The following opinion piece originally ran on Agri-Pulse on October 1, 2024.
Over the past two years, Congress has held numerous hearings that have documented a brewing financial crisis caused by falling commodity prices, high input costs, and tightening farm credit. Members have heard from farmers and ranchers across the country about the need for a new farm bill. Now, it’s time for Congress to act. Waiting would be a mistake.
I was the chief economist at the Department of Agriculture when the last farm bill was written and saw firsthand the impacts on our agricultural and food system caused by the changing climate, a trade war, and a global pandemic. It is important to have an updated farm bill to provide certainty for American farm families as they plan for a period of tightening operating margins and deteriorating credit conditions.
That new farm bill should reflect the realities farmers and ranchers currently face as they feed, fuel, and clothe America and so much of the world – a lot has changed since the last five-year farm bill was passed in 2018.
USDA is projecting the largest two-year decline in cash income for farmers and ranchers since the Great Depression. Since the last farm bill, input costs are up 33%, creating serious financial headwinds for many of America’s family farmers and ranchers.
For example, when accounting for inflation, farm income since 2018 is forecast to be down 56% for wheat producers, 32% for corn producers, 36% for soybean producers, and 28% for hog producers. Those aggregate numbers reflect averages, meaning that there are farms that are doing better and farms that are doing worse. The hardest hit are small to intermediate-sized farms, where farm income has fallen 46% relative to the last farm bill.
Right now, many farmers are beginning to harvest and are planning for the next planting and growing season. Current credit conditions and uncertain commodity markets mean that many of those farmers do not know how they will finance their operations next year. Farm sector debt is at a record level, with borrowing costs up by more than 52% since the last farm bill.
The current farm safety net may not be strong enough to reassure lenders without raising the costs of financing. Without loans or the affordable financing needed by our farm and ranch families to underwrite the immense cost of planting, cultivating, and harvesting a crop, some farmers may choose to exit farming altogether.
Even before the recent downturn in the farm economy, farms and farmland were leaving America. Between 2017 and 2022, 141,733 farms left agriculture, and more than 20 million acres of farmland were lost.
Recent disasters are also contributing to hardship in farm and ranch country. It is clear that the crop insurance and standing disaster programs contained in the current farm bill need to be strengthened to keep pace with the severity and frequency of recent disasters, from hurricanes and flooding to drought and loss of irrigation to wildfire and disease outbreaks.
Congress has been forced to save farms by enacting supplemental funding for USDA to deliver through ad hoc programs over the past seven years. Making critical improvements to crop insurance now in the farm bill will immediately help our farm and ranch families when they need it most and save taxpayer money by reducing the need for unbudgeted ad hoc disaster programs.
The level of farm assistance has fallen to its lowest level relative to farm income since 1981. It is clear the current suite of farm programs is fraying at the edges. Farms are leaving agriculture. Farmland is getting paved over. America is importing more and more food. U.S. agribusinesses are shuttering facilities in the Corn Belt and moving them to Mexico. And Congress is continually having to fill in gaps caused by an inadequate safety net.
Waiting to advance a five-year farm bill puts our food and agricultural system at risk. Among those at most risk heading into this economic downturn are new and beginning farmers – those farmers we most want to support to secure a sustainable future for our domestic food production.
Because of American farm families, we have the most abundant and diverse food supply in the world. Our farmers and ranchers are as efficient and productive as any in the world. We can’t risk that by making them wait longer for programs that reflect today’s realities. They need improved certainty now for securing credit needed for the next planting season and longer-run investments in productivity.
That is why farm and ranch families are urgently calling on Congress to pass a bipartisan farm bill that delivers greater certainty for rural America, provides a stronger farm safety net, and strengthens our national food security. All of us who benefit from the bountiful and efficient food and agriculture system in America should also demand it.
Rob Johansson serves as the director of economics and policy analysis for the American Sugar Alliance, the national coalition of sugarbeet and sugarcane growers, processors, and refiners. Previously, he was the chief economist for the Department of Agriculture. He also has held positions at the Office of Management and Budget, the Congressional Budget Office, and the White House Council of Economic Advisers.
