The House Ag Committee is set to give an initial outline of budget views and estimates for the 2024 fiscal year. An early look at the report shows the House Ag Committee could push for improvements to the current safety net within Title I of the farm bill and move away from relying on Congress to approve ad hoc disaster aid. The letter also states the current safety net is outdated and doesn’t take into account the rising costs farmers face today.
Just as corn, sorghum, soybean and wheat growers worked to set policy priorities during Commodity Classic, Farm Journal Washington Correspondent Jim Wiesemeyer released an exclusive early look at the House Agriculture Committee’s budget views and estimates for the 2024 fiscal year. He says the panel will hold a business meeting Thursday morning where the panel will go over the changes outlined in the letter.
After reading the initial budget letter from the House Ag Committee, Wiesemeyer called it one of the best he’s seen during his long career of reporting on the business of agriculture.
“The letter presents a clear road map, with lots of transparency, on what is really needed in the new farm bill,” Wiesemeyer says. “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.”
According to Wiesemeyer, the budget letter includes the following key points for ag related programs:
- Stresses the importance of funding production agriculture programs with Title I, with a strong focus on the farm safety net.
- Outlines efforts to alleviate the need for what the House Ag Committee deems as costly and inefficient emergency ad hoc spending
- Focuses on the spike in the cost of goods farm and ranch families in the U.S. are facing today
According to Wiesemeyer, the letter points out the Title I safety net is projected to account for two-tenths of 1% of federal spending, while still supporting an industry that accounted for 43 million jobs, $2.3 trillion in wages, $718 billion in tax revenue, $183 billion in exports, and $7.4 trillion in economic activity in 2022.
“We would challenge any Member of Congress to identify other legislation that can take credit for a similar return on investment of federal support,” the letter states.
The 2024 FY budget letter to be outlined tomorrow, also says, “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% 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 House Ag panel’s budget views say since current policies were designed in the 2014 farm bill, it uses production data from 2012.
“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%, 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.”
House Ag Committee Echoes Commodity Organization’s Policy Priorities
The House Ag Committee’s point regarding the current farm fill’s safety net flaws is also a message Steve Censky, CEO of ASA, expressed to Farm Journal just ahead of Commodity Classic this week.
“We’ve been leading an effort with other commodity and farm groups, to the budget message to the budget committees, letting them know that the agriculture committees are going to need more resources. We’re hopeful that they can get more resources, but we’re also realistic that it’s going to be tough to try to get those additional resources,” says Steve Censky, CEO of ASA.
Censky expresses a need for Congress to adequately fund the 2023 farm bill, but also do so on time, as he says ASA recognizes the current need among growers to see additional resources for things beyond weather events.
“We want to No. 1, fully protect crop insurance, because that’s soybean farmers’ most important risk management tool, but we also want to improve the safety net for soybeans,” Censky says. “Even when we had the China trade war, when U.S. soybean exports plummeted, the safety net, ARC or the PLC programs, did not kick in. Soybean farmers did not receive any payment, and they had to rely on ad hoc payment.”
Tim Lust, CEO of NSP, is also encouraging legislators to strengthen the safety net within Title I of the farm bill. He points out budget sheets today show inflation and higher costs are overpowering commodity prices, but it’s also drought eating into outlooks for farmers. He says both are just two examples of why Title I isn’t a strong safety net for farmers.
“When we look at the number of dollars that have been spent on ad hoc disaster over the last six years, there are ways, without spending the total amount of dollars that we have spent over the last six years, that we could do some things in Title 1 to really provide some extra dollars there to provide a safety net and to get us out of this situation of an every-year disaster,” Lust says.
NSP has been pushing for the two Agriculture Committees to add funding and improve the safety net within the new farm bill, without taking money away from other essential programs such as crop insurance.
“Whether that is a disaster assistance, whether that’s an increase in reference price, there are three or four different ways that you could provide that safety net,” Lust says. “At this point, we’re not really at this point saying exactly what that is, other than to say, it is needed.”
Both ASA and NSP’s concerns seem to be addressed in the initial 2024 budget letter. According to Wiesemeyer, the budget letter says yearly ad hoc payments are not the 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,” the letter states. “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.”
The letter also outlines nearly $20 billion for new funding for conservation programs, which was also part of last year’s focus by the House Ag Committee.
“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,” Wiesemeyer says.
House Ag Committee Questions CBO’s Farm Bill Score
In February, the Congress Congressional Budget Office (CBO) released its analysis and projections for the federal debt of the U.S., while also providing a CBO score of the current farm bill. the 10-year baseline for mandatory programs in the farm bill, including crop insurance, showed less money for Title I. That estimate also sent a message to farm groups.
“As we see the baseline come out in the CBO score, right now there’s less money for Title I, meaning that we’re going to have to figure out how to divide that pie even thinner,” Chandler Goule, CEO of National Association of Wheat Growers (NAWG), said ahead of Commodity Classic.
However, the budget letter from the House Ag Committee called out CBO’s cost estimate, stating it varied from other analysis available today.
“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% 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.”