House Ag Panel to Consider Fiscal Year 2024 Budget Letter on Thursday

Letter stresses production agriculture, Title I, and importance of funding farm safety net

The House Ag Committee will consider its fiscal year 2024 budget letter on Thursday. The House panel will hold a business meeting at 10 a.m. ET Thursday for “consideration of the budget views and estimates letter of the Committee on Agriculture for fiscal year 2024,” House Agriculture Committee Chairman Glenn “GT” Thompson (R-Pa.) announced Tuesday.

     Something farmers and farm groups should clearly like: The letter stresses production agriculture, Title I, and the importance of funding the farm safety net.

     Some key sections of the letter:

• “The 2023 Farm Bill… through strategic investments in critical programs… “will alleviate the need for costly and inefficient emergency ad hoc spending and promote economic growth, thus contributing to lowering the debt-to-Gross Domestic Product (GDP) ratio.”
• “The farm safety net — commodity programs and crop insurance combined — is projected to account for a mere two-tenths of one percent of federal spending. In return for this modest investment, the farm bill undergirds the food and agriculture sectors, which in 2022 accounted for direct, indirect, and induced output of more than 43 million jobs, $2.3 trillion in wages, $718 billion in tax revenue, $183 billion in exports, and $7.4 trillion in economic activity.1 We would challenge any Member of Congress to identify other legislation that can take credit for a similar return on investment of federal support.”
• “America’s farm and ranch families… are perhaps the most critically impacted by the spike in the cost of goods, especially for the inputs necessary to operate a farm… In 2021, when adjusted for inflation, U.S. farm sector debt climbed above the previous record set in 1980 and has since continued to climb, underscoring the need for a strong farm bill.”
• “The current policies were designed in the 2014 Farm Bill using 2012 cost of production data. Today, the combination of spiking input costs and outdated policy has rendered the commodity title ineffective. Consider the four crops that represent the largest acreage in the U.S.: corn, soybeans, wheat, and cotton. The forecast season average farm price of each commodity would need to fall by roughly 23, 30, 21, and 52 percent, respectively in 2023 to trigger any support under current law. If left unchanged, while production costs remain sticky, many producers would be bankrupt before Title I support provides assistance.”
• “Due to the ineffectiveness of the existing farm bill safety net, Congress has returned to the cycle of providing unbudgeted ad hoc assistance for both weather and market related disasters, totaling $93.3 billion over six years. This amount is 150 percent of the entire Title I 10-year baseline. The assistance has been a godsend for many producers who would not have been able to remain in business otherwise in the wake of a trade war, a once-in-a-century pandemic, or historically devastating weather disasters. However, as mentioned above, despite this infusion of assistance, the farm financial picture is beginning to erode due to repeated production losses and skyrocketing inflation.”
• “The continued reliance upon off-budget assistance is not a fiscally responsible way to support producers. One of the most difficult aspects of production agriculture is the incredible amount of uncertainty farmers and ranchers face. One of the most important principles of a farm bill is its intention to provide a modicum of predictability to this very risky industry. With ad hoc assistance, producers and their lenders have no idea what assistance will be available, or which programs they will be eligible for when a disaster strikes. They don’t know if or when policymakers will decide to step in, with action oftentimes occurring a year or more after a loss. Additionally, each time ad hoc assistance is authorized, either Congress or the administration changes the parameters of which losses are eligible. As a result, the Committee believes this inefficient and ever-changing delivery of assistance costs the taxpayer substantially more than what would have been needed if the support were incorporated into the existing farm safety net.”
• “Relative to Title I, the price assumptions used by the Congressional Budget Office (CBO) to estimate the cost of the title and score changes relative to baseline are lower than other analyses. When compared to the United States Department of Agriculture (USDA) and the Food and Agriculture Policy Research Institute (FAPRI)—subject matter experts in predicting macroeconomic trends in commodity prices—CBO shows a price series that, across major covered commodities, is 10 to 15 percent lower than FAPRI and USDA projections. As a consequence, these assumptions may result in modifications or improvements to existing programs scoring more costly than they would if CBO’s price assumptions were more in line with USDA and FAPRI. This further complicates this Committee’s job in trying to deliver a farm safety net that is relevant to today’s conditions.”
• “The conservation title of the farm bill provides critical assistance to producers to protect natural resources. This title makes significant contributions to working lands conservation and contributes to the preservation of healthy soils, clean air and water, wildlife and wildlife habitats, and numerous other environmental benefits, including addressing and mitigating the impacts of natural disasters. To address funding backlogs across all major working lands conservation programs, the Inflation Reduction Act (IRA; P.L. 117-169) provided $19.5 billion to these programs. While not all Members of this Committee agree with the manner in which the new funds were provided, the oversubscription of these conservation programs — many of which are cost-share programs with producers—has long been a shared concern for many. The Committee will be undertaking a thorough analysis of how these funds are allocated, including USDA’s ability to spend the funding provided, and will be working to ensure they are targeted to address the most critical conservation needs to maximize their environmental impact or address other related funding concerns within the farm bill.”

     The letter also notes the importance of trade promotion programs contained in the farm bill. It adds: “The flagship program in the trade title, the Market Access Program (MAP), has been funded at $200 million per year since 2006. When inflation and sequestration are accounted for, that level has declined to $125 million per year in real dollars. Consequently, since 2011, the agricultural trade balance of the U.S. has declined from a surplus of $40 billion to a $481 million trade deficit — the first in more than 60 years — in 2019.7 According to USDA, for every $1 spent on market development programs, the return is $24 in additional U.S. agricultural exports. For U.S. producers to remain competitive in international markets in the face of high and rising foreign subsidies, tariffs, and non-tariff trade barriers of countries such as China, further investments in these programs may well be required.”

     Regarding the touchy subject of food stamps and the nutrition programs contained in the farm bill, the letter notes: “Each Member of the Committee thinks differently, and often passionately, about the farm bill’s nutrition programs, namely the Supplemental Nutrition Assistance Program (SNAP). The Committee will continue its oversight and engagement related to the local, regional, and Federal impact of anticipated spending, set to peak at $124 billion through aid to more than 41 million people in 2023. That oversight will include the process by which the Thrifty Food Plan was reevaluated in 2021, as well as how the program can better align with improving technologies and evolving ways of purchasing and consuming. The Committee will also continue its review of strong pathways to employment, the promotion of health and well-being, and robust and effective integrity measures within farm bill nutrition programs. The Committee believes the combination of each, coupled with outcomes like lower healthcare costs and increased labor force participation, will have sustainable and far-reaching impacts on our nation’s deficit.”

     The letter stresses that other programs “have a role to play in contributing to a robust rural economy,” including:

• Credit programs that help finance farm operations;
• Research funding that increases farm productivity and sustainability;
• Rural development programs that bring capital to the countryside, improve infrastructure and health outcomes, and provide opportunities for direct to market and value-added production;
• Resources for the deployment of broadband infrastructure to bridge the digital divide between urban and rural America;
• Policies that aid in the management of our public and private forests;
• Energy programs that ensure rural America benefits from energy efficiency efforts and continues to play a role in the production of renewable energy;
• Horticulture initiatives that increase and improve access to fruits and vegetables;
• Animal health programs that safeguard against the spread of economically devastating animal disease; and
• Outreach programs that ensure all producers have access to and can participate in USDA assistance and programs.

Comments: This letter is one of the better if not best I have seen over my long career in reporting on the business of agriculture. The letter presents a clear roadmap, with lots of transparency, on what is really needed in the new farm bill. Budget panel chairs should take the well-researched policy and funding recommendations to heart in working out a realistic farm bill baseline because without that, the farm bill will not get the reforms it clearly needs to alter Title I and move away from the billions of dollars in ad hoc disaster program payouts. I also applaud what the letter notes is the importance of trade promotion programs and agricultural research — two topics that usually get a lot of farm bill attention in the early rounds of working on the legislation, only to find them short-changed at the end of the process. The nearly $20 billion in new funding for conservation programs that was part of legislation last year will also be a focus by the House Ag Committee as detailed in the letter. As for food and nutrition programs, the letter attempts to find a middle ground. It remains to be seen whether any changes in this area will be quickly blasted as unworkable by some who want significant increases in funding and little to no reform.