Farm bill timing, issues | Trade policy | Ag financial woes
On farm bill matters, he continued to stress policy first, and only then a discussion about funding levels should be discussed and acted on. He said there are several farm bill issues that need to find a compromise beyond the widely reported differences on work requirements relative to SNAP/food stamps. He sees low odds of supply management for the dairy sector. He was vocal in his opposition to Sen. Chuck Grassley's (R-Iowa) amendment that would alter farm program eligibility language. He discussed various issues surrounding when the farm bill would be completed, openly wondering whether his Senate colleagues want to delay the process for political reasons.
He took time to comment on President Donald Trump's trade policy initiatives and farmers’ and ranchers’ reaction to them. He revealed he wanted a different approach to the Trump tariff relief aid but once the program was announced, he is backing the aid package, saying USDA Secretary Sonny Perdue is doing a “great job.”
On U.S./China trade policy conflicts, he was upbeat when it comes to the timeline of getting resolutions to lingering U.S./China trade policy differences. Some farmers and ranchers may disagree with Conaway regarding his views on long-term impacts of ongoing trade policy issues.
Bottom line: Things currently appear farther apart than most observers believe when it comes to the farm bill, with Conaway indicating there are differences remaining in all but two titles of the bill. Plus, the process with the Senate wanting to set funding and then the policies that go with that is also creating difficulties in getting to a final bill. Given the financial situation in farm country, it was heartening to hear Conaway's view that the commodity title changes are a positive for farmers. Also, Conway's offer that Stabenow rejected as not going far enough involved all titles of the bill, not just SNAP. Conaway is just one lawmaker but his passion for getting this farm bill to the finish line should not be underestimated. He wants a bill that most Republicans can back and ideally most Democrats. But so far, that has been a challenge. It's clear Conaway respects the legislative/executive responsibilities on policy. And that's why he is pushing to get the farm bill completed as soon as possible. While observers may think lingering farm bill issues are too many and too lofty to complete soon, especially by Sept. 30, if both chambers compromise, the farm bill end zone could come together sooner than most now think. But if key lawmakers want an issue rather than a bill, that’s an entirely different situation. Conaway wants a bill enacted on time and Stabenow has stated the crunch time is December. The obvious question is why? After the interview, the sense is the issues that divide the four farm bill principals are not of the nature that should prevent on-time enactment of a farm bill. They all seem bridgeable. So, why not complete the process in September rather than put it off three months?
The following are edited questions asked and Conaway’s comments (slightly edited for clarity) on key topics:
Can you provide a farm bill conference update?
“We're in negotiating mode. I've got a countdown clock that I've got on my phone. It's not only running on my phone but running in the back of my head over and over and over. I've got 12 days, 11 hours to get this thing (farm bill) done, so time is of the essence. (Note: The interview took place Tuesday afternoon, Sept. 18, in Chairman Conaway’s House Agriculture Committee Office.)
“From my perspective, there are hard issues that need to be compromised on, none of which individually or in combination you would say, 'Okay, this can't get done.' We can work our way through each and every one of the differences as hard as they may be and get to a conclusion that they would get through both houses. We probably have two titles that are not an issue with... the remaining issues are across the board.”
Timing of farm bill.
“I'm not going to be any smarter in October. There will be no new information on the table in October, so now's the time to get it done and that's why I'm pushing this. That is why I came back to DC (this week) to continue to push on the idea that let's get things done right now on behalf of all those good, hard working men and women in production agriculture who've got a lot of other things going on. Taking any anxiety associated with the farm bill ruckus off their plate would be welcome, I suspect, for everyone.”
Sens. Roberts (R-Kan.) and Stabenow (D-Mich.) suggested the end of December is the crunch time for the farm bill, do you agree?
“I couldn't disagree more. I played football way too long probably, but there's time until this clock goes to zero on September 30 and as far as I'm concerned, I don't want to talk about anything other than getting this done within the time that's on the clock that's running right now, period. And anybody who's going to talk like that maybe are signaling they've given up, but there's no give up on this. You don't see me giving up. I'm not bluffing... (hitting fingers on table)... Let's get this thing done.”
Some say the farm bill will not get done before Nov. elections. What changes after elections?
“That would be the question I would ask anybody who says that. The only thing that potentially changes would be who controls the House of Representatives. I hope that's not what is going on between the ears of my counterparts. It's certainly not going on with me.
“I don't care who wins the election in November from the standpoint of getting this farm bill done now. We need to get it done now. Putting off a decision... there's always an opportunity to put something off. That is the most human nature thing we do in DC. So, it just makes no sense for people to allow that to get in between their ears. I know it does and it's beginning to dawn on me that perhaps that's more of a motivator among my colleagues in the Senate than it should be. If that's the case, I certainly hope it's not, but when I look at what we're trying to get done and the lack of movement from the Senate on terms of policy decisions in particular, there's only one reason why they're not moving it and they must have some reason that they perhaps don't want a farm bill. They think maybe putting it off until December helps them in some form or fashion. I don't know how you do this in the lame duck, quite frankly. But we'll see. As far as I am concerned, there are still 12 days and 11 hours left on the clock.”
Some say the farm bill will be kicked to the next Congress in 2019
“For those who say just kick it to the new Congress, then why have a Congress at all? If you can't do the hard stuff during your Congress and put it off to the next Congress... while it's human nature (to delay) and we do it all the time, it's the worst way to run government.”
Was it frustration with the farm bill lack of progress when President Donald Trump came out and mentioned Sen. Stabenow?
“I think it's the process. I asked him to help where he can, asking for support on the farm bill and SNAP (food stamps). You saw that in his tweets that he's backing our play on that. It helps kind of offset the fact that I had only Republicans in the House vote for the bill. Collin (Rep. Collin Peterson, D-Minn., ranking member on the House Ag Committee) has been a help where he can, but he's in a holding pattern on his side because of the vote [in the House, where no Democrats voted for the farm bill]. But having the president's help is something I asked for. When you ask for his help, you get it however you get it. I think the tweet was a response to let the world know that he wants a strong farm bill and he wants work requirements (for food stamps) enforced as well.”
Will the majority of House Republicans need to signal they will vote for a farm bill conference report before you agree with final language?
“Yes. I can't bring back a bill that gets more Democratic votes than Republican votes. I'm not going to do that. I'm hopeful that given that Debbie (Stabenow) has some strength in the Senate, that Collin can agree with whatever she ultimately agrees with, and that might get some Democratic votes in the House and that would be fantastic. This should not be a partisan bill. Eating in America is not partisan. Having gotten the farm bill done in the House on a partisan basis is not particularly a badge of honor, but I'm proud I got it done. But it would be better if we had Democrats helping us to move this ball across the finish line as well.”
What have you offered the other conferees as compromise on farm bill issues?
“I can't litigate the details with you. I know you'd like them... most reporters would. But that's not how you would negotiate a deal, so I'll be respectful of the process. But our first offer in late August was across all 12 titles. The Senate came back with some dollar changes on a few of the titles and then they did a second round of dollar changes, with limited policy changes. My offer was policy, dollars... the full package. Right now, we're only getting dollar stuff from the Senate.”
Sen. Roberts has indicated he has not been ingenious enough in coming up with something that will work regarding SNAP work requirements.
“The Senate seems to have abandoned the idea that it is Congress' responsibility to fix the waiver issue and that somehow [USDA] Secretary (Sonny) Perdue could wave a magic wand and fix that. It's not his responsibility; he does not have the authority. Quite frankly if President Obama's Ag secretary (Tom Vilsack) had done that, we would have been screaming bloody murder. So, the Senate is perpetuating the same bad government solution to having the executive branch ignore the law and ignoring the legislative branch. So, it's our job to fix it and then once we get the law fixed, it's the Secretary's responsibly to implement the new law, not fix the existing broken system that's allowing waivers to be abused.
“The Senate has not proposed any changes to SNAP other than what's in the Senate farm bill.”
Are some of the suggestions from the Senate side regarding the safety net improvements?
“The Senate bill does harm to Title I, in my view.
“One of my guideposts is to strengthen work requirements and enforcement (food stamps) and we've got to have a better Title 1 than we've currently got and the Senate bill didn't do either of those. I believe the House bill did. We've changed the House bill with our Senate colleagues and our staffs have been working great together. We've negotiated some changes to what we (House) did in Title 1 to accommodate some problems the Senate had. So, the Title I we have now is a bit different than the House bill. But it does strengthen Title I, which is a must.
“The five-year decline in net farm income of 50% is the worst since the Depression. These are hard times for production agriculture. A stat that just haunts me every single day is the number of suicides among farm families going on right now. Farming is such a family business. You would think they would be protected enough that [our safety-net programs] would not let that happen, but the threat of a multi-generational operation that loses the family farm or family ranch is just a monster that has driven people to the point of taking their own lives. It shows the safety net is not working as well as it should, so we can improve that.”
Is there enough funding to improve the safety nets?
“We find it with adjustments. We take money out of Title 1 in certain places and put it back in Title I in other places. Recall that in the BBA (Bipartisan Budget Act of 2018) we took money within Title 1 from cotton and recirculated it for cotton as opposed to the dairy program that had new money. We try not to cross titles, but if the policy doesn't drive spending the money, then I don't think you should spend it. Let's figure out what the policy should be and then if you can afford it, great. If you can't, then try to modify to guess what the best policy should be.
“Let's not talk about money, let's talk about policy and what should the policy look like. Let's find the very best policy we can pay for. If we can't afford it then at least you know where to get what you're trying to get to so as you modify to try to squeeze it into the money you've got, you know where you're trying to get to. If you just start with a money level, then you get goofy policies at that point in time just to get under the spending cap.
“I got lucky in a sense on SNAP because that (House food stamp proposal) wound up scoring zero.
“Pat (Roberts) and Debbie (Stabenow) want to go spending first and then figure out policy. That is just wrong headed to me. So, if I've got a title that the policy that makes the most sense for the country doesn't spend all the money, then I'm not driven to go find more policies to spend the money on now. In the Senate that seems to be the mindset. So that's part of the differences of opinion we have.
“There isn't additional money. This idea that under no circumstances can you take money out of one title and put it in another is wrongheaded. It's interesting that my Senate colleagues take that position with respect to titles like I, II and IV, but nowhere else in the bill. That's a bit frustrating.
“Title I (safety-net programs) has to be stronger. Title II (conservation) Collin and I have some great stuff there.
“Collin and I negotiated everything in the House farm bill except SNAP (Title IV). That story got lost in the fight (on the House farm bill vote). So, Collin is able to defend the non-SNAP stuff in our bill because he and I negotiated that. We have offered some modifications. It includes phasing out the Conservation Stewardship Program (CSP) and adjusting the Conservation Reserve Program (CRP) acres. Collin and I agree that CSP needs to go away and then we take that money and put it into EQIP (Environmental Quality Incentives Program) and that within the CRP program, we pay for [adjusting the maximum acres upward] by adjusting CRP rental rates.”
Is there bipartisan opposition to the Sen. Grassley (R-Iowa) amendment that would alter farm program eligibility and lower the AGI test?
“Yes, there is bipartisan opposition. Collin and I are vehemently against hurting farmers by the actively engaged stuff Grassley wants to do or the AGI change. Both would hurt farmers and it's the wrong time to do it. It was in both farm bills the last time but it didn't make the final cut and that was better financial times for production agriculture. Now it's 180 degrees the other direction. Now is not the time to hurt people with changing the rules. Farm bankruptcies are up 39%.”
With the decline in dairy prices now four years-plus, some are again pushing dairy supply management. Do you agree with that approach?
“I see low odds of that. I just don't think that the system is ready to try that. Collin (Peterson) and I are trying to improve existing programs and we've got some dairy producers in Congress that are actually trying to live this wreck that is dairy. The things we are trying to do is to try to increase milk usage... whole milk in schools... trying to increase demand and utilization. That is a better approach. One of the pieces with a trade deal with Canada may be that Class 7 milk wreck that that has caused a lot of problems. We are not going to necessarily deal with Canada's supply management program, but I think they can try to get as a part of that (NAFTA 2.0) negotiation relief for Class 7. That's one of the pieces that I think Canada's got to put on the table: the impact that they've had and its impact on U.S. dairy markets.”
Are farmers and ranchers moving away from their prior support of President Trump due to the ongoing trade issues, particularly with China?
“There's tension. Farmers and ranchers love this country and are Patriots and have a president doing the exact same thing and they really love that. Now they are also living day to day with price changes and the need for cash flow, the inability to make long-term deals and markets are drying up. All that has increased farmer and rancher anxieties. Some are actually experiencing it while others think they're going to experience it” [with additional trade policy action].
“Farmers see it and they know it: They know China cheats and has spent about $100 billion each year in subsidies for just three crops (wheat, rice and corn). And that dwarfs what we do across our entire farm bill. Farmers know that has screwed up the markets. These are anxious times and commodity prices aren't getting any better. There's no interest like self-interest when farmers and ranchers start to look at their own deal. They don't get a time out with the bank because the trade deals are going on. They can't call the banker and say when President Trump gets the trade deals I can pay my note. That is not how the bankers look at it.”
How long can the current trade policy uncertainties last before there is significant farmer and rancher reaction?
“It's going to last as long as it's going to last. China will continue to get bigger, they will continue to have strengthened their own economies and their own walk in this world. We must take them on right now and try to at least show that they have to abide by agreements they made” (via WTO commitments).
So, you are in full support of what President Trump is trying to do via trade policy?
“Absolutely. Chinese leader Xi Jinping is a bully and there's never an easy time to stand up to a bully. Sometimes bullies push back. Got that. But as China gets bigger and bigger and bigger, if we don't take them on now, it will be even more difficult in the future to try to show them that if they want to be that international superpower that Xi Jinping aspires to, they need to have some modest appreciation for the rule of law, international law. Even now their retaliatory measures are against the rules. They have a whole different concept of how law should be and it's different from ours and different from the international norms that we've had since the end of World War II. It's never going to be an easier time to do it. It will always be hard, but President Trump is doing it. He would tell you in a private conversation that he thinks he's closer to bringing China to the table than what it might look like to those of us who don't have that insider information.”
Comments on President Trump's tariff relief aid.
“I'm proud of him that through USDA he announced the Market Facilitation Program for certain crops and there may be another round of that in the future. What he said to production agriculture, and folks take great heart of this, is that he is saying he will do the best he can, and he will not let the Chinese use U.S. agriculture as a weapon against America in the negotiations.”
Is there concern that farm and commodity groups and some lawmakers may continue to want to tap the Commodity Credit Corporation (CCC) for more farmer spending?
“There's always an issue when the CCC gets used. I had my input to the Secretary (Perdue) on how the program should be implemented. He went a different direction. That's his call and I back his play. He's doing a terrific job... it's a hard job.
Note: Chairman Conaway did not detail what approach he favored but said Perdue... “thoughtfully considered what I said and decided to go another direction. That's his job. He's doing a terrific job. I don't know what that second tranche might look like, but he's got economists on his team that are taking data and trying as best they can to try to see how it affected this crop or that crop. It's not like algebra where answers are in the back of the book. This is hard stuff that they're trying to do and they're doing a good job of it. They can always be second-guessed by the naysayers out there, but it won't be me because I think the Secretary's doing the right thing by making it happen.”
“CCC should not be used for an ad hoc disaster bill. That's the main reason we have a farm bill.” (Conaway stressed there are weather-related events like major hurricanes that should mean separate congressional aid.)
What are the long-term consequences of the tariff battles that are going on? History shows that ag-related investment money goes to Argentina, Brazil, but now in the case of wheat and other commodities, Eastern Europe — Ukraine, Kazakhstan, etc.
“As for the wheat issue in Kazakhstan and other places, increased production likely would have happened despite recent trade policy developments. I don't know that you can say the tariffs will have long-term negative impacts. Getting China to the table soon will be a big signal as to whether or not this is long-term issue. This president is negotiating.”
In your talks with ag bankers and the crop insurance sector, have they told you of big financial concerns for U.S. agriculture and perhaps for some crop insurance companies ahead?
“Bankers are anxious. They've got long-standing existing relationships with families that have been there with them through thick and thin. They have seen families make hard choices to stay current on the loans and bankers have tried to make that happen but there are some bankers in a tough spot. The longer this price downturn lasts in the ag economy, farmers are burning through their capital (working capital is down an estimated 20% in 2018 and down 70% from the 2012 high). We are beginning to see that pressure in bankruptcies as I previously mentioned, and the increased suicides are an indication that things are getting really hard. Bankers have gone as far as they can for a lot of families.
“I have not heard of any major concerns in the crop insurance sector.”