federal crop insurance, I wouldn't be the sixth generation
farm. My family's farm is in Sumner County, and there is
probably no chance of the seventh generation that is at home
right now being able to take over.
Mr. Thompson. That pretty much says it all. Let's go Mr.
McMillan.
Mr. McMillan. Yes, I don't know that I can add much to that
that these gentlemen haven't covered. But it is a crucial part
of the overall safety net that we have. Our priority is the PLC
program, but we need crop insurance. Like the gentleman just
said, we probably couldn't get an operating loan if we didn't
have crop insurance to show them.
Mr. Thompson. Very good. Thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Chairman.
The chair now recognizes Ms. Brown for 5 minutes.
Ms. Brown. Thank you, Mr. Chairman. As I did with the first
panel, I would like to start out with a question for the group.
During our full Committee hearing, we have discussed the rising
cost of inputs at the farm gate and how those costs ultimately
affect food prices at the grocery store. What are the
predominant inputs required for growing your commodity? And can
you give us an idea of input price increases and any
corresponding price availability? And I would like to start
with Mr. McMillan and work my way back. All of you, but I will
start with Mr. McMillan, please.
Mr. McMillan. Yes, I am sorry. You are asking about our key
inputs, and what was the last part of your question?
Ms. Brown. The input prices increases and corresponding
price availability.
Mr. McMillan. Yes, so our key inputs are anything from
seed, fungicides, and crop protectants are a big part of our
inputs. Our cost of production has increased significantly, and
that is why the cost of production needs to be tied to the
reference price, and we need to see that reference price
increase.
Mr. Meeker. Some of my crop inputs would be fuel and
fertilizer, of course, labor. The labor market is a huge part
of my input cost as well. Those predominant prices have gone up
anywhere from 100 to 300 percent. My cash price has not done
that. And when I go to the grocery store--I get to luckily do
most of the grocery shopping at our house. And when I go to the
grocery store with the list that my wife provides for me, it
hits me at about that same amount, too. And it is devastating.
It has been devastating in my community at the grocery store
and at the farm level. And we would love to engage with you on
how there can maybe be some corrective measures taken by this
Committee and the full Committee.
Mr. Cheyne. Using the USDA's total cost of production, the
average cost of production over the past decade was $7.12 a
bushel. Meanwhile, the wheat reference price is $5.50, and the
FSA loan rate is $3.38 a bushel. I think we can draw a little
bit of a conclusion what is going on there. Where I farm in the
Klamath project, my power cost can hit $126 an acre for 130
bushels of wheat and poor-cutting alfalfa crop. My irrigation
district going in, it will be $85 an acre next year. I just
paid 49 a pound for spring wheat seed. It is going to be late
going in. It is not going to stool, it is not going to tiller.
It will be 200 pounds of seed at 50 , over $500 for fertilizer.
And there are times with interest and the rising cost of fuel,
you begin to wonder why you even bother. But I love doing it,
so I will bother.
Ms. Brown. Thank you.
Mr. Frischhertz. Like most have said on this panel, it is
labor, fuel, diesel, and input costs, fertilizer. I could speak
directly to our farm. From 2021 to 2022 we spent from right at
$127,000 to over $250,000. And that is just in 1 year. Our
potassium went from $330 all the way up to over $1,000 a ton.
Labor, like everywhere, is difficult to come by these days. It
is a tight labor market.
But one note I would like to make, as commodities, we are
price takers, not price makers, so we are at the beg and mercy
of the market.
Mr. Cates. And everybody has pretty well said a lot. The
same thing for me. My input costs are fuel, the seed,
fertilizer, everything--fertilizer has more than doubled from
last year, a year ago. Our seed price has gone anywhere from 20
to 35 percent higher, diesel fuel has almost doubled from what
I was paying 2 years ago. And so according to the University of
Illinois, the cost of production for soybeans, break-even is
$12.39. That is at least in Illinois. I cannot speak for the
rest of the country. And, all of us, because we are so
widespread, the cost of production for different farms can vary
from that price.
Ms. Brown. And I see my time has expired, so I will have
other questions for the record. Thank you, Mr. Chairman. I
yield back.
The Chairman. Thank you, Ranking Member Brown.
And you have all hit on this a little bit, but I want to go
back just again and reiterate this. So you were talking about
soybeans, and you said the average cost of production is
$12.39. And according to my records, the reference price is
$8.40 and loan is $6.20. And if we could, I know you don't have
a reference price on sugar. What is the loan rate on sugar?
Mr. Frischhertz. I believe it is 19.75 .
The Chairman. Okay. And as we go down the path, wheat, do
you know the average cost of production in the country, Mr.
Cheyne?
Mr. Cheyne. I was having difficulty hearing. Could you
please repeat the question?
The Chairman. For wheat, what does it cost you to produce a
bushel of wheat?
Mr. Cheyne. Our cost of production we figure is about $7.12
a bushel.
The Chairman. Okay. And reference price being $5.50 and
loan is $3.38 on wheat, is that correct?
Mr. Cheyne. Yes, but $5.50 on wheat, right.
The Chairman. $5.50 reference price, but loan would be
$3.38. And I assume that few people will use loan anymore
simply because the values are so low. Is that----
Mr. Cheyne. That is correct.
The Chairman. Is that correct? And so Mr. Meeker, for your
crops what is the average cost of production and reference
price?
Mr. Meeker. Well, I only prepared for sorghum today so I
can't talk to all of them.
The Chairman. Okay.
Mr. Meeker. I could text Dad. He could probably get me
pretty quick, but for sorghum, it is----
The Chairman. Well, just give it to us on sorghum.
Mr. Meeker. For sorghum it is a $5 break-even, really
close.
The Chairman. Okay.
Mr. Meeker. I can get you closer to that if you want, but
$5 is a pretty good break-even cost.
The Chairman. No----
Mr. Meeker. Our reference price is $3.95. And the loan rate
in Sumner County is $3.99 per hundredweight----
The Chairman. Do you----
Mr. Meeker.--which is far below the cost of production.
The Chairman. Okay. But your loan rate is $3.39?
Mr. Meeker. Per hundredweight.
The Chairman. Okay.
Mr. Meeker. Not per bushel.
The Chairman. Okay. I got you.
Mr. Meeker. I would have to do----
The Chairman. That explains why my numbers didn't make----
Mr. Meeker. Yes, so I would have to do some figuring here.
I couldn't get to the website where it figured it by bushels.
The Chairman. Yes. Yes. So I will spend a little more time
with you, Mr. McMillan. You mentioned that across peanut
representative farms the cost of production per ton increased
26.31 percent from 2021 to 2022. You also state total variable
input cost increased 33.48 percent and that reference prices
haven't been a functional safety net since the 2021 crop year.
Now, you are an eighth generation farmer and your family has
weathered a lot of events over the last 250 years. That
reference price on peanuts, $535 a ton, loan is $355 a ton.
Mr. McMillan. Yes, sir.
The Chairman. Do peanut farmers use loan anymore with that
price as low as it is?
Mr. McMillan. Yes, sir. I mean, I believe that----
The Chairman. You do still----
Mr. McMillan.--the Marketing Loan Program is used by a lot
of peanut growers.
The Chairman. At the same rate that it was 5 years ago or
10 years ago?
Mr. McMillan. Yes, sir.
The Chairman. Okay.
Mr. McMillan. I mean, and potentially, that could be looked
at for an increase.
The Chairman. All right.
Mr. McMillan. We have looked at it with an economist, and
we think that the most beneficial thing for growers is a
reference price increase. And that is what would help them the
best.
The Chairman. Okay.
Well, can you expand a little further on how you and future
generations will be affected if we don't increase reference
prices and improve that safety net? And I also want you to
explain why we should have a voluntary base acre update.
Mr. McMillan. Yes, so if we don't have----
The Chairman. And I have a minute.
Mr. McMillan.--an increase in the reference price--and let
me just say, we really don't want to be reliant on a safety
net. We don't want to be in that position, but we need it. And
if we don't have an increase in the reference price, what is
happening with that deficit that we have from $535 to $668,
that is being rolled over into land loans. We are using up the
equity that we have in our equipment. Eventually, it is going
to catch up with us, and we aren't going to be able to stay in
it very much longer.
And then for the base update, we would like to see those
new growers that are in Florida, Arkansas, Missouri, these new
areas, and even in my own state, if there are growers that
haven't had the chance to get base, see a voluntary base update
from growers with and without base.
The Chairman. All right. Thank you all for your testimony.
I now recognize Ms. Davids of Kansas for 5 minutes.
Ms. Davids of Kansas. Thank you, Mr. Chairman. And thank
you to our witnesses this afternoon and our witnesses on the
earlier panel as well. I represent the 3rd District in Kansas,
and the 3rd District is home to small-, medium-sized family
farms, urban and rural areas, everything from hobby farms to
poultry producers, specialty crops, some row crops. And then,
of course, the State of Kansas grows a lot of commodities that
support not just our country, but the entire world.
And I am wanting to better understand Title I programs and
the tools that are being used. We have heard some of that
today. And as I am kind of talking to folks at home and
learning, I definitely have heard a lot about the ways that
USDA programs work or maybe sometimes don't. And we have heard
a bit about them today, ARC and PLC, and those are administered
by the Farm Service Agency. I am wondering if you all could
talk to me a little bit more about that. In the 3rd District,
we have a consolidated Miami and Johnson County Farm Service
Agency. It is in Payola and they help tons of people. And I
also know that they are having a hard time finding staff. They
are doing as much as they can to help people, but there are a
lot of folks who are retiring. That institutional knowledge is
leaving. And, that also means the newer folks are taking on
increased workloads.
I am curious. Mr. Cates, if you could talk a bit about--
because you mentioned a bit about this in your testimony, in
your farm bill priorities about us considering USDA staffing
and then the technological capabilities. Could you just kind of
expand on that a little bit and talk to us about the FSA
offices and appropriate levels of staffing and that sort of
thing?
Mr. Cates. Staffing at NRCS and at the Farm Service
Agency--luckily in my county--well, NRCS is short-staffed in
both counties that I farm in Monroe and St. Clair County. And
the FSA agency, both have positions that they need but are told
that they cannot hire at this point. Luckily, we have a good
enough staff that we are getting it done, but they are both
short-staffed. And the NRCS is very short-staffed and have
concerns with the new conservation programs that have been
initiated back in December with that bill, whether or not with
such shortage of staff if that money can be appropriated in a
timely manner to get the conservation programs done that need
to be done in that time frame.
Ms. Davids of Kansas. I saw a lot of heads nodding, and I
was going to move on, but I think I will probably--because I
wanted to talk some about the reference pricing and base acres
and that sort of thing. But if others want to chime in on this
and then I will follow up with like written questions to you
all.
Mr. Meeker. So thank you for the question, Ms. Davids, and
thank you for what you do for this service for the State of
Kansas. I appreciate that. I fall in Congressman Estes'
district, but thank you for your work in the Kansas City area.
The FSA offices, they are overwhelmed, quite frankly. And
because of ad hoc disaster assistance and other CCC funds that
have gone through the offices, they have been overwhelmed. It
is pretty hard for them to do the things that they typically do
every day or should be doing every day, and it is hard for them
to get through that work list when you have so many of these ad
hoc disaster programs or other programs that are coming in. I
would love to see some sort of a disaster program that is
predictable that comes through the farm bill that is part of
their normal working daily things and have a smaller reliance
upon ad hoc and other emergency disaster assistance. I think
that would do very well.
And the technology, I can see what my dad is doing today on
the farm with my phone. I can do a lot of things with FSA from
my phone, too, and I would appreciate that opportunity.
Ms. Davids of Kansas. Oh, awesome. And I will absolutely
follow up with additional questions. Thank you. I yield back.
The Chairman. The chair now recognizes Mr. LaMalfa for 5
minutes.
Mr. LaMalfa. Thank you, Mr. Chairman. And thank you to our
panelists for coming in here for our round two here today. It
is very important we get to the bottom of what you are facing
and as we help to shape the farm bill with that. Our listening
sessions around the country have been pretty helpful as well.
So I want to come to Mr. Cates there. I have a question
here on the testimony you submitted. A USDA report did project
a 20 percent drop in net cash farm income in 2023 relative to
2022. So is that as an equal component of price of your
commodity or costs that continue to go up? And all ours
skyrocketed in 2022. How would you explain the 20 percent drop
in net cash?
Mr. Cates. It is going to be a combination of both input
cost to us and also the drop in the commodity prices.
Mr. LaMalfa. So equally both?
Mr. Cates. Yes.
Mr. LaMalfa. Yes. All right. I have the same input costs as
you all with farming rice in California, so our fertilizer
tripled last year, fuel doubled, and I am a rice seed grower,
so I don't complain about seed prices as much. But it is the
same for them. To produce that seed, they have to recoup to get
it back from you all to buy the seed, too.
What do you think--and just go across the panel if you
wish--on our energy policy in this country that obviously our
fuel comes from gas and diesel but also where our energy is
used to produce nitrogen, fertilizer, et cetera. Do you want to
just whistle down the line there, each give you 10 or 15
seconds on that?
Mr. Cates. Yes, our energy prices are definitely having an
impact on our cost of production, as you said, with the
fertilizer cost, so that depends on fuel. Our diesel prices
have increased, so it is definitely a huge impact on our energy
price.
Mr. LaMalfa. What should the United States be doing about
energy?
Mr. Cates. We definitely need to be able to try and lower
the energy cost somehow.
Mr. LaMalfa. Right.
Mr. Frischhertz. For sugarcane in particular, we are all
very proud to say that we use the sugar rind, the rind of the
sugarcane to run our mills as a renewable source of energy, and
it is something that that helps keep us going and keep us very
sustainable. As everybody's going to mention on the panel, yes,
diesel costs have eaten into margin. This has made it very
difficult. Anything that can be done to help that would be very
welcomed.
Mr. LaMalfa. Okay. Mr. Cheyne?
Mr. Cheyne. I believe that the fuel and fertilizer costs
are really hurting us and hurting us badly. My suggestion would
be, I think this nation is capable of getting some type of like
a small-scale Manhattan Project off the ground where we could
get environmentally friendly fertilizer plants here in America
close to the source where they need to be used and get these
products out to the American farmer. And I think we can do as a
nation a much better job than what we are, just food for
thought.
Mr. LaMalfa. Yes, sir. All right. I am going to end it
right there on that question. Mr. Cheyne, do you want to talk
to me about your particular situation in your basin there with
water supply?
Mr. Cheyne. Well, sir, I think you are one of the more
well-versed people I know, but our situation in the Klamath
Basin is very, very unpleasant. We have over 200 percent of
snowpack. We are going to get maybe 60 percent of our
irrigation allocation because of the Endangered Species Act. We
are told that the ESA is the law of the land. I have come full
circle where I look at the ESA as the flaw of the land. And
while it is, our resource of irrigation, water is being taken
for the Endangered Species Act----
Mr. LaMalfa. From the Klamath Project with agriculture in
mind directly.
Mr. Cheyne. On the Klamath Project, yes, sir.
Yes, being directly denied the resource. And we are being
told by agencies in the Federal Government that we have no take
because the ESA allows it to be taken.
Mr. LaMalfa. So you are not out anything. They just get to
come in your house and take your stuff, but since it is ESA, it
is not considered actually a taking.
Mr. Cheyne. Correct.
Mr. LaMalfa. Yes, that is----
Mr. Cheyne. That is a perfect analogy.
Mr. LaMalfa. Yes. So you faced this in 2020--well, the last
3 or 4 years of having your water----
Mr. Cheyne. Yes.
Mr. LaMalfa. Well, in 2020 they want to take the water mid-
season after you were planted, and we were able to help get you
through that season last year----
Mr. Cheyne. Yes.
After our crops are already dead, they make the decision to
give a little bit of water.
Mr. LaMalfa. Yes.
Mr. Cheyne. I guess I feel better now that I have given up
all hope.
Mr. LaMalfa. I will yield back, Mr. Chairman.
Hang in there. God bless you.
Mr. Rouzer [presiding.] Don't ever give up hope.
Mr. Bishop, you are recognized.
Mr. Bishop. Thank you very much. Let me thank all of you
for appearing today. You have been very, very helpful and very
frank, and you have covered a lot of the areas that I wanted to
raise with you.
Can I get you to just in a general sense talk about the
process that a producer has to go through to fulfill
eligibility requirements like demonstrating that a producer has
met the adjusted gross income limitation, actively engaged
requirements? Is it a straightforward process? If each of you
could just tell me how that impacts your areas. Start with Mr.
Cates if you would quickly.
Mr. Cates. I guess can you repeat that? I didn't quite hear
it all.
Mr. Bishop. I was wanting to know how the process that a
producer, one of your commodity compatriots, has to go through
to fulfill the eligibility requirements. I know that the
eligibility requirements you have to demonstrate that you have
met the adjusted cost gross income limitation, that you are
actively engaged, that it is actively engaged. And those
requirements for eligibility, are they straightforward or do we
need to do something in the farm bill to try to clarify it?
Mr. Cates. In my area, I think it is pretty
straightforward, the eligibility for the termination of our FSA
programs.
Mr. Frischhertz. Yes, I would echo that. It seems pretty
straightforward. Honestly, we go to the CPA and work very
closely with them and then turn that in to FSA.
Mr. Cheyne. I think they are very straightforward. I am
fortunate that I have a very good staff at my FSA office. I
would just throw out the only flaw I see in reference to her
question, State of Oregon, we got 36 counties, but I think we
are down to maybe five FSA loan officers. The one servicing my
county has a 4 hour drive one way. So if we want to get any of
our new next generation farmers involved, I would suggest that
we look into staffing and sustainability in the staffing
because you just get a really high-quality person trained, they
get headhunted by a private bank, and we are back to ground
zero.
Mr. Meeker. The paperwork seems to be pretty
straightforward for us.
Mr. McMillan. I agree with these gentlemen. And our FSA
office helps us out very well.
Mr. Bishop. Well, I serve on the Appropriations Committee,
and staffing is an issue that we hear about, as well as the
technological upgrades for the Department. Do you have any
comments? I think I have heard you in response to Ms. Davis
talk about that. But I guess you pretty much laid it out that
it is understaffed. And you need to take full advantage of new
technologies, and that would be helpful. Is that correct? I see
all of the head nods.
But tell me about the input prices. The economic conditions
for your commodity obviously has changed since the 2018 Farm
Bill. So your energy prices, I assume, are impacting your
business. Tell me about the input increases, and how do you
think we can actually accommodate that in the farm bill? Price
loss when you got prices high, but input prices are up. So how
do we need to factor that cost of input into the farm bill that
will give you the safety net that you need?
Mr. Meeker. The problem isn't today. The problem is
probably a year or 2 from now when we have low commodity prices
with still high input prices. That is when there is going to be
a real issue. And you are probably not going to be seeing many
people my age that would be testifying and definitely younger--
--
Mr. Bishop. What about margin protections? Is that an idea
that you think would work?
Mr. Meeker. There are some ideas with margin protection. We
have looked at it with the sorghum industry, and we haven't
found a good fit yet. But that is something that we are going
to continue to actively work on. But again, I think the issue
is going be coming in the future, not today.
Mr. McMillan. For peanuts, I think that the Price Loss
Coverage Program works really well. And when you factor in--or
the framework is very well if we have a reference price
increase. And when you factor in the cost of production with
that reference price, then that protects us really well.
Mr. Bishop. Thank you. I think my time has expired.
Mr. Rouzer. Mrs. Miller?
Mrs. Miller of Illinois. Yes, thank you to everyone for
coming out for this hearing. And I want to say, Mr. Cates, it
is so nice to have a fellow Illinoisan here and a fellow
soybean producer. So in the last panel and also this panel, we
have been talking about the importance of our insurance
protections. And I was wondering if you could discuss how crop
insurance has benefited you on your farm.
Mr. Cates. It is been a huge benefit, especially to make
sure that there is some protection in case of a weather
disaster. There has been in my own particular--almost every
year, I used crop insurance--we have some kind of weather event
in the spring that I have to come back and either replant some
corn or some soybeans, and so I am using my crop insurance to
help pay for that replant. And the biggest thing is in case of
a huge weather event like we had in 2012, if it wouldn't have
been for my crop insurance, it could have been a true disaster
in making sure that you could put a crop out the following
year.
Mrs. Miller of Illinois. Thank you. I would like to say
that crop insurance gives us the courage to go on another year,
doesn't it?
So also in light of inflation being on the rise, you have
all shared how input costs are skyrocketing to a painful place
and then with the Federal Government raising interest rates.
What I am worried about is that credit could potentially become
too expensive for producers. So would you each share with me if
you have any ideas, how do you feel this will impact the
agricultural community? And how can we begin to prepare a
safety net for farmers now? Mr. Cates, would you like to go
first?
Mr. Cates. Yes, the rising interest rates is definitely--
especially for beginning farmers going to be huge. I mean, just
my operating loan from Farm Credit right now has jumped to 8\1/
4\ percent.
Mr. Frischhertz. As a younger farmer really just starting
out, it has been a major hurdle to overcome with rising
interest rates. We will see younger farmers not have the
ability to purchase the equipment they need to really enter the
industry. It could be a big hurdle for most.
Mr. Cheyne. Interest rates are becoming a significant
problem in farm country. I had loans a couple of years ago that
were at three percent. My banker and I actually got along. Now
they are at ten percent. We are not seeing eye to eye so much.
Mrs. Miller of Illinois. That is painful.
Mr. Meeker. Access to credit is a huge thing for me on my
operation. Federal crop insurance allows me to access that
credit. It allows me to leverage what I know my production is
to manage my risk. It is the largest risk management tool I
carry in my toolbox Federal crop insurance, and it helps me
mitigate some of that risk of interest. However, as we see
rising interest rates, it is going to be the ones that have the
financial stability and ability who will be able to continue to
farm, not the ones that have to use lending as an option. And,
my dad has a different checkbook than I do. My dad is liable to
still be farming, and I will be looking for a job in town
again. And my dad is 70. I am 40. I think I have a lot more
opportunities to farm physically than my dad does, but his
checkbook allows him to farm a lot longer than mine does.
Mr. McMillan. Yes, I will just echo something that he just
said. As credit becomes tighter, I may be looking for something
else to do. And I don't know that folks my age will be able to
continue to farm. And then that is a food security issue.
Mrs. Miller of Illinois. Thank you. And, my husband and I
are farmers, so I feel your pain.
And then, Mr. Cates, one last question real quick. Trade is
out of this Subcommittee's jurisdiction, but do you support
increased investments in trade promotion programs such as MAP
and FMD?
Mr. Cates. Definitely. It needs to be doubled. With the MAP
at $200 million, and when you take inflation into
consideration, we are only really getting about--compared to
what it was in the beginning, $113 million out of that is
compared to what it was in the beginning, 18, 20 years ago. So
yes, it definitely needs to be increased because that FMD and
MAP program is what will help secure future trade in areas in
case we have another situation like what happened with China.
Mrs. Miller of Illinois. Yes, and we don't want to be left
behind. Thank you.
Mr. Rouzer. The gentlelady's time has expired.
Ms. Budzinski?
Ms. Budzinski. Thank you, Mr. Chairman. And thank you,
Ranking Member. I appreciate it. And thank you to the panelists
for being here today. I was hoping I could ask you a little
different question, but just to get your thoughts on it, which
regards young farmers. I have an Agricultural Advisory Council,
and I am in central and southern Illinois and that help
provides real feedback to me as we are in these farm bill
negotiations and having these hearings. One of the things that
I heard from the very first meeting was the need to create more
of a pipeline and bring new people, young people into
agriculture. And I know you have talked a little bit about some
of the challenges that current farmers are facing, but as we
are trying to attract the next generation of farmers, what we
can be doing. And last week, I was really proud to help
reintroduce the Young Farmers Success Act (H.R. 2728), along
with our gracious Committee Chairman G.T. Thompson, which works
to expand Public Service Loan Forgiveness Program for certain
farmers. And I am also working on other legislation to expand
access to young and beginning farmers as well. I would
appreciate your thoughts on what we can do to entice more
individuals to go into farming.
Mr. Meeker. Access to credit through FSA would be an
incredibly important tool. For me, it was not something that
was actually a viable tool for me to use because how I entered
into the operation. By the time I needed to start securing
those loans that were of consequence to the operation, I had
already been in farm production for more than 5 years, so I was
no longer a young or beginning farmer. However, I was still a
young and beginning farmer in the real terms. And so I think
looking at how we maybe evaluate and we maybe look at how those
rules are written, that might be a really good option.
I am a child of the 1980s. I saw my dad in the 1980s farm
crisis. I don't want to be that for my children, and access to
credit and making sure that they can just--excuse me.
Ms. Budzinski. Take your time.
Mr. Meeker. It is an important thing to have young
generation on the farm, and we need to figure out how we can
continue to entice the young generation to the farm and not
export the greatest generation that we have, and that is the
next one.
Ms. Budzinski. Thank you.
Mr. Cheyne. I would urge a complete overhaul of the FSA
Beginning Farmer Program. It, like me, has gotten old, and it
is tired. It needs an upgrade. As a casual observer of the
program from a safe distance, a young farmer gets just enough
money out of the program to get in real trouble real fast, and
the rug gets jerked out from under them at warp speed. And if
they had an adequate capital to get up and running on their
feet and going, I think we could manage to get some real
success stories. As it is, when they get the rug jerked out
from under them, that generation has lost agriculture, that
skill set, all that knowledge. It just goes to town and it is
lost. So I would ask you to conserve some of your money to give
that program a complete overhaul.
Ms. Budzinski. Thank you. Anyone else on the panel? I
appreciate your candor and your stories, personal sharing, your
thoughts on that. I had one other question. I know we have
talked a lot about crop insurance, but I think something that,
Mr. Cheyne, I think you mentioned during your testimony was
just the impact more largely for rural communities and the
importance and the connection between fully investing in our
crop insurance program and what that means more largely to our
rural communities. I think you mentioned banking and access to
extending lines of credit, what that might mean, though, more
broadly. If any of you might be willing to speak to that, the
impact and the importance of crop insurance for our rural
communities.
Mr. Cheyne. Well, as many farmers get in debt with their
vendors, it is before we know that we have a disaster on our
hands. When we get that insurance payment, we are able to get
our bills paid. Not only does that keep us whole, we keep our
vendors whole, so it gives a ripple effect out through the
community, and it is a stabilizing hand on the community. And I
think that is of paramount importance because the PLC safety
net, the price has to fall by almost \2/3\, 62 percent. And by
the time, I am used to watching disasters unfold, but by the
time you fall that far, you might have a heart attack and be
gone before the net catches you, so it is too much, too little,
too late.
Ms. Budzinski. Okay. Thank you. I will yield back. Thank
you.
Mr. Rouzer. I thank the gentlelady.
Mr. Finstad, you are recognized.
Mr. Finstad. Thank you, Mr. Chairman.
And first of all, Mr. Meeker, thank you for reminding me
why I am doing this. And I am a little jealous. I am the fourth
generation farmer in our farm raising the fifth, but you are
the sixth going on the seventh. That is awesome. And really,
that just solidifies what we are doing here and why we have to
get this right. We have to make sure that we write a farm bill
for the farmer by the farmer. And again, it is not for you and
I. It is for our kids. It is to make sure that the John Deere
tractors keep farming my farm for generations to come.
And so thank you all. We have had really an awesome
opportunity to have ten amazing witnesses today come to talk to
us about what the family farm looks like. And it looks
different. Each one of you describe something very different.
And for us, that diversity and that uniqueness is what really
makes farm country amazing. And really, just the honor for us
to work in the most honorable, noble profession that this
country has, and that is farming. So thank you for being here
and representing your commodities.
I am a corn and soybean farmer from southern Minnesota. I
raise corn, soybean, and kids. And I am just really, really
honored to be here and to have you here in front of us. I did
some math. As a farmer, commonsense farmer, I like to play
around with numbers and try to figure out how do I get to that
next generation of farm succession planning? And so if I look
at reference prices $3.70 for corn, $8.40 for soybeans, I just
quickly looked up my local co-op, my July corn right now is
$6.16. July beans is $14. I look at break-even, $5.10 for corn,
$12 for beans, doesn't take a math genius to figure out that we
are pretty tight. Reference prices, this Title I, what is this
ARC and PLC we talk of? I haven't seen this or heard of it. I
don't know if we are sure what it is. Crop insurance has been
the number one tool on our farm that has really provided me the
opportunity from day one with the banker to end of crop, in the
combine, marketing decisions. And that is what provides the
opportunity to continue.
So as we look at safety net, as we talk about crop
insurance, as we talk about ARC, as we talk about PLC, my
question, and I will start with you, Mr. Cates. What is it like
to farm knowing that you do not have really an effective Title
I farm safety net with the ARC and PLC where we are at right
now? And what should the Committee do to focus on improving
this in the future?
Mr. Cates. It is a little scary knowing where we are at,
and so that is why it is so important to get it right, right
now, to be able to raise the ARC and PLC, get the program to
the point of being able to get where we have to be able to--I
am losing my thought here.
Mr. Finstad. Probably reference pricing----
Mr. Cates. Yes, the reference price.
Mr. Finstad. Yes.
Mr. Cates. We have to be able to get that at a different
level where we are more competitive than where we are right
now. That reference price for every one of us sitting here is
way too low.
Mr. Finstad. Yes. And I appreciate that comment. And if you
just look at the conversation that we just had in regards to
the inputs, look at the reference price, the break-even that I
just talked about, we are already upside down.
Mr. Cates. Right.
Mr. Finstad. And when we talk about generational farms like
Mr. Meeker and myself and all of us are working so hard to
preserve, that makes or breaks a generational change of farm if
you are upside down. You can only sustain that, obviously, so
long, and especially from a young farmer perspective. So, I
mean, I think this is something important, something that we
have to get right in the farm bill.
I have about a minute left here, so I will move along. Just
quickly, just maybe kind of a yes or no up and down the line
here. I hear from Minnesota farmers, the FSA loan size
limitations haven't kept up with the rising prices. We talk
about the inputs, we talk about farmland prices. The current
cap makes it more difficult for farmers, especially beginning
farmers, to access the FSA guarantee loans. So I guess just a
quick yes or no up and down the line. Do you think that farm
country would benefit from modernizing these limits in the farm
bill?
Mr. Cates. Yes.
Mr. Frischhertz. Yes.
Mr. Cheyne. Absolutely.
Mr. Meeker. Yes.
Mr. McMillan. Yes.
Mr. Finstad. And I appreciate that. And I would just close
with this. It hurts my heart a little bit to hear the shortage
of staff on the FSA side. The USDA has 100,000 employees. I
think we have a prioritizing problem, not maybe a staff
shortage, so we can work on that. And I look forward to working
with my colleagues here on that.
Mr. Chairman, I will yield back.
Mr. Rouzer. The gentleman yields back.
Mr. Davis?
Mr. Davis of North Carolina. Thank you so much, and to the
Chairman and our Ranking Member, thank you for having us here.
And to the gentleman from North Carolina, Mr. Rouzer, it was
great joining you in eastern North Carolina with the gentleman
from California there, so I just want to recognize you for
that, and then on the forums.
To our witnesses who are here today, it was great chatting,
saying hello earlier, and thank you for being with us. And it
is obvious as we hear not only the wisdom but the passion that
you bring, and thank you for doing the Lord's work here.
To ensure a robust agriculture sector in eastern North
Carolina, we must strengthen the safety net for our soybean
producers. In doing so, Congress must address the growing
discrepancy between plant acres and base acres, which ballooned
to 30 million acres last year. Now, Mr. Cates, what specific
steps can Congress take to close the Agriculture Risk and Price
Loss Coverage gap to assure soybean farmers that they will have
protection in the event of a trade war with China or other
unforeseen market shocks?
Mr. Cates. Well, several things would be to increase the
reference price, change the ARC so that it is more up-to-date,
and we need to go ahead and be able to have a voluntary base
update for the farmers that would also be beneficial to even
those young farmers.
Mr. Davis of North Carolina. Okay. In the most recent Ag
Economy Barometer report cited input costs as the top concern
for producers for the year ahead. In an inflationary
environment, fertilizer costs are putting the squeeze on our
farmers, as you mentioned in your testimony, Mr. McMillan. In
your capacity representing the U.S. Peanut Federation, would
you, Mr. McMillan, support initiatives to onshore the
production of fertilizer to stabilize long-term prices and
avoid dependence on strategic competitors if doing so would
even mean higher prices in the immediate short-term?
Mr. McMillan. I may have to get back to you in the written
record on that question, but I do think something needs to be
done about these increases that we are facing because, like I
said in the testimony, we have seen prices double, even triple,
and it is hard to move from one year to the other with those
kinds of increases.
Mr. Meeker. Could I speak to that, please?
Mr. Davis of North Carolina. Please.
Mr. Meeker. So I think I would love--I am not an energy
guru by any stretch of the imagination, but I do know that the
American spirit is that if you give us a challenge, we will
meet that challenge and usually beat it. And I think it would
be fantastic to unleash the ability of our economic energy--or,
excuse me, of our domestic energy program to not only produce
that domestic energy, but also the domestic fertilizer. And I
think short-term, yes, you may have a price hike, but we have
had an incredible price hike already. I mean, what is ten
percent more really? Not much. But if we can have long-term
sustainability with a domestic supply of energy and fertilizer,
I would welcome that any day.
Mr. Davis of North Carolina. Thank you for that. And, Mr.
Cates, can you walk me through the consequences if Congress
fails to provide adequate funding for the Market Assistance
Program, the Foreign Market Development Program as tensions
ratchet up with our trade competitors, including China?
Mr. Cates. I think you are going to see a situation where
it is going to be very harmful to the farmers and the future of
farming or the next generation of farmers because without it, I
think you are going to see the young generation not want to
farm and that those that are in it could have difficulty
continuing the farm.
Mr. Davis of North Carolina. Well, again, I thank this
panel, and I yield back.
Mr. Rouzer. The gentleman yields back.
Mr. Rose is recognized.
Mr. Rose. Thank you. I appreciate our witnesses bearing
with us today and being here.
One of the core charters of this Subcommittee is risk
management, and I want to talk a little bit about data privacy,
which maybe is something we haven't talked about today, unless
I missed it, Chair Rouzer. We have seen a number of high-
profile data breaches and cyber attacks in recent years kind of
across the spectrum, but oftentimes targeting government. And I
would like to ask each of you from the perspective of the
producers that you represent to discuss how concerned you are
with maintaining the privacy of your individual data and how
important it is to make sure that USDA doesn't release private
farm data without the consent of the producers that you
represent. Would anybody liked to talk about that?
Mr. Cates. Well, I think it is very important that the data
be kept private, what is the farmer's data should be the
farmer's, and it should only be up to that farmer if he wants
to share that data.
Mr. Rose. Anyone else want to weigh in on that?
Mr. Frischhertz. Well, at this point, it is almost like
farming on your phone. Before this Committee started I was
checking on the tractors in the field right here, and it scares
me quite a bit that one little breach on this phone could bring
our operation to its knees. It is something of very high
priority and, honestly, nobody has really tackled this issue to
that point.
Mr. Rose. As a follow-up, I would like to ask each of you
to comment on how safe do you feel that your private data is in
the hands of USDA? Do you feel confident about that? Is it----
Mr. Cheyne. I guess I would say I, sir, am an eternal
optimist. I would hope that my data is safe, the same way I
would hope my bank is keeping the data on my money safe. It has
real and lasting and meaningful value to me. And I didn't get
all of that data compiled just so some schmuck could steal it
from us collectively.
Mr. Rose. Has anyone had a bad experience or know of one
with respect to USDA-held data?
Mr. Cheyne. I have a perfect track record in keeping it
whole, and I hope to get retired with my record intact.
Mr. Meeker. I don't have a specific issue, but I think that
it is an issue that we probably ought to think about and
address. We do a lot of things much differently than we did 20
years ago, 50 years ago, and I think our thought process
probably needs to be modernized across the board, whether it be
with data security or financial lending from the FSA as well.
Mr. Rose. Let's shift gears then. In March's Ag Economy
Barometer published by Purdue--and I am a Purdue alum, so I
picked this question out so I could say Purdue a couple of
times, maybe fit it in three or four. Surveyed producers listed
high input costs and rising interest rates as top concerns for
farmers. Can each of you speak to how these issues are
affecting your operations, and probably you have already to
some degree covered this but with a specific reference to the
support programs and the level of support that is currently
available vis-a-vis the inflation that we have seen in those
input costs?
Mr. Cates. Well, like I say, with the rising interest
rates, it is definitely a concern. I mean, I am in fairly good
shape. The problem is, at the end of the year I have run out of
money, and so to purchase the inputs for the next growing year
usually in December, I am having to borrow operating. And like
I said, every time the Federal interest rate goes up, guess
what, my farm interest credit from Farm Credit interest rate
goes up. I am at 8\1/4\. By the time December comes, I might be
over nine percent interest for my operating loan, so it is a
major concern.
Mr. Frischhertz. Rising input costs, really they bring home
the point that we need strong sugar policy in the farm bill.
That is our safety net. Without it, we are sunk.
Mr. Rose. Sure.
Mr. Cheyne. Input costs are becoming a major headache. I
have one bank that I deal with that is up to ten percent
already on one line of credit. Some of my fuel and fertilizer
has almost tripled the last couple of years. So yes, we are
having to cut back, try to get less done with more. There are
certain improvements that will not be made in a timely manner,
and that is impacting the efficiency of the farmer. And that is
the one thing we can really control, and it is being taken away
just through attrition.
Mr. Rose. And of course, you will just raise your prices if
your input costs go up, right? All right. Thank you. I see my
time has expired. I yield back.
The Chairman [presiding.] The chair now recognizes Ms. De
La Cruz for 5 minutes.
Ms. De La Cruz. Thank you so much, Mr. Chairman, for
hosting this important hearing.
The farm bill isn't something that happens every year,
which I think is good as it allows Congress the time to look at
the policies in the past and see whether they have been working
or not working. As a result, we are able to make good, informed
policy changes to strengthen the farm safety net and support
rural America.
I look forward to working with my colleagues on the other
side to help strengthen this industry and to support
stakeholders across this industry with good legislation and
specifically working with our farmers in Texas and across this
country.
Now, my question is really to everybody on this panel. I
know in talking to producers in my area crop insurance is
really critical. I come from an insurance background. That is
my previous life being in insurance, and so I understand how
important insurance can be. Now, for the most part, lenders
require farmers to carry insurance, and generally, it works
well. Could each of you briefly comment on the role crop
insurance plays in your industries and the typical policy
carried by your member?
Mr. Cates. Well, I carry 80 percent on my corn and 70
percent on my soybeans. It is critical for the crop insurance.
I think one thing that would be helpful if we could have maybe
a higher rate at a more advantageous cost factor to the farmer
would be helpful. I think the big thing is, ad hoc is supposed
to be for a major disaster, and I would rather see money spent
into the crop insurance to maybe lower our premiums at a higher
rate of insurance. That would be more advantageous than
worrying about an ad hoc program and whenever just anything
comes about.
Ms. De La Cruz. Thank you. And I would like to hear from
each of you what changes or improvements you think we can make
in this specific area, and if you are a specialty crop, how
insurance has been effective in your specialty crop.
Mr. Frischhertz. So sugarcane, we are not eligible for ARC
or PLC. There are insurance products available. Our farm did an
analysis about 3 years ago and just found it to be too
expensive for the coverage that is available and honestly just
wasn't a viable option for us. The Hurricane Insurance Program
has been invaluable for farmers, especially along southern
Louisiana, but for our farm where we are located, it was just
too expensive for the coverage available.
Ms. De La Cruz. Thank you.
Mr. Cheyne. Yes, on my farm we utilize an 80 percent yield
protection coverage. I choose this because it is the highest
amount I feel that I can afford. I would like to insure it at a
higher level, but the premiums become too expensive for us to
pay. So as others have stated, I think it would be very
beneficial to strengthen the crop insurance program and
eliminate the need for ad hoc programs down the road. And I
guess I view it no different than a homeowner taking fire
insurance out on a home. In a perfect world, we never need to
use it.
Ms. De La Cruz. Thank you.
Mr. Meeker. For the sorghum industry, and especially in
your district in south Texas, irrigated and higher rainfall
areas have been 70 to 75 percent buy-up. The dryland areas such
as the High Plains and the panhandle of Texas and western
Kansas, eastern Colorado, more of a 60, 65 percent buy-up area.
The higher-end buy-up is just price prohibitive. You wouldn't
have recommended to any of your customers to buy product at a
high rate if the return was never going to be there. So I think
some of the ratings could be changed if we could look at how
the ratings could be changed relevant to what production
history is. I think there could be some ways that we can
manipulate that and still keep the actuarial table sound.
Ms. De La Cruz. Thank you. And in 6 seconds or less?
Mr. McMillan. Well, I would just say quickly from peanuts,
one thing that could be improved is the revenue protection. I
believe it is tied to other oilseed commodities. It is not even
tied to a peanut price. And if there were some way to tie it
back to peanuts, I think it would work a lot better.
The Chairman. Okay.
Ms. De La Cruz. Thank you. I yield back.
The Chairman. I am going to give a roster update before I
go to Mr. Nunn. We are going to go Nunn, Carbajal, Johnson,
Crockett. Everybody good with that? Okay. All right. Mr. Nunn,
you are recognized for 5 minutes.
Mr. Nunn. Thank you, Mr. Chairman. I appreciate that, and I
appreciate the team being out here today. I know you have a lot
of folks who are back at home working in the field doing the
best they can. As my colleagues on the other side of the aisle
and I very much agree is that providing an onramp particularly
for young farmers, this next generation, I think it was talking
about, Mr. Meeker, just the amount of technology that is in the
field right now that agriculture is starting to change. And
that is a lot of really good things, it is a lot of very
exciting things, but also the barrier to entry into a farm or a
community has also increased, and that makes it difficult for
somebody who either wasn't born into it, didn't inherit it, or
wants to come into it. And we want all those people to be
successful across that board.
So one of the things we have talked about for a while now--
and I think the chair has been a great leader on this--is on
the Farm Service Agency's Small and Beginning Farm Program. I
have heard time and time again now when I am out in the state
and I talk with my young farmers how challenging this is both
to navigate and what they are doing. But I wonder if each of
you could speak to your individual industry's perspective on
this, specifically the most significant impact we could do to
either reform or help hone the Farm Service Agency?
Mr. Frischhertz. Well, I was just nominated to the Board of
Supervisors for our local FSA last week----
Mr. Nunn. Right.
Mr. Frischhertz.--have yet to fill out the paperwork. I
will be happy to report back if I am invited back to speak to
the Committee. But working with NRCS, I can say that we have
implemented a number of conservation programs and worked very
closely with our local NRCS office, and they have been great to
work with. And without them, we would not have been able to
implement that. But again, I will be happy to report back on
FSA in a couple of weeks.
Mr. Cates. I think one thing is that we still need to keep
the county committees intact. We need that local control
because those farmers in that county know what the situation
is. And that is, to me, a very important step that we
definitely need to keep.
Mr. Cheyne. I feel fortunate that in my county we have a
very, very good, high-quality staff. But in wheat country,
there are some shortages out there. And as stated earlier, I am
really worried about the loan program and the lack of loan
officers. We had a couple of really good ones just get trained
up, got headhunted by a private bank. So at some capacity, I
don't know how you are going to figure out a way to pay him
enough money that private industry can't take those prized
employees away from you.
Mr. Meeker. I think from a lending standpoint, the cost of
production, the cost of equipment, the cost of capital is
incredibly high, and I think limitations on the size and the
scope of loans needs to be reevaluated. I had the--I don't know
if it is the great fortune or misfortune to get to purchase a
new piece of harvesting equipment this year, and I would have
not qualified at the FSA office for a loan because of the value
of the piece of machinery. I am fortunate to have a very good
rural community bank that I am very confident in and am
grateful for, but some communities and some of my producers in
my association don't have that same luxury that I do. And so I
think overhauling and modernizing where our lending is at and
looking at the value of where we are at with equipment, inputs,
cost of production I think needs to be reevaluated as opposed
to just doing the same thing that we have always done.
Mr. McMillan. I will just speak to some of your statements
at the beginning. I wouldn't be here today if it weren't for a
dad and an uncle giving me a hand up and allowing me to be a
part of their operation. It is not something you just really
get into. So, right now, I am not familiar with some of the
programs that may help a young farmer, but going forward, those
are things that I am probably going to need and need access to.
And the better that can be, I think the more likely we are to
have young farmers involved.
Mr. Nunn. Well, Mr. Meeker, I would agree with you. I
wouldn't know a lick about pigs if my mom hadn't shown me how
to do it to begin with. So, hey, I want to thank you very much
for being here. The things that I think we are learning in this
is that your experience is really helping us identify where
young farmers have the ability to bring a lot to this field
going forward and finding onramps for them both in the credit
for a first-time farmer, but also in the experience from a
seasoned farmer really can be a great match. I appreciate you
being here today. Thank you.
With that, Mr. Chairman, I yield back.
The Chairman. Thank you.
And the chair now recognizes Congresswoman Crockett for 5
minutes.
Ms. Crockett. Thank you so much, Mr. Chairman, and thank
you to each and every one of you for being here this afternoon
to testify.
When I was in Waco at our farm bill listening session, I
heard a lot about the difficulty farmers are facing with high
input costs, but I also heard a lot about how resilient farmers
are. Farmers alter decisions from planting choices to
harvesting techniques to overall farm management to adapt to a
changing market. Most of all, I heard about farmers making
alterations to survive in a challenging climate.
As you all know, our planet is heating up, and now, we are
not just facing higher temperatures, we are dealing with the
changes in animal and plant behavior, soil characteristics,
weather patterns, and so much more. I know our sugar growers
and our sorghum growers in Texas are battling a terrible
drought and don't have the water that is owed to us from
Mexico. We all know that in the coming years more folks will be
put in situations where they are trying to stretch our limited
supply of water even further. Even so, many growers in my
state, like farmers and ranchers across this country, are
adapting to the harsher climate.
Mr. Meeker, I appreciate what you said in your opening
statement about how planting sorghum is climate-smart because
it is resilient to drought. But if I understand correctly, your
crop insurance rates aren't reflecting that. Let me be clear,
we must maintain actuarial soundness, but I think there are
ways to recognize the reality of our climate in our crop
insurance policies. Look at health insurance companies where
they have started to see reductions in premiums for wearing
things such as health-monitoring devices. It is an actuarially
sound decision and doesn't punish those who don't want to make
the change. It just benefits those that are willing to adapt.
I am glad we are having this hearing because it gives us a
chance to start a dialogue. I learned so much from listening to
the growers in Waco. So I want to let you in on what I am
thinking so, hopefully, we can figure out our best approach.
Crop insurance isn't a monolith. There are lots of different
policies, so I wonder if there is room for some
experimentation. Let me be clear, I would not suggest anything
that isn't voluntary and incentivized-based. I wouldn't want to
leave anyone worse off for continuing their current practice. I
don't know if it is a study or an option we offer or incentives
for private insurers, but I do know that from the testimony
today that many of our commodity growers would benefit from
more climate-aware insurance.
I hope to explore this issue further with my colleagues,
but it must be based on your input both here and following up
with our offices. Working together, I think we can ensure
American agriculture is both environmentally and economically
sustainable for generations to come.
So my question for each of the witnesses, starting with Mr.
Meeker, is this: What factors of crops you grow or practices
you employ are not accounted for by current crop insurance
policies that you feel should be considered? Or if none, what
should we be thinking about as we consider reauthorizing crop
insurance?
Mr. Meeker. Seventy-five percent of the acres of sorghum
are raised using no-till technology, no-till methods. That is
not documented anywhere in RMA data. That is just your yields
have gone up and gone down with using that technology and that
management style. We have had the opportunity to engage with
the climate-smart commodities grant, and we are excited about
that. We think that it is going to accentuate the attributes
that sorghum has as a water-sipping crop and as a resource-
conserving crop, that we will be able to utilize that and
showcase what our abilities are as a crop.
But, I think there are some really good ways to look at the
actuarial tables and look at where our yields have been at
because diverted water from a higher-value crop and having some
of those zeros taken away, I think that would be a really
awesome opportunity. And RMA really hasn't had that ability to
do that yet, and maybe through this Committee, we can ask RMA
to have some of that flexibility.
Ms. Crockett. Thank you so much. Is there anyone else? We
still got about 30 seconds.
Mr. McMillan. I don't know that this is taken into account
with crop insurance or not, but one of the great things about
peanuts is they are a very sustainable crop, and they use far
less water, which is a very valuable resource, as you seem to
know. They use far less water than a lot of crops. And so that
is a really great thing about peanuts.
Mr. Cheyne. Where I farm, I am an irrigated farmer. On the
rare occasion I have water to grow a lot alfalfa hay, there is
no effective coverage on alfalfa or grass crops.
The Chairman. The gentlelady's time has expired.
I now recognize Mr. Johnson from South Dakota.
Mr. Johnson. Yes, I want to pick up where Ms. Davids left
off just talking about FSA offices being overwhelmed, and since
then, we have also talked about some staffing issues. And NRCS
isn't the jurisdiction of this Subcommittee, but I would note I
hear the same thing about NRCS offices, people working hard,
trying to do their best.
I guess I would ask you each of you gentleman, I mean, is
there something about the application process for these
programs that could be streamlined? Have we made things too
complicated? Are they too cumbersome? Any thoughts?
Mr. Cates. I sometimes think it is too cumbersome. I mean,
a lot of times it takes anywhere from 6 months to a year for
those of us that do have farmland in the hills to get a plan to
do certain conservation practices. And I think that it
definitely could be streamlined.
Mr. Johnson. Well, on the FSA side, too, I mean, are they
asking for information that maybe wouldn't have to be in the
application?
Mr. Cates. In my case, I haven't seen that.
Mr. Johnson. Okay. Anybody else, thoughts?
Mr. Frischhertz. I was going to say on the NRCS side in
working through programs, a lot of times you have to identify
fields and programs 2 to 3 years in advance, and having some
flexibility could help implement that. So in sugarcane, we were
a rotational crop in that we don't necessarily know when we are
going to plow it out. It can go 3, 4, or 5 years in the field.
So we might identify a field with NRCS and say we want to put
this in cover crops 2 years in advance. Well, the yields in
that field were fantastic. Why would we want to plow that out
and plant a cover crop? Having that flexibility to roll it over
to another year would be hugely beneficial for us.
Mr. Meeker. I would say that from an FSA asking for
probably data that they don't need, ERP phase 2 is probably the
number one thing on my mind. The first thing that came to my
mind with that, they don't need my income tax records. They
have RMA data that tells them what has already happened. That
is where the disaster was at. They knew there was a loss. They
can utilize that.
My direct competition, a lot of times their wife might work
in the FSA office, and that would be pretty healthy information
for their operation to have to know what my income status is
compared to theirs when a land sale comes up. So I think there
are some opportunities there that we could streamline that,
again, go back using a program that already worked with ERP
phase 1. And I have other areas of ERP phase 2 that are really
detrimental to my operation. I don't want to bore you with that
today at this time, but I would love to have conversations with
anybody that would like to have those conversations of why I
was excluded from ERP.
Mr. Johnson. Well, and let's just dive into ERP phase 2,
for any of you. I mean, how is that rollout going? I mean, what
can you teach the Committee about where we are at?
Mr. Cheyne. I think the rollout is going fine. I can speak
for my area, my county, got good staff, good people, well-
trained, well-informed. I hear other stories from other
producers in other areas that are the exact opposite of mine.
FSA has been good. Over the years, there has been numerous
times when I have had to remind the NRCS people that I manage
my farm, not them, to the point of just saying not interested
in your program, we are all done, goodbye.
Mr. Meeker. Two weeks ago on the dashboard there was ten
approved ERP phase 2 approvals. That is pretty pathetic. I am
sorry, that is pathetic. There are a whole lot more than ten
producers that have a need in this country. I don't know what
it is now. I think some of the staff back here is trying to
find that number for us. They will get it to you. But we have
poor rollout. We have poor use of our time and our resources,
and I would love to have a have a discussion on how we can make
that better in the future. One hundred and twelve now, so they
have gone up almost 100 percent, so that is pretty good, but I
bet in 2020 and 2021, there was more than 112 people that had a
problem, and that is detrimental to the farm gate.
Mr. Johnson. Very insightful, gentlemen. Thank you, and I
yield back.
The Chairman. The chair now recognizes Mr. Carbajal for 5
minutes.
Mr. Carbajal. Thank you, Mr. Chairman. And thank you to all
the witnesses that are here today.
Mr. Frischhertz, can you talk about the weather and
economic conditions that sugar producers have experienced in
recent years, and what can Congress do to help strengthen the
current USDA disaster program?
Mr. Frischhertz. Well, what is wonderful about sugar is
that it is grown in 24 states all across the country. You can
have a drought in Minnesota and Texas and too much rain in
Louisiana, and that is what we have been experiencing.
What we really need is a better insurance product that can
help us stand with hurricanes and what we are seeing
particularly in Louisiana with hurricanes, but the value of our
crops should reflect the value of the product. With number 16
sugar price, essentially, we can bank on a more reliable
product I guess is what I am trying to say. Whether the weather
fluctuates so much from various places across the country,
having a more flexible and unified crop insurance program could
be very beneficial.
Mr. Carbajal. Thank you, Mr. Cheyne, with climate being an
ongoing issue in agriculture, take me through your process of
how you as a producer go through in making decisions on crop
insurance coverage.
Mr. Cheyne. Well, for me, sir it has been pretty
straightforward. I have been able to get a really good crop
insurance agent. My son is handling it almost exclusively now.
We are able to go and talk to the agent, figure out the price,
the level of coverage, try to outguess Mother Nature, and put
together a program that we feel we can afford and will give us
the needed amount of security to stay in business if there is a
failure. And I kind of look at it when I go in there, the
insurance isn't to get rich off of. It is there to keep me
whole financially to live to fight another day. And as long as
the farm bill can continue to provide that assurance, I think
there will be a big sigh of relief throughout the farm country.
But to me, it has been a very straightforward and easy process.
Mr. Carbajal. Great. Thank you for sharing. Mr. Cheyne,
continuing, as you may know, California experienced severe
storms at the beginning of this year. This caused flooding with
several crops, including wheat. Can you share your perspective
on how Title I commodity programs have functioned for producers
during years in which quality problems arise?
Mr. Cheyne. With Title I, yes, we are talking ARC and PLC
here. The price has to fall 62 percent, nearly \2/3\, before
that part of the safety net fills in. And if you are totally
reliant on ARC or PLC, there are days you are going to feel
like you are chairing the train wreck committee when you get up
out of bed because you are wondering whether that net is going
to catch you in time, whereas with the crop insurance, it is
pretty immediate, very effective, rapid in payment, and it just
gives an additional layer of security that is very, very much
appreciated.
Mr. Carbajal. Thank you very much. Mr. Chairman, I yield
back.
The Chairman. The chair now recognizes Mr. Rouzer for 5
minutes.
Mr. Rouzer. I thank the Chairman. And it looks like I may
be the last one here for you today. And given that you have
heard about every question in every which way, many pretty much
almost identical or related to each other, I thought I would
give each of you an opportunity to underscore perhaps the one
thing that you really wanted to be asked about, whatever that
may be, and/or the main point that you really want to stress
and get across. And then to follow up that, as you answer, I
would like to know, obviously, when we were crafting a farm
bill--and I have been a part of a number of different farm
bills in the past. I have had multiple lives in this town. It
is all going to come down to how much money we have to work
with, how much extra money or how much less money? What is the
one thing, if you had to pick one thing that needed to be
adjusted, I would love to know what it is. I think I know that
answer, but I want to give each of you an opportunity to speak
to it.
Mr. Cates. I think probably for the soybean farmers it
would be definitely to be able to increase the reference price
and to be able to increase on a voluntary--base acres would be
one of the most important things.
Mr. Frischhertz. The number one takeaway for me would be
that the sugar policy is vital to our nation and to our local
communities and that we should really examine how the farm
safety net could be improved for all Title I commodities.
Mr. Cheyne. I think the big takeaway for me in this is in
the last two farm bills, agriculture has given up, other
programs involved in the farm bill have not. It is only \2/10\
of a percent spending. I am hopeful that the Congress can
protect crop insurance and help us out on the reference price.
Wheat industry views this as just a great way to not only
protect the American farmer, but our food security and
ultimately, our national security. Because food and security
are so intertwined now, I would ask everybody involved to
please not take your eye off that.
Mr. Meeker. I would like to take the opportunity to say
thank you for the budget estimate letter that was sent out. I
appreciate that. It shows the need, and I know that there is a
great need for added dollars into the baseline. And I
appreciate you having us here today. Thank you very much. I
appreciate the opportunity to testify on behalf of my commodity
organization.
I think our main focus is protecting crop insurance,
maintaining the relevant safety net or making a relevant safety
net. But as we develop a new farm bill, I would like us to make
sure that we do not pick winners and losers between
commodities. Let's let the natural market decide what crop gets
planted. I am a diversity grower. I raise a lot of different
crops. Sometimes market dictates what I raise. It is not just
in my rotation. But I don't want government to dictate what I
raise. I want the market to be able to dictate that.
And then second, or third, just see how we can make that
safety net relevant with an increased reference price. Thank
you. And again, I appreciate the time.
Mr. McMillan. I also appreciate the letter that was sent to
the Budget Committee. There were a lot of good points that were
made, and it shows that you all truly understand. And I
understand y'all's constraints, too, that not everything can be
done. But if we could have one thing, that--the PLC program,
the framework works, but if we could have one thing, we need a
reference price increase to have a viable safety net.
Mr. Rouzer. Mr. Meeker, I think it was you that mentioned
the high cost of equipment. Can you repeat what that specific
piece was, a combine maybe? I can't remember. And then what the
price was if you don't mind?
Mr. Meeker. It was a cotton stripper, and it was $850,000.
And if I would have ordered the same cotton stripper--I ordered
that cotton stripper in November of 2021. Had I ordered that in
November of 2022, that would have been over $1 million machine
this year. So the cost continues to go up, and that cotton
stripper purchase might or might not be some of the tax
liability reasons why I have an ERP problem.
Mr. Rouzer. Well, I have a theory, and then there are
multiple contributors to increase of the cost, obviously, but
you know, all this new emissions technology with the sensors
and everything else and how you can't repair the equipment, you
got to send it back to the dealer, and then they got you by
the--well, anyhow, you know what I mean.
The Chairman. We are going to hit the mute button right
there.
Mr. Rouzer. I went there. So, Mr. Chairman, I yield back.
The Chairman. Before we adjourn today, I would like to
invite the Ranking Member to share any closing comments she may
have, Ms. Brown.
Ms. Brown. Thank you, Chairman Scott.
To our witnesses, thank you, thank you, thank you for
taking time out of your busy schedules to be with us today. We
truly appreciate your time and expertise. Your insights
regarding the implementation of the 2018 Farm Bill provisions
related to Title I and Title XI, along with everything else
mentioned today, will inform us in drafting the 2023 Farm Bill.
Working together, we can ensure that the farm safety net and
crop insurance tools serves all America's farmers, ranchers in
an equitable manner. And thank you again.
Mr. Cheyne. On behalf of the wheat industry, thank you,
ladies and gentlemen, for hearing what the farmers of America
have had to say. Your help is appreciated.
The Chairman. Gentlemen, I want to thank you for being
here, and I want to leave you with a few words from the great
philosopher, Mr. Jerry Reed, we have a long way to go and a
short time to get there, but we are going to do what they say
can't be done in this Committee.
And with that said, under the Rules of the Committee, the
record of today's hearing will remain open for 10 calendar days
to receive additional materials and supplementary written
responses from the witnesses to any questions posed by Members.
This hearing of the Subcommittee on General Farm
Commodities, Risk Management, and Credit is adjourned.
[Whereupon, at 4:27 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Hon. Shontel M. Brown, a Representative in Congress
from Ohio
April 26, 2023
Hon. Austin Scott,
Chairman,
Subcommittee on General Farm Commodities, Risk Management, and
Credit,
House Committee on Agriculture,
Washington, D.C.
RE: Request for a hearing on Minority and Socially Disadvantaged
Farmers and Ranchers in the Subcommittee on General Farm
Commodities, Risk Management, and Credit in the 118th
Congress.
Chairman Austin Scott,
As you consider additional hearings within the General Farm
Commodities, Risk Management, and Credit Subcommittee jurisdiction
during this 118th Congress, I write to ask you to allow Members an
opportunity to hear from minority and socially disadvantaged farmers,
ranchers, and stakeholders on farm bill issues. Our nation's strength
in agriculture and as a people is in our diversity. We must acknowledge
that this farm bill is for everyone: no matter what you look like, what
you grow, or where you grow it.
Over the last 6 years, we have seen nearly $70 billion in ad hoc
payments to producers. This is $70 billion in addition to our existing
farm bill safety net and disaster mitigation programs. These dollars,
although welcomed by those who received them, have been distributed in
an inequitable manner, favoring certain producers over others as has
been confirmed by the Government Accountability Office.
There were provisions in the 2018 Farm Bill that were an effort to
allow socially disadvantaged farmers and ranchers to receive increased
benefits under many USDA programs. Such programs included, but were not
limited to crop insurance, disaster assistance, Farm Credit, and loan
assistance. We need to hear from these farmers and ranchers to
determine the effectiveness of those provisions as well as to hear
where improvements need to be made.
I urgently request that additional hearings be identified for the
Subcommittee on General Farm Commodities, Risk Management, and Credit
to ensure that Members have a forum to discuss minority and socially
disadvantaged farmer and rancher priorities.
I look forward to working with you on this critically important
work.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Hon. Shontel M. Brown,
Ranking Minority Member,
Subcommittee on General Farm Commodities, Risk Management, and Credit.
______
Submitted Questions
Response from Tom Haag, President, National Corn Growers Association
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. For many corn growers, like myself, the foundational
practice we use to increase soil health, reduce risk and increase our
farms' resilience and profitability is conservation tillage. Today,
about 72% of all row crop acres in the U.S. are farmed with forms of
conservation tillage, which increases soil health by leaving more crop
residue on the soil surface and more organic matter below the surface,
reducing soil erosion and nutrient losses, while also reducing energy
use and the related GHG emissions. This practice lowers our on-farm
out-of-pocket costs while sustaining yields. In 1989, mechanical
tillage using a moldboard plow or similar implement was in use on 75%
of crop acres. Today those percentages have essentially flipped. About
72% of row crop acres are in conservation tillage (37% under ``no-
till'', 35 % under ``strip-till'' or ``reduced tillage'' or similar).
Another practice that is being increasingly adopted by corn
growers, is cover crops. NRCS reports that between 2006 and 2016 the
number of acres treated with cover crops grew from 2 million to almost
20 million. This rapid growth in the adoption of cover crops is
expected to continue as corn, soybean and pork grower groups have
joined with NRCS and conservation organizations to double the number of
corn and soybean acres in cover crops, to 30 million by 2030.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. We have suggested to Congress that two specific things be
done to help us reduce risk through soil health and conservation
practices. NCGA recommends that USDA be given direction to undertake an
initiative to create and promote the use of a new conservation practice
standard that could be called ``conservation weed management.'' That
practice should provide for excellent weed control in the context of
our use of conservation tillage while also minimizing the development
of weeds' resistant to the herbicides that are critically important to
the success and workability of conservation tillage. Once a new
``conservation weed management'' practice standard is created, USDA
should make that practice a priority for funding under EQIP, RCPP and
related efforts. Second, we recommend that Congress direct USDA to
revise and strengthen its current Interim Conservation Practice
Standards program to allow for the more rapid and transparent
development of conservation practice innovations and their
incorporation into the USDA system.
Question 3. What are the top three issues that Congress should
examine more closely as it pertains to our existing commodity support
programs?
Answer. Corn growers are invested in developing forward-looking,
market-orientated farm policies. NCGA's farm bill recommendations seek
to make existing USDA programs more effective, efficient, and
responsive through strategic investments and policy enhancements. Our
top three recommendations for strengthening the commodity title are for
Congress to increase the Agriculture Risk Coverage (ARC) County maximum
payment rate above ten percent, increase the ARC-County coverage level
above eighty-six percent, and to strengthen the Price Loss Coverage
(PLC) effective reference price ``escalator.''
Question 4. How has the economic and growing conditions effected
your planting decisions?
Answer. This year has brought growing conditions that could force
changes from planting corn to another crop. From a cold and wet spring
in the northern Corn Belt to spreading drought conditions, weather can
influence the ability of corn farmers to get their crop planted and the
productivity of the corn that is planted. As of June 11, 2023, the USDA
estimates that 93% of corn is planted. While some additional corn may
still be planted, there is a daily drop in expected productivity at
this point that equates to about 1% of yield potential or about 2
bushels per acre, per day in June. Given the estimate that 7% of corn
is unplanted and the declining productivity potential, it is likely
some farmers did face challenges that prevented them from planting any
crop, or conditions forced a switch from corn to an alternative crop.
Crop insurance policy parameters that reduce the revenue or yield
guarantee each day during the late planting period can also impact corn
farmer planting decisions in this situation. The USDA June Acreage
report that will be released on 6/30/23 will provide better
understanding as to how corn farmers final planting decisions differed
from planting intentions.
Compared to other industries, corn farmers are not as able to
respond as quickly or straightforwardly to the impact of economic
conditions when deciding what to produce. Most row crop farmers decide
what to produce only once per year, and the agronomic and risk
management benefits of sticking to a planned rotation have value when
weighing economic conditions. Some corn inputs are available for
farmers to purchase for the upcoming crop year before harvest of the
current crop, prompting planting decisions to start 6 or more months
ahead of planting. There is still flexibility to make changes,
particularly if inputs are not already applied. The fertility needs of
corn are greater than other crops and for 2023 are expected to be 46%
of the operating cost of production for corn. Farmers who have already
applied high-cost fertility inputs for corn ahead of planting are not
likely to change their decision, except as a weather induced last
resort.
Question 5. What other resources does the USDA need to support
producers, specifically in the technology space? What are those
technology capabilities you want, but are not getting?
Answer. Corn farmers have a proven track record of using innovation
and technology to stay ahead of the curve when it comes to production
and adoption of conservation practices. However, support from USDA
would accelerate the adoption of precision agriculture practices across
agriculture. NCGA supports the Precision Agriculture Loan Program Act
(PAL) and the Producing Responsible Energy and Conservation Incentives
and Solutions for the Environment (PRECISE) Act create promising
avenues to do so by utilizing new and existing USDA programs to put
cutting edge technology in the hands of more farmers.
Question 6. The 2018 Farm Bill included a provision that provides,
under certain situations, a one-time opportunity to update their Price
Loss Coverage (PLC) program payment yield that would take effect
starting with the 2020 crop year.
Answer. Yields for harvested corn have been steadily increasing in
the United States with USDA NASS data showing a national yield trend
increase around 1.9 bushels per acre per year over the past 25 years.
NCGA supported the update of PLC payment yields in the 2018 Farm Bill
and has policy supporting the voluntary updating of program yields when
applicable.
Question 7. What is the process a producer must go through to
fulfill eligibility requirements, like demonstrating that a producer
has met the Adjusted Gross Income (AGI) limitation and actively engaged
requirements? Is it a straightforward process?
Answer. Corn growers who are existing customers with the Farm
Service Agency (FSA) and other USDA agencies are used to filling out
USDA forms to quality and certify eligibility for commodity, disaster,
and conservation programs. USDA has improved customer service in recent
years by posting fillable forms along with instructions on farmers.gov.
Specifically, the CCC-941 form used to annually certify average AGI
income is fairly straightforward for most producers, depending on the
size and complexity of their operation. Producers are also required to
have an AD-102 form on file for the Highly Erodible Land Conservation
and Wetland Conservation Certification, which typically only has to be
completed and filed once.
In order to be considered ``actively engaged in farming'' and thus
eligible for FSA commodity programs, producers and all legal entities
must provide significant contributions to the farming operation. The
farm operating plan which USDA uses for ``actively engaged in farming''
and other payment eligibility and limitation determinations can be a
more complicated form and process, depending on the operation
structure. Individual farmers are able to fill out the CCC-902 form and
legal entities use the CCC-901 form.
Response from Shawn Holladay, Chairman, National Cotton Council
Question Submitted by Hon. Shontel M. Brown, a Representative in
Congress from Ohio
Question. Even though my region of Ohio-11 may not have cotton
fields, we certainly interact with the material later in the supply
chain in the form of textile production.
Given the presence of the textile industry in my district, it is
important that the next farm bill has strong support for this sector.
The Economic Adjustment Assistance for Textile Mills, or EAATM
program, was originally set at a rate of 4 per pound of cotton used,
but that rate fell to 3 in 2012 and has not been adjusted since.
Mr. Holladay, can you speak to how EAATM funds have benefitted your
members' mill operations, and the role that the program played in
sustaining textile jobs in the United States?
Answer. The ability of the U.S. textile industry to maintain its
production and employment base can be attributed to the continued
benefits of the EAATM. Supporting this program is now more important
than ever.
Despite the increased competition from imported textile and apparel
products, the U.S. textile industry proved its resilience during the
COVID pandemic by quickly shifting their manufacturing facilities to
the production of PPE. Also, with increased concerns about the use of
forced labor in the production of textile products in other countries,
the U.S. textile industry and the trade arrangements in this hemisphere
provide a safe and stable sourcing option for apparel and textiles.
As you noted, one of the manufacturing facilities is in your
district, and that facility is the largest cotton consumer-cosmetics
plant in the world. When the pandemic began, the country didn't have
enough testing swabs, and the facility in your district converted some
of their equipment to produce almost one billion cotton swabs for
[COVID] testing. This could not have happened without this program.
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. A good portion of my farmland has numerous undulated
features, and we have been successful in the adoption of terrace
systems that have significantly reduced erosion. We also plant sudan
grass and cereal grains for our cover cropping which have led to
increased soil moisture and yields.
However, my conservation practices are reflective of the amount, or
lack thereof, of rainfall I receive. In Dawson County, Texas, where I
farm, we receive only 16" of rainfall on average per year and have been
under extreme drought conditions for nearly 2 years. Due to the need to
conserve available water during times of drought, I am often unable to
carry about my full conservation plan. This is common in many areas of
Texas and the Southwestern part of the U.S. that is heavily dependent
on moisture for production
While we should continue to incentive producer's adoption of
conservation and climate smart practices, these programs must be
locally driven with a clear understanding of the environmental and
agronomic conditions facing growers from across the country.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. I think it's important that conservation programs
prioritize working lands and provide a means to devote marginal
production acres into long-term use.
We are grateful the Administration is recognizing the
sustainability practices of producers through the utilization of the
Climate-Smart Commodities grant. The U.S. Cotton Trust Protocol, along
with our partners at Cotton Incorporated, Alabama A&M, North Carolina
A&T, the Soil and Waters Outcomes Fund, and Texas A&M, have received a
$90 million grant from USDA that will financially incentive growers who
adopt climate smart practices in cotton.
It is critical that conservation funds, both provided by the 2023
Farm Bill and the 2022 Inflation Reduction Act recognize the diversity
of production practices across the cotton belt by rejecting a one-size-
fits-all approach. These funds should also reward, not penalize, the
environmental contributions of those who have long time adopters of on-
farm sustainability practices.
Response from Aaron Flansburg, Chairman, USA Dry Pea and Lentil Council
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. Hello Representative [Sorensen], and thank you for your
questions.
Conservation and promoting good soil health are high priorities on
our farm. I believe that healthy soil is necessary to achieve maximum
yield potential. The way that I'm currently striving towards improving
soil health begins with soil conservation practices. I need to maintain
and build good topsoil to grow good crops!
The area in which I farm is known as ``The Palouse,'' a hilly
region with some of the best silt loam topsoil in the world. We
consistently grow very high yielding dryland crops, including winter
wheat, barley, canola, alfalfa, and of course pulse crops such as peas,
lentils, and chickpeas. The hills present challenges that have been met
by creative technological solutions, many of which I employ. But a
steep hill is also considered highly erodible land. Conventional
farming methods lead to heavy losses of topsoil in our area.
As topsoil losses mounted, my dad employed conservation practices
such as divided slopes, that is, planting a different crop on the top
and upper portion of a hill than in the low ground and bottom part of a
hill. We also put in soil retention ponds in a few places to slow the
runoff. However, the biggest changes to our farming practices came
within the last 10 to 15 years when we began to further commit to no-
till farming. Now, in a given year, we typically employ no-till
practices on nearly 100% of our ground.
This works for all of the crops that we grow. We rotate between the
crops listed above every year, in what would typically be a 3 year
rotation. This helps us to manage risk, as different crops may grow
better given changes in weather patterns. It also helps us to mitigate
price risk as markets fluctuate. Disease risk is also minimized by
having different crops every year, and some repeated plantings may be
as many as 9 years apart.
Growing diverse crops from year to year helps to improve soil
health by adding residue to the surface some years and avoiding low-
residue crops year after year. Soil is continuously improving by
avoiding tillage, allowing for larger soil aggregate structure,
improved earthworm activity, better water infiltration, and greatly
reduced, if not nearly eliminated, water and wind erosion. However,
there are many more farming methods I'm interested in adding to improve
the health of the soil.
One way I'm trying to change the way I farm is through an
experiment with organic agriculture. This year, I expect to complete
certification of 50 acres of organic farmland, with another 110 acres
to be certified in 2025. I'm looking to reduce input cost by
eliminating synthetic fertilizer, which has a detrimental effect on
soil pH through acidification, and also harms soil fauna. Pulse crops
play a role in this, as they do not require fertilizer, and some will
actually fix more nitrogen in the soil than they use to grow, reducing
fertilizer needs for the next year's crop in a conventional farming
system, and eliminating the need to purchase fertilizer altogether as
part of a regenerative system when used to build soil nitrogen and
carbon in cover-crop mixes. I want to move closer to a healthy soil and
surface ecosystem on my farm, which I hope will get me as close as
possible to true regenerative agriculture. My long-term goal for this
ground is to leave the soil health much better than I found it,
maintain and build more topsoil, and gain as much control of input
costs and market opportunities as possible.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. Our farm policies have been largely successful in promoting
inexpensive food. Some of our historical conservation programs have
also worked well. However, the promotion of diverse crop production
systems has always been a weak point of the farm bill. Support for the
biggest, most well-established commodities is important for the
stability of our farms and domestic food security, but favoring them
can come at the expense of healthier crop rotation, investment in those
smaller crops, and ultimately, the health of the soil.
Crops such as peas, lentils, chickpeas, and beans have an important
role to play in soil health and improving the health of our population
because they're high in protein and fiber, low in fat and
carbohydrates, and nutrient-dense. They are grown on a much smaller
acreage than our biggest commodities, but they play an important role
in reducing water use and conserving soil moisture for the following
crop year. They also have an extremely low carbon footprint. If
Congress is serious about supporting crops that reduce greenhouse gas
emissions throughout their life cycle, we must support the growth and
consumption of pulses. We need more research dollars for pulses.
Congress can also help us to drive demand through domestic marketing
grants, and by continuing to support the development of foreign markets
while pushing for open and free trade.
Soil health and conservation are very important to me, but without
consistent and dependable weather patterns, farming becomes an even
higher risk industry. Higher risk leads to higher expense, and
insurance programs become more expensive and more important. This also
makes the farm bill more expensive. We need to incentivize cropping
systems that reduce the need for chemical fertilizers, which are not
only expensive, but also increase greenhouse gas emissions in their
production, harm soil health, and increase soil acidification. We must
promote the use of crops in rotation that reduce our reliance on these
fertilizer inputs, and pulses are a critical tool to achieve this
reduction. Pulses are the single most climate-smart food that we can
grow.
Pulses are also an important part of every cover crop blend that
I've ever used, and I believe that cover crops need to be promoted by
Congress to increase diversity, retain moisture, build soil health,
increase nitrogen and carbon sequestration, provide pollinator and
beneficial predatory insect habitat, and reduce fertilizer requirements
for the next crop. However, it is expensive to grow cover crops, in
that they must be seeded, which costs time, fuel, the purchase of seed,
and wear and tear on equipment, without realizing a direct profit from
the harvest of that crop. Some cover cropping systems equate to a year
of fallow, from which no direct income results. If Congress is serious
about promoting soil health and conservation management practices,
there needs to be ways to incentivize the growth of cover crops and
monetize them for farmers through an easily-accessible program. Perhaps
it could be similar to the CRP program, but for a single year.
There are lots of barriers to changing farming systems to improve
conservation practices, whether it be the expense of choosing to forego
a cash crop for cover crops, equipment changes, or market uncertainty
associated with alternative crops. But for me, one of the biggest
impediments has been lack of knowledge resources. As I began to move
towards an organic production system on some acres, I found no local
contacts that were able to help me. My search for information included
reaching out to the NRCS and local conservation districts. At this
point I've read six or seven books on alternative cropping systems,
organic and regenerative agriculture, and have basically been
experimenting on my own. Our specific area is almost entirely devoid of
organic agriculture, and despite having two highly regarded ag.
universities nearby, Washington State University and the University of
Idaho, I haven't found information that would help me locally. I am now
participating in a 3 year experiment with the U of I to establish and
evaluate spring seeded cover crops, but this effort is still new in our
area. I feel like the current governmental resources in my region are
entirely lacking for farmers looking to develop organic practices. In
terms of knowledge resources, I feel that I've been mostly on my own to
gather information from books, online, or from a very limited number of
like-minded farmers.
I participate in government programs through the FSA, but NRCS soil
health conservation programs seem mostly tailored to monitoring residue
or establishing grassed waterways, and do not seem suited to monetarily
rewarding no-till practices and crop rotation on their own. For this
reason, I don't participate in any governmental conservation programs
other than CRP, which I only employ in limited areas. I have worked
with our local conservation district to receive grants for purchasing
no-till drills, as well as payments for grassed waterways that do exist
on our farm.
Our commodity programs need revisions to prioritize risk management
through diverse cropping systems. Going forward, I would also like to
see a way that farmers who have already adopted conservation methods,
such as no-till seeding, diverse cropping systems, cover crops, and
even regenerative practices, will be able to capture incentives for
these established practices, as opposed to only rewarding farmers who
move away from more conventional farming. Those who are already moving
ahead with their quest towards healthier farming practices should be
rewarded for the strides that they have made! I feel like all of these
conservation practices and more will need to be adopted on a much
larger scale so that farmers can do their part to mitigate climate
change, keep more growing plants with living roots in the ground for
carbon capture and soil health, and be able to minimize the harm from
warmer average temperatures and more extreme drought and storm events.
Conservation of the soil resource and soil health are my top
priorities for the long term on my family farm. I want to be able to
leave the ground better than I received it for future generations. But
despite all of my own efforts in this direction, I do need support.
Some of that support is knowledge-based, some is financial, and some
will come from a farm bill that prioritizes the voluntary adoption of
practices that increase resilience and soil health. Supporting programs
that nibble around the edges is not enough. If we agree that a warmer
climate would be catastrophic to the future ability of the planet to
support current agricultural production, then we must work together to
meet that challenge with revolutionary thinking. Pulse crops are a part
of that solution, and we need to grow many more acres and consume many
more plant proteins. Conservation practices need to be easy to adopt
and financially rewarding. Massive investment is needed to improve soil
health and therefore increase its ability to store carbon. Regenerative
farming practices need to be quantified, developed, incentivized, and
implemented. We need to invest in knowledge resources for farmers to
adapt to new practices that support resilience and soil health. The
USDA needs to be able to implement these priorities as established in
the 2023 Farm Bill.
I sincerely appreciate the chance to respond to your questions. I
hope that my answers can be useful to you and the House Agriculture
Subcommittee.
Aaron Flansburg,
Chair of the USADPLC.
Response from Kirk Satterfield, Chairman, USA Rice
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. Almost all rice grown in the Mid-South and my region in the
Mississippi Delta is done so on a crop rotation. Rice farmers practice
crop rotations to improve soil structure, enhance fertility, and break
disease and pest cycles. Rice farmers employ precision nutrient
management strategies to optimize fertilizer application, reduce
nutrient runoff, and minimize environmental impact. Conservation
tillage practices that disturb the soil as little as possible during
planting and after harvest are common and help maintain crop residue
cover on the soil surface. 100 percent of rice grown in the U.S. is
irrigated. Precision-leveled fields are instrumental in improving
water-use efficiency but also prevents soil erosion, slows down or
eliminates water leaving the fields, reduces sediment runoff, and helps
retain soil on the fields.
Rice farms support approximately 45 percent of the North American
wintering duck population. We close our drains and capture rainwater to
create surrogate wetlands within the major Flyways of North America.
The habitat co-benefits from rice are irreplaceable and necessary to
maintain and enhance wildlife populations. Winter flooding of rice
fields also has proven to reduce nonpoint source export by reducing not
only the runoff volume but also the concentration of solids and
nutrients in said runoff. This is in part due to the shallow waters
providing a protective layer that buffers the soil from rainfall and
reduces the flow of water across the field thereby allowing sediments
and nutrients to settle and not be discharged as suspended solids.
Foraging by migrating waterfowl also increases surface straw
decomposition and fallow flooding increases nitrogen uptake during the
next growing season.
USA Rice has made a concerted effort to engage with USDA to ensure
that working lands programs work for rice growers across all rice
growing regions. The Environmental Quality Incentives Program (EQIP),
Conservation Stewardship Program (CSP), and the Regional Conservation
Partnership Program (RCPP) have practices and enhancements available
for the methods listed above and are critical to rice farmers to carry
out these vital conservation efforts.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. The Conservation Title should focus on the locally led,
voluntary, incentive-based conservation model instead of a top-down
regulatory regime. Conservation programs should provide options for all
farmers to participate and should not incentivize a one-size-fits all
model.
There should be a priority on working lands programs like the
Environmental Quality Incentives Program (EQIP) and the Conservation
Stewardship Program (CSP) instead of set-aside programs like the
Conservation Reserve Program (CRP) especially during times of potential
global food shortages.
Conservation programs should have the dual goal of not only
incentivizing environmentally beneficial practices but also helping
producers be more productive and economically viable while helping the
rural economy.
Rice is a unique crop in that cover crops traditionally do not
work; however, we use shallow water flooding throughout the winter
months that offers similar benefits in addition to creating habitat for
migratory waterfowl and other wildlife, significantly increasing
biodiversity.
Partner-driven programs, such as the Regional Conservation
Partnership Program (RCPP), work. USA Rice's partnership with Ducks
Unlimited, the Rice Stewardship Partnership, has beneficially impacted
more than 800,000 acres of rice and rice rotation ground and resulted
in more than $108 million in additional conservation funding to rice
farmers.
Response from Andrew Moore, President, U.S. Canola Association
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. Conservation is important to our farm and to U.S. Canola
farmers. On our farm, we use no till production practices, per acre we
utilize a five crop every 3 years crop rotation, and double crop all of
our winter crops (Canola, Wheat, Barley, and Oats) followed by a second
no-till soybeans, sunflowers, or a summer cover crop. We either allow
natural cover to establish the winter before we plant corn or plant a
cover crop to make sure we are growing something green year round.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. Using a broad brush to identify what can be established on
a national level to encourage farmers to incorporate risk to increase
soil health and conservation management practices is difficult to
answer. Growing regions across the U.S. are dramatically different with
unique potentials. For example, the Southeast U.S. has the potential to
grow winter canola in the fall then harvest in the early summer, then
immediately plant the second crop, soybeans.
The Southeast is unique to the double crop production practices due
to the mild climate during the winter. I believe that giving the
opportunity for regions to develop conservation production practices
that are unique to the area they represent is the best way forward. I
am very familiar with Southeast production practices; however, my
experience limits my scope of production practices for production
practices in the Pacific Northwest, the Great Plains, the northern
Midwest. Allowing regional experts to make recommendations to what
makes sense for the producer will gain the greatest return on
increasing soil health and increasing conservation management
techniques.
Response from Daryl Cates, President, American Soybean Association
Question Submitted by Hon. Shontel M. Brown, a Representative in
Congress from Ohio
Question. Can you talk about the different uses for soybeans, and
any concerns about the availability of soybean oil to meet the
increased demands?
Answer. Domestically produced soybeans are used to produce the
world's food, feed, fuel, and biobased products. When processed,
soybeans are divided into protein and oil. Soybean protein
(approximately 80% of the bean) is primarily used in livestock animal
feed, but it is also an ingredient in plant-based foods, plastic
composites, synthetic fiber, paper coatings, adhesives, and more.
Soybean oil (the remaining 20% of the bean) is one of the most
versatile natural oils because of its molecular structure and suitable
fatty-acid profile. In addition to edible oil, soybean oil can be used
to produce biomass-based diesel (biodiesel, renewable diesel, and
sustainable aviation fuel) as well as a variety of other products
(tires, tennis shoes, cosmetics, paint products, concrete sealants, and
even golf balls).
Looking specifically at soybean oil, an increase in the use of
soybean oil for biofuels has led some to believe this could result in
increased food prices. However, a recent study \1\ * by Dr. Jayson Lusk
at Purdue University was very revealing. It considered the impact of a
20% increase in soybean oil used in biofuels and found consumer food
costs remain practically unchanged. The retail food price impacts were
muted, as soybean oil is only a small share of the overall cost
involved in producing retail foods. Further, increased soybean oil
production led to more domestic soybean meal production. This meal,
which is used primarily as animal feed, led to a retail price reduction
for animal proteins. Overall, the study by Dr. Lusk found that the
price increase of soybean-oil containing food was largely offset by the
price decrease of protein-rich foods, leaving the overall ``food at
home'' portion of the Consumer Price Index largely unchanged (an
increase of 0.05 percentage point in the food at home CPI when
considering a 20% increase in soybean oil demand for biofuels).
---------------------------------------------------------------------------
\1\ https://ag.purdue.edu/cfdas/wp-content/uploads/2022/12/
report_soymodel_revised13.pdf.
* Editor's note: the referenced report, Food and Fuel: Modeling
Food System Wide Impacts of Increase in Demand for Soybean Oil, is
retained in Committee file.
---------------------------------------------------------------------------
ASA is sensitive to issues regarding the availability of our
products. Fortunately, availability does not appear to be an issue for
soybean oil. USDA forecasts that the U.S. will consume more soybean oil
for biofuels next year. Yet, food use is expected to continue to remain
nearly constant. Expansion in the soybean crushing industry is allowing
more use of soybean oil for biofuels without detracting from the edible
market.
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. In 2020, ASA surveyed soy growers who engage in
conservation about the practices on their farms. Respondents indicated
they use the following practices:
Reduced tillage (70.21%)
Precision agriculture practices, e.g., variable rate
application, precision irrigation, etc. (68.09%)
Nitrogen inhibitor/split nitrogen management (63.83%)
No-till/strip-till (55.32%)
Cover crops (55.32%)
``4-R plus'' nutrient management (40.43%)
Manure management (36.17%)
Buffer strips (34.04%)
Edge of field practices, e.g., bioreactors, saturated
buffers, wetlands, drainage water management, sediment basins
(27.66%)
Other, e.g., in-field terraces, drainage tile, pollinator
habitat (6.38%)
Clearly, the participation rates add up to much more than 100%--
many farmers ``stack'' practices, simultaneously engaging in many
practices to implement a conservation plan that takes a comprehensive,
long-term approach to soil health, risk reduction and resilience, and
better yield. These strategies are paying off. Between 1980 and 2020,
U.S. soy farmers have realized:
60% irrigation water use efficiency improvement per bushel
48% land use efficiency improvement per bushel
46% energy use efficiency improvement per bushel
43% greenhouse gas emissions efficiency improvement per
bushel
34% soil conservation improvement per acre
These changes have occurred while U.S. farmers have increased
production of soy (bushels) 130% on the same amount of U.S. land.
(Source: Field to Market National Indicators Report 2021) \2\ **
---------------------------------------------------------------------------
\2\ https://fieldtomarket.org/national-indicators-report/report-
downloads/.
** Editor's note: the referenced report, Environmental Outcomes
from On-Farm Agricultural Production in the United States, and its
addendums are retained in Committee file.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. Congress can continue to provide sufficient resources for
voluntary, incentive-based conservation practices through USDA's
Natural Resources Conservation Service. Incorporating conservation into
one's farm is important but can be cost-prohibitive in a farm economy
with tight margins. Cover crops, for instance, can cost upwards of $30
an acre to implement, and--especially in the first few years of the
practice--yields (and therefore revenue) on those acres can take a hit.
Trying new practices is inherently risky in agriculture, where you only
get one chance per year to get it right. Thus, Congress continuing to
provide financial and technical support to growers who want to try new
conservation practices will be essential.
Soybean farmers are avid participants in existing farm bill-
authorized programs like the Environmental Quality Incentives Program
(EQIP) and Conservation Stewardship Program (CSP), which support
conservation practice adoption on working lands. In 2021, ASA conducted
a nationwide survey of soy farmers about the most pressing resource
concerns on their farms and where farm bill conservation funding should
be directed: The results indicated that the conservation title of the
farm bill should prioritize programs and practices that address
cropland soil quality and health, water quality and quantity, saving
input costs, and providing growers with regulatory certainty (under the
Clean Water Act, Endangered Species Act, etc.). Streamlining the
enrollment and contract management process for these programs will
further incentivize farmers to work with NRCS to literally encourage
conservation at the ground level.
It is also important to recognize that one size does not fit all in
agriculture: Soil health will mean something different in Illinois than
it does in Georgia or North Dakota. ASA supports flexible program
offerings at NRCS that can meet farmers' needs across various crops,
soil types, farming methods, levels of existing investments in
conservation, and climate and weather conditions.
Question 3. What are the top three issues that Congress should
examine more closely as it pertains to our existing commodity support
programs?
Answer. ASA supports several improvements to increase the
effectiveness, accessibility, and reliability of the Title I farm
safety net:
Increasing the soybean reference price, which could be
achieved through a statutory reference price change,
adjustments to the effective reference price such as removing
the arbitrary cap and increasing the coverage factor, or a
combination of these.
Adjusting the ARC calculations, such as removing the
arbitrary cap and increasing the coverage level.
Providing the option (not requirement) to update base acres
to reflect a more recent, defined period of time while allowing
new acres to enter the program.
Question 4. How has the economic and growing conditions effected
your planting decisions?
Answer. U.S. farmers make significant investments and take on
enormous risks to produce food, feed, fuel, and fiber for consumers
domestically and abroad.
Like all farmers, I have experienced higher input costs for several
years. Those increased costs have, in turn, increased my borrowing
needs. With higher interest rates, credit is also more expensive.
Higher crop prices are also driving up my crop insurance premium costs.
Farming is expensive, and farming has many variables that impact
economic viability--including weather. Crop insurance is our most
effective risk management tool and must not become strapped with farm
bill amendments that weaken effectiveness or reduce affordability.
In my written testimony, I highlighted deficiencies in the Title I
farm safety net that were exposed during the China trade war. During
that time, ad hoc assistance kept my farm afloat--not the Title I
safety net. Without the extra programs, I would not be farming today.
Having already experienced economic hardship under the current farm
bill, we can all reasonably expect that economic disruption will occur
again in the future. Preparing for these rough spells proactively with
a reliable safety net is a much better approach than relying on ad hoc
assistance from USDA or Congress.
Question 5. What other resources does the USDA need to support
producers, specifically in the technology space? What are those
technology capabilities you want, but are not getting?
Answer. ASA supports providing incentives to encourage use of
precision agriculture technologies and specialized tools (such as
deeper drills) to implement conservation practices. ASA has endorsed
two bills that would be effective at getting these tools into more
farmers' hands: the Precision Agriculture Loan Program Act of 2023
(H.R. 1495) and the Producing Responsible Energy and Conservation
Incentives and Solutions for the Environment Act (``PRECISE Act,'' H.R.
1459).
Precision agriculture equipment can directly benefit yield from
accurate spacing, population rate, and limiting harvest loss; optimize
applications of fertilizer and pesticides by reducing overlap, skips,
and improving placement; save fuel through fewer field passes and more
efficient harvests; and save water in irrigated operations with
selective application and remote shutoff. Indirectly, this equipment
can improve soil health and reduce soil compaction; improve water
quality and reduce nutrient runoff; reduce net greenhouse gas
emissions; help limit production on marginal fields and conservation
areas; reduce weed resistance development; and lower energy use.
Many of these tools require access to high-speed, wireless internet
to be fully utilized, but broadband access continues to be unavailable
in many rural areas. A United Soybean Board study published in 2019
found nearly 60% of U.S. farmers and ranchers believe they do not have
adequate internet connectivity to run their businesses, and the study
highlighted direct links between connectivity-driven technology that
farmers want to use and the sustainability of their operations. ASA
applauds Congress for ongoing, significant investments in broadband and
encourages prioritizing the extension of access to rural communities to
facilitate access to precision agriculture technologies and their
related production and sustainability benefits.
Question 6. The American Soy Association has argued that the
reference price for soybeans in Agriculture Risk Coverage (ARC) and
Price Loss Coverage (PLC) is insufficient, and cited low prices due to
the trade war, and more recently, higher operating costs.
Can you give us a sense of what should be used as a standard for
determining support levels? Is it cost of production, is it revenue
levels, is it something else?
Answer. Recent input prices, recent commodity prices, current
program elements and deficiencies, as well as the intended purpose of
ARC and PLC are several factors that should be considered when making
improvements to ARC and PLC. In the end, margins are the most important
metric for producers. However, input cost and use data is not as
readily available as price and revenue data. Any metric used to
determine benefits must use data that is transparent, timely, reliable,
and representative.
For soybeans, the current programs do not serve as effective safety
nets when market disruptions occur, and they must be improved.
The statutory reference price for soybeans has only increased twice
in over 20 years and needs to be adjusted. Although an effective
reference price (ERP) mechanism exists that adapts to price increases,
the cap undermines that flexibility. Removing the arbitrary ERP cap
would allow Title I programs to adapt to price and cost inflation.
Either this approach, a statutory reference price change, or a
combination of these would provide a more effective safety net.
While adjusting the reference price is helpful, the impact is
limited for many soybean farmers with the relatively low percentage of
base acres that provides access to the farm safety net. As discussed in
my testimony, there is a 34 million acre gap nationwide when comparing
recent soybean plantings with soybean base acres, on which specific
Title I benefits are provided. Having the option (not requirement) to
update base acres to reflect a more recent, defined period of time and
allowing new acres to access the farm safety net, combined with an
increase in the soybean reference price and other ARC changes, would
help farmers access a more effective farm safety net.
Question 7. In a normal year, what is generally the price a farmer
needs to receive for their soybeans to break even?
Answer. In a piece published April 11, 2023, the University of
Illinois' farmdoc Daily \3\ *** authors estimated the break-even price
to cover total costs for soybeans at $12.53 per bushel.
---------------------------------------------------------------------------
\3\ https://farmdocdaily.illinois.edu/wp-content/uploads/2023/04/
fdd041123.pdf.
*** Editor's note: the referenced article, Risks for 2023 Grain
Farm Returns, is retained in Committee file.
---------------------------------------------------------------------------
For comparison, the reference price for soybeans is $8.40 per
bushel. If the soybean farm safety net triggers under the current
scenario, the economic situation in farm country is already past a dire
state.
Question 8. In your written statement, you shared your
organization's priorities for this upcoming farm bill, which call for a
review of USDA staffing and technological capabilities and
cybersecurity, among other things.
Please expand on why you suggest an assessment of USDA staffing.
Answer. ASA has heard from farmers throughout soy country about
their inability to access expert staff in USDA Farm Service centers and
at the field level, especially at the customer-facing agencies NRCS and
FSA. This has been a trend for some time but was compounded during the
COVID-19 crisis when USDA offices closed their doors. Even today,
offices offer limited visiting hours that are not compatible with farm
work schedules or what can sometimes be extensive travel time to and
from the farm. And, in our growers' experience, field visits have
largely been delegated to third-party technical service providers. NRCS
leadership recently relayed that, in 2022, the agency had 3,000
vacancies; it had direct hiring authority for 1,500 staff but hired
only 800 and retained only 500. We also learned it takes 3 years to
properly train new staff to interact with a farmer in the field.
I understand that NRCS has put in place an aggressive hiring
strategy for the next few years to make up this gap and that the agency
is revisiting its training protocol. ASA commends NRCS for the steps it
is taking. While I am unaware of FSA's approach to addressing this
issue or how far the problem extends to other USDA agencies, it is
still frustratingly clear to our growers that current staffing is not
meeting farmer demand. The new farm bill is likely to provide USDA with
new authorities, and it is essential that Congress works to ensure USDA
is prepared and equipped to manage farm bill implementation with
sufficient staffing, training, and technology.
Response from Patrick A. Frischhertz, J.D., General Manager, St. Louis
Planting, Inc.; Member, Board of Directors, American Sugar Cane
League; on behalf of American Sugar Alliance; American
Sugarbeet Growers Association
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. We take an immense amount of pride on our family farm and
have a multigenerational history of implementing conservation
practices. One of the main issues for farmers in southern Louisiana is
soil and nutrient run off. For over sixty years, our farm has
implemented precision land leveling practices and water control
structures to control water runoff and prevent soil erosion and
nutrient loss. Through precision land leveling, we are able to manage
the drainage grade of a field and slow the water from exiting the
field. By slowing down the run off, we allow for the soil and nutrients
to settle in place instead of being deposited in our waterways. We are
also able to close unnecessary drainage ditches, which provides more
area for cultivation and reduce weed pressure by eliminating entry
points for weeds to enter the areas of cultivation.
Our farm also implements cover crops during our rotational fallow
years. Since sugarcane is a ratooning crop, we are able to harvest the
sugarcane and the next crop will regrow from the roots--like a grass
found on a baseball field. In Louisiana, we are able to harvest 3 to 5
years of sugarcane from a single planting. However, the yield potential
of each successive harvest falls until, eventually, it is no longer
commercially viable. Thus, every fourth or fifth year, the crop in the
field is plowed under to fallow for a growth cycle. During this fallow
period, we plant two cover crops on the field to improve soil health,
reduce soil erosion, and manage weed control. Our farm plants a
combination of Austrian Winter Peas and Daikon tillage radishes in our
fallow.
These two crops are a great fit for our sugarcane operation
because, as legumes, they produce their own nitrogen that remains in
the soil after termination. They also provide an immense amount of
organic matter for the soil when they are terminated and worked into
the ground. These crops also directly grow and compete with rye grass,
a threat to the following sugarcane crop. For our farm, this
combination improves soil health and helps reduce pesticide expenses by
out-competing problem weeds.
Last, our farm implements a comprehensive nutrient management
program. We are now using a variable rate potassium and lime applicator
that, with precision soil analysis, allows our farm to maximize the
benefit of our fertilizer investment by distributing the right amount
at the right place for optimal yields. We also use a novel nitrogen
fertilizer applicator with two nitrogen stabilizers. This nitrogen
fertilizer applicators place the nitrogen on top of the sugarcane row
and directly in the root zone of the plant. The two stabilizers used in
our applicator ensure there is no air or water volatility. In
Louisiana, we receive a substantial amount of rainfall. These
stabilizers help bind the fertilizer to the soil, preventing nitrogen
washout or leaching into our waterways and ensuring the nitrogen is in
place for the sugarcane plant while it grows--subsequently improving
yields and returns.
We are a multigenerational family farm. Like many other farms,
every agronomic practice we implement has a goal to improve our farm's
soil and financial health for the present and future generations.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. Many conservation programs offered under the farm bill are
not used by Louisiana sugarcane farmers due, in many cases, to the
payment limits and AGI eligibility factors attached to the programs. As
a result, most sugarcane growers are implementing soil health
conservation practices without assistance from NRCS. This issue raises
questions as farms in America continue to grow with consolidation
across all commodities. One way to substantially increase the uptake of
NRCS approved conservation practices would be to loosen AGI and payment
limits for conservation programs.
Question 3. What are the top three issues that Congress should
examine more closely as it pertains to our existing commodity support
programs?
Answer. The costs of producing the food that America relies upon
has been growing much faster than net farm income since the last farm
bill. That is true for sugar and a host of other crops. We would
support Congress examining the Title I program parameters, including
loan rates, to more accurately reflect a viable safety net for all
growers.
Congress should continue to examine other countries' subsidies and
attempt to level the playing field for all commodities. This is
especially true for sugar, the most distorted commodity market in the
world. World market prices are typically well above global costs of
production because other countries subsidize production and dump excess
supplies there. American farmers can compete with anyone on a level
playing field, but our farmers cannot compete with foreign treasuries
that distort the global marketplace.
Congress should seek to improve the affordability and efficacy of
crop insurance. That program provides the mainstay of most commodities'
safety net. As weather patterns continue to strengthen, managing risk
is probably the most important concern for most farmers. Having an
effective and affordable crop insurance policy is essential to bottom
lines and peace of mind. Unfortunately for sugarcane and sugarbeets the
products offered by USDA-RMA are relatively expensive and fail to
adequately cover the perils facing the industry.
Question 4. How has the economic and growing conditions effected
your planting decisions?
Answer. Every year our family considers how to adjust planting and
management of our owned and rented lands. We always keep the short-term
bottom line in mind, but also keep a longer-range view on improvements
to productivity and sustainability. For example, we have moved more
acres from soybean production to sugarcane production over recent
years, not because soybean prices have been bad, but because the
weather and climate conditions have made it difficult to bring in a
good soybean crop. On the other hand, sugarcane has been a more
reliable producer for our region. If prices for sugar do return to the
levels forecast by USDA and FAPRI over the next 10 years, we might have
to reconsider our crop mix. Those low prices, unprotected by a
modernized loan rate and a viable risk management policy, could put our
operation in jeopardy under different scenarios.
Question 5. What other resources does the USDA need to support
producers, specifically in the technology space? What are those
technology capabilities you want, but are not getting?
Answer. Sugarcane and sugarbeet are approximately 2 million acres
combined in the U.S. As small acreage crops, compared to feed grains
and oilseeds, our industries lack funding from third party corporations
to aggressively invest in industry specific technology. Therefore, we
rely heavily on USDA's important work on plant genetic resources,
genomics, and genetic improvement. Gene editing (CRISPR) and RNAi
regulations need to be finalized so that important technology can be
utilized. We would strongly advocate for continued resources for USDA
to sponsor needed research across all its experiment stations.
Our farmers are among the most progressive and efficient sugar
producers on the planet, embracing new technologies that are both
scalable and affordable. As we continue to use nutrient management
tools, integrated pest management, drones, unmanned aerial vehicles,
satellites, remote sensors, irrigation technologies and nanotechnology,
we are excited about what advances can be made through artificial
intelligence. Many of these tools will need internet and satellite
connectivity. The demand for more data to meet climate objectives will
require scientists to have appropriate data management platforms to
support research and the implementation of these technologies.
Sugarbeets are grown on 1.1 million acres in the U.S., and our
farmers rely on multiple funding sources to address production
challenges facing growers. Growers rely on seed companies, public
research from USDA to universities, and grower and co-op-funded
research to address a variety of challenges to their crop. USDA ARS is
an important partner with eight ARS research stations across sugarbeet
country. We need USDA APHIS to move forward expeditiously in its review
and approval of the next generation of bioengineered sugarbeet seed.
USDA should closely monitor prototype machines using lasers for weed
control and provide support where it is appropriate. Our growers'
greatest concerns also lie with the ability to retain current crop
protection products and approve new ones in a timely manner. USDA's
Office of Pest Management needs greater engagement with EPA to make
sure growers have the tools they need.
Sugarcane growers fund research partnerships with USDA ARS and
universities for varietal development. Our growers would like to see
additional funds to support the sugarcane research being done at the
ARS Sugarcane Research Unit in Terrebonne Parish, Louisiana and the
research station at Canal Point, Florida. ARS sugarcane researchers are
currently working with ARS genetic specialists in Stoneville, MS, to
expedite the release of new varieties of sugarcane with desirable
traits that can thrive in our diverse growing conditions.
Sugarbeet and sugarcane growers urge the Committee to provide
funding to support the research, researchers, and the physical
infrastructure needed by our vital ARS partners.
Response from Brent Cheyne, President, National Association of Wheat
Growers
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. I use conservation tillage on my operation and have been
farming this way for over 35 years. In Oregon, we have dryland and
irrigated wheat production, and farmers are most concerned with
maintaining their soil health and maintaining the soil in place on the
farm and protecting it from wind and water erosion.
I also farm using a diverse crop rotation that includes wheat,
alfalfa, barley, and sometime oats. This rotation allows me to keep the
alfalfa in the ground for 7 years and results in keeping the ground
covered almost the entire year between the wheat and alfalfa.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. It is important the farmers are recognized for the
conservation practices they have been implementing for many years.
Voluntary conservation programs are important to help farmers undertake
new practices or try out something new on a portion of their land, but
it is that existing conservation be recognized for the ongoing
management and investment it takes to maintain those practices.
Congress could look at more maintenance payment for ongoing
conservation management practices.
Question 3. What are the top three issues that Congress should
examine more closely as it pertains to our existing commodity support
programs?
Answer. Within Title I, Congress should examine is making a
meaningful increase to the reference price in PLC. The current $5.50
reference price is far too low to provide an effective safety net.
Farmers would have to lose over 30 percent of their current price to
trigger the PLC reference price. This effectively makes PLC no safety
net at all. Further, wheat's average cost of production according to
the USDA over the past decade is $7.42, far higher than the reference
price. Costs have increased by 38 percent over the past decade, while
the reference price has remained the same. It's imperative that
Congress address this issue.
When looking at the Crop Insurance Title, NAWG would request is to
make crop insurance more affordable at higher levels of coverage. The
current costs of the crop insurance premiums make it unaffordable for
many farmers to select higher coverages. Our farm utilizes an 80
percent coverage level. While my son and I would like to opt for 85
percent coverage, the increase in premiums is much higher than the
increase in protection. This is a problem for many farmers across the
country.
Similar to increasing the reference price, another Title I issue
for examination would be the reference price escalator that makes the
effective reference price. Congress should look at modifying the
parameters of the effective reference price to allow it to be more
flexible with increased prices. The current effective reference price
is capped at 115 percent of the statutory reference price, with a
maximum level of $6.33 per bushel for wheat. While the effective
reference price currently falls below statutory reference price for
wheat, it could come into effect in the mid-2020's. However, the
current 85 percent factor on the moving average should be reexamined
and increased to make the effective reference price more responsive.
Consideration should be given to increasing the factor to 90 or 95
percent. Alternative reference price inflators like the prices paid,
interest, taxes and wages (PPITW) or Consumer Price Index (CPI) should
be taken into consideration. Overall, having an adjustment that takes
years to occur is too slow with the current volatility of commodity
markets and the ever-increasing cost of production and the Committees
should consider making this mechanism more responsive to market
conditions.
Question 4. How has the economic and growing conditions effected
your planting decisions?
Answer. Wheat farmers across the country look at the economic and
weather conditions in their area every year when making planting
decisions. In addition, farmers frequently look at the prices of
different commodities when determining what to plant. Right now, soft
red winter wheat is seeing an increase in production thanks to
increased double cropping. Meanwhile, farmers are also highly dependent
on the weather. Wheat is often viewed as a drought resistant
alternative to other crops. Finally, the economics of crop inputs can
also determine what farmers plant and what practices they implement.
For example, if fertilizer gets too expensive, farmers may withhold, or
change the crop they choose to plant. Farmers across the country look
at all of these factors and more when making the determination of what
to grow and how to grow it.
Question 5. What other resources does the USDA need to support
producers, specifically in the technology space? What are those
technology capabilities you want, but are not getting?
Answer. One thing that would be helpful in the technology space
would be to allow for e-signatures for FSA forms. That would allow
farmers to complete paperwork in the field and not have to travel into
an office. If you're in an area like mine where the FSA office is far
away, this can save valuable time and effort for both the FSA staff and
farmers.
Question 6. In your testimony you mention that your farm is a great
demonstration of the challenges farmers face when it comes to
affordability of crop insurance. How can Congress help with the
affordability aspect of crop insurance?
Answer. As mentioned previously, NAWG recommends increasing the
affordability of higher levels of coverage of crop insurance. Crop
insurance premiums are made on an actuarial basis, meaning that farmers
payments are determined by the risk of growing a specific crop in a
specific area. Premium payments are made by farmers with the Federal
Government sharing part of the cost. NAWG requests that Congress
considers increasing the Federal cost-share for crop insurance
premiums.
Response from Craig Meeker, Chairman, National Sorghum Producers
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer. Members of the National Sorghum Producers (NSP) are early
adopters of many conservation and regenerative soil health practices
for generations. That's because the bulk of sorghum production occurs
in the High Plains region of the Central U.S. Nearly 1 century ago this
region experienced cataclysmic weather events we know today as the
American Dust Bowl. In response, our farming practices over the decades
since have continuously improved and we have adopted practices at
industry-leading rates of reduced tillage up to full no-till,
diversified rotations, nutrient management, rotational grazing where
feasible, and other environmental enhancements to add resiliency
against highly eroding wind, heat, and drought. On my farm in south
central Kansas I also utilize cover crops but recognize the practice
carries enhanced risk for production the further south and west you go
in the U.S. as water resources become increasingly scarce.
Alternatively, farmers in the Southern High Plains who consistently
deal with drought conditions utilize sorghum in place of traditional
cover crops because of its high residue and ability to efficiently
utilize water better than most other crops in order to maintain yield
and profitability.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. NSP wishes to thank Congress and this Committee for efforts
to rightly recognize the conservation and sustainability efforts of
U.S. farmers across the nation who work to feed and fuel Americans
every day efficiently and cost-effectively. We also appreciate efforts
in tandem with NRCS following the 2018 Farm Bill to specifically
recognize sorghum's sustainable attributes in diversified rotations.
NRCS announced in 2021 additional language concerning the definition of
a ``resource-conserving crop'' and a ``resource-conserving crop
rotation'' under Conservation Stewardship Program ``. . . to be more
inclusive of all crops that could be resource conserving and fit within
the purpose for which the definition was crafted.'' Specifically, NRCS
updated these definitions to include ``a non-fragile residue or high
residue crop or a crop that efficiently uses soil moisture, reduces
irrigation water needs, or is considered drought tolerant,'' giving
sorghum a strong foothold in this program. NSP stands ready to work
with this Committee to further promote sorghum in resource-conserving
rotations across the nation.
Response from Daniel T. McMillan, Producer, Southern Grace Farms; on
behalf of United States Peanut Federation
Questions Submitted by Hon. Eric Sorensen, a Representative in Congress
from Illinois
Question 1. Can you elaborate on your conservation methods that you
use to increase soil health, risk reduction and resilience, and for
ultimately increasing yields?
Answer.
a. Crop Rotation--helps mitigate pest pressure, lowers our reliance
on pesticides and maximizes yields.
b. Terraces and contoured rows for erosion control.
c. Grass borders around fields along with grass waterways in highly
erodible areas.
d. Rye cover crop for grazing.
e. Grid soil sampling to conserve and efficiently use fertilizer.
f. We use Irrigation mobile applications to conserve water.
g. We leave residue (commonly called ``peanut hay'') in the field.
Question 2. What can Congress do to support farmers who decide to
incorporate this risk reducing soil health and conservation management
practices?
Answer. Although these practices are beneficial for soil health,
they can be costly to implement. It would be helpful if there were
programs that incentivized implementation of these practices. For
example, the Conservation Stewardship Program (CSP) should be fully
funded and expanded.
[all]