The boom that agri-business enjoyed over the past several years has screeched to a halt. American farms are bracing for impact as expenses soar to 79% of gross income and bankruptcies are rifling through the sector as the dreams of cashing in on eco-friendly trends like ethanol have vaporized. Credit quality and repayment capacity for the industry are on the decline while delinquencies head higher. The initiatives outlined in the last Congressional session will be immediately put to the test as rural America looks for ways to cope with one of the most severe economic crises in history.
Over two days last week, the House Agriculture Subcommittee on General Farm Commodities and Risk Management held hearings to review the implementation of the Food, Conservation and Energy Act of 2008 (FCEA), more commonly referred to as the Farm Bill. Last May, the Farm Bill was enacted, making investments in nutrition, conservation, renewable energy and a variety of farm programs, including significant payment limit and income eligibility reforms.
"For me, the Farm Bill is one of the most important pieces of legislation Congress works on because every man, woman and child has a vested interest in agriculture," said Congressman Leonard Boswell (D-IA), subcommittee chairman. "While there have been some bumps along the way to implement the programs, producers are eager to have the rules and regulations finalized so they can continue providing the world with an adequate and affordable food supply."
After the tumultuous weather experienced in 2008, one of the concerns voiced was about the Farm Bill's disaster assistance measures. Last year, crop destruction was seen throughout the country as late-season flooding and hurricanes pounded the Gulf Coast, levy breaks terrorized the Midwest, spring freezes hit the Northeast and drought wrought damage throughout the Carolinas, Georgia and Texas. Because of older technology, the United States Department of Agriculture (USDA) has stated that it will need approximately $300 million to upgrade its system in order implement and keep track of Farm Bill programs, like disaster assistance.
"One of the most common questions we get from farmers concerns the delivery of disaster program assistance," said Bob Stillman, president, American Farm Bureau Federation (AFBF)."For over a year, we have been unable to answer that question since the rules have not been published." Stillman urged the Agriculture Committee to work with the USDA and the Appropriations Committee to secure the needed funding to upgrade the aging system.
He added, "It is unclear how long the antiquated system can continue to support increasingly complex farm programs. Systems across agencies under USDA jurisdiction cannot communicate with each other, which could lead to improper payments and duplicate paperwork."
Other concerns focused on farmer and rancher safety nets. "The economic collapse of the dairy industry is spreading and impacting many in its wake," testified Roger Johnson, president, National Farmers Union (NFU). "With demand shrinking, market prices collapsing, input costs increasing and reduced credit availability, dairy farmers are facing a unique set of challenges on multiple fronts." Johnson reminded the Subcommittee that the NFU was the only organization to call for the elimination of direct payments to bolster other facets of the farm safety net. The predicament facing the dairy industry now, he feels, is an example of the inadequate price safety net included in the Farm Bill, and Congress and the USDA need to take immediate action to rectify the damage being done to the sector.
"The farm bill touches the lives of every producer in this country," stated Stillman. "It was a long, hard road to passage of the 2008 Farm Bill, and thanks to the hard work of this committee, the end product was a fiscally responsible compromise of which we can all be proud. However, the work does not end with the passage of legislation, but continues and often becomes more difficult as that legislation is implemented."
Matthew Carr, NACM staff writer