May 16, 2016

Why Is It So Quiet Down on the Farm?

Burleigh Leonard

It’s half-time for the 2014 Farm Bill, the mid-point of the five-year law that authorizes virtually every program administered by the U.S. Department of Agriculture (USDA).  There is an eerie silence emanating from the locker rooms of the various stakeholders.  It is not the silence associated with satisfaction or resignation.  It feels more like the quiet before the storm.

The first half of the Farm Bill has bordered on disaster for many players on the field.  Crop prices have declined dramatically.  In 2013, a bushel of corn averaged $6.15; a bushel of soybeans $14.10; a bushel of wheat $7.32; a hundred weight of milk $20.10.  In 2015, corn sold for $3.71; soybeans $9.49; wheat $5.28; and milk $17.10.  The decline in commodity prices has led to a precipitous drop in the income of farmers.  The Chairman of the House Agriculture Committee, Rep. Mike Conaway, recently noted that during the period 2013 to 2015 net farm income fell 54%, the largest two-year decline since 1919 to 1921.   The bleeding is not over.  USDA forecasts net farm income will drop by another 3% in 2016.

Farmers have responded by cutting costs across the board. They have reduced purchases of seed, fertilizers, pesticides and tractors. Suppliers of agricultural inputs and machinery, like John Deere and Monsanto, have suffered as a result. Their share prices have cratered; they have eliminated thousands of jobs; and their boards of directors have resorted to mergers and spin-offs to survive the shake out.

Taxpayers, too, have taken a hit.  According to the Congressional Research Service, federal payments to farmers will balloon from $9.8 billion in 2014 to $13.9 billion in 2016, a 42% increase in just two years.  Taxpayers now provide 25% of net farm income, up from just 9% in 2013.

America’s farmers and ranchers aren’t shy. They are quick to place demands on the federal government for relief from low prices, bad weather, insect infestations and unfair trade practices.  In the late 1970s, during a period of hard times, angry farmers drove their tractors to Washington and used them to blockade the Mall.  They trapped the Secretary of Agriculture in his office and shouted down members of the House and Senate in the hallways.  Today, barely a whimper can be heard from the hard-working people who feed this nation and much of the rest of the world.  Why?

Part of the reason may be that producers’ financial condition has yet to deteriorate to the point where local bankers are unwilling to finance them for another year.  Thanks to record high commodity prices earlier in this decade, many farmers have reserves to see them through this rough patch.  In February, Secretary of Agriculture Tom Vilsack testified before Congress that “the debt to asset ratio for U.S. producers is still near record lows indicating that the farm balance sheet is strong.”  In the absence of banks foreclosing on them, farmers are less prone to brandish their pitchforks and take to the streets.

Another and admittedly more speculative reason for the farmers’ apparent reticence may be that they have found company with a larger and seemingly more effective movement to express outrage over the current state of affairs:  Donald Trump’s unorthodox campaign for the presidency.  Rather than marching on Washington to seek redress from their elected representatives, farmers may be marching to the ballot box to collectively thumb their nose at the world.

The best explanation for the lack of an outcry from down on the farm is found in that old dictum “Be careful what you ask for.”  The quickest and most direct way to pump-up farm income is to enhance the host of safety net programs established under the current Farm Bill.  But opening up the Farm Bill for that purpose would allow budget hawks, environmental groups, consumer organizations and advocates for the poor to pursue their agendas.  Farmers remember the “near death” experience in 2013 when an odd coalition of the most conservative and most liberal members of the House of Representatives mustered enough votes to defeat the Farm Bill the first time it was brought to the floor.  The riotous nature of this election year certainly suggests that the atmospherics for farm legislation have not improved.  Farmers are heeding the dictum and keeping their powder dry, waiting for a more opportune time to strike.

That time will come soon enough If things don’t improve down on the farm.  So enjoy the half-time show because farmers are getting ready to “make some noise.”


Burleigh Leonard

With over 35 years of Washington experience, Burleigh has done a little bit of everything—from confronting angry farmers who had barricaded the Mall with their tractors, to eating jelly beans with President Reagan and his Cabinet, to demonstrating the world’s first “smokeless” cigarette to skeptical members of Congress, to fleeing Capitol Hill on 9/11 as acrid fumes wafted across the Potomac from the burning Pentagon. His experience is bolstered by his expertise in food, agriculture, and international trade issues. Burleigh Leonard is a senior consultant at Prime Policy Group.