Time to start discussions on next farm bill
Profitability in farming remains elusive as predictions indicate that farm income will decline for the third straight year. While farmers fight to reduce inputs to deal with low prices, a policy advisor urges producers to let those in Washington know what should be included in future legislation at the federal level.
Lynn Tjeerdsma, senior agriculture policy advisor for Sen. John Thune, spoke to members of the Aberdeen Area Chamber of Commerce Ag Committee last week. Tjeerdsma has concentrated on ag policy at the federal level, working on the last five farm bills. A native South Dakotan, he also owns farms near Platte.
“How do we find out what should be in the next farm bill?” Tjeerdsma asked. “We spent time away from Washington talking to the people who are impacted by the legislation. We find out what’s working and what should be changed. We talk to you.”
He believes future legislation will focus on family farms and will look at payment limitations.
“Regardless of who is president, the ag community stays very cohesive and works together to put policy first,” he said. “Getting the last farm bill passed through both houses of Congress was difficult, and I anticipate that the next one will be difficult as well.”
Tjeerdsma said there is an urgency to get started on the 2018 Farm Bill to make sure the vital farm programs aren’t delayed.
“Under ARC and PLC (Agriculture Risk Coverage /Price Loss Coverage) programs, the 2014 Farm Bill was to save $20 billion, but it’s going to end up being more costly,” Tjeerdsma said. “Whenever we write a farm bill, it reflects the prices at the current time. That lasts for five years. When we wrote the last bill, we figured prices would drop some, but prices dropped a whole lot more than anticipated.”
In South Dakota, 90 percent of the farmers are enrolled in ARC-county. That resulted in healthy payments for many last fall, which was a welcome relief to producers.
This fall, the payments won’t be as large. As the program is set up on a rolling average, every year the payments will go down. “By the time we get to 2017 and 2018, ARC payments will be rather small,” Tjeerdsma said.
As fewer people are involved in agriculture, selling the farm bill and resulting payments to the public will be harder. He said that taxpayers want a good use of their dollars and that has to be taken into consideration during negotiations.
Crop insurance is something the public understands as producers have skin in the game. Tjeerdsma said they can understand that if premiums are paid, the program covers potential risks.
“We may need to look at ways to make ag more sustainable,” Tjeerdsma said. “That may come through expanding the Conservation Stewardship Program including cover crops and no-till practices.”
Tjeerdsma noted that the weather continues to present challenges. Six counties have been declared primary natural disaster areas due to damages and losses caused by the current drought. As designed under the 2014 Farm Bill, the designation opens up the Livestock Indemnity Program to provide help with livestock feed.
Question on crop insurance
Randy Knecht of Houghton noted that if crop insurance is not included in the next farm bill, bankers would run for the exits. He asked attendees in financial institutions if they would finance farms without crop insurance. Those present indicated they would not. Lance Vilhauer of Plains Commerce Bank said that without crop insurance, farming “would become much more of an established man’s game overnight.”
Tjeerdsma said he fears that crop insurance will be on the chopping block in the upcoming farm bill. In the last negotiations, $3 billion was cut from the program. By using reserve funds, the money was restored.
Some may insist on a payment limitation in the next negotiations. If that happens, Tjeerdsma predicted crop insurance would be available but it would be much more expensive.
Concerning the Trans-Pacific Partnership, Tjeerdsma predicted that in his opinion, it has less than 10 percent chance of being passed by the lame-duck Congress. The pact writes rules for global trade by deepening economic ties between the nations involved. Tjeerdsma said that under a new president, no matter which party, negotiations will be set back by about five years.
As he wrapped up the session, Tjeerdsma reminded the group to let those in Washington know what should be included in future legislation.
“The 2018 Farm Bill will be more difficult to write, but overall, the money is well-spent as we look at the U.S. food supply and how safe it is,” Tjeerdsma said.
Connie Sieh Groop is a freelance ag journalist. She and her husband farm near Frederick, S.D., where they grow corn and soybeans. Follow her on Facebook and read her blog at inkaboutag.com. If you have any suggestions for ag stories, email her at firstname.lastname@example.org.
Agricultural Risk Coverage
Under the previous farm bills, which are funding bills for agriculture and nutrition in the United States that are rewritten usually every five years, farmers were guaranteed payments from the federal government regardless of their crop yield or revenue. The current bill features three payment options.
Last November, payments flowed to approximately 43,000 farms in South Dakota with corn base who participated in the Agricultural Risk Coverage – County Option. The option was meant to serve as protection against lower revenue from a combination of lower prices and yields.
The 2014 Farm Bill saw its first round of payouts for the 2014 crop, has three payment plans, but about 90 percent of South Dakotans chose the Agriculture Risk Coverage – County (ARC-CO) program. Corn payment kicked in because the corn price was 30 percent below the historical benchmark price used by the ARC-CO program. Farmers were locked into that plan for the duration of the bill that ends in 2018.