Opening Statement: Chairman K. Michael Conaway: Rural Economic Outlook: Setting the Stage for the Next Farm Bill
Remarks as prepared for delivery:
Good morning. We ordinarily kick things off every year with the Secretary of Agriculture offering testimony as our one and only witness.
However, our new Secretary has not yet been confirmed. I have visited with Governor Perdue a number of times now, I believe he is an excellent choice, and I hope that he can be confirmed in short order so that he may begin the important work of the Secretary of Agriculture.
This is our first full Committee hearing of the 115th Congress. And, Chairman Emeritus Frank Lucas will kick off a series of subcommittee hearings on February 28.This is also the first Farm Bill hearing as we begin to develop the next Farm Bill. And it is timely.
America’s farmers and ranchers are facing very difficult times right now. This is something that the Federal Reserve, the Agricultural & Food and Policy Center, the Food and Agricultural Policy Research Institute, USDA, and even The Wall Street Journal agree on.
Farmers and ranchers have endured a 45 percent drop in net farm income over the last three years, the largest three-year drop since the start of the Great Depression. The most recent ERS report now tells us that net farm income will be down again in 2017. Overall, ERS is forecasting a 50 percent drop in net farm income since 2013. It’s hard for any of us to imagine our income being sliced in half.
We are told that 1 in 10 farms are now highly or extremely leveraged. Nominal debt levels are at all-time highs and real debt levels are approaching where they were prior to the 1980s farm financial crisis.
Yes, interest rates are lower and that certainly is a mitigating factor that differentiates our situation from the 1980s. But, as the recent Wall Street Journal article stated, and as I have experienced as a CPA in West Texas, there is real potential here for a crisis in rural America.
That is why I am so eager for Governor Perdue to be confirmed. Even as we work to develop a new Farm Bill, the Secretary of Agriculture may well be called upon to help struggling farmers and ranchers. Let’s all pray that a good crop and better prices this year will make that unnecessary.
As we begin consideration of the next Farm Bill, current conditions in farm and ranch country must be front and center. But there are other important considerations as well.
Chairman Lucas’ strong admonition during the last Farm Bill debate that a safety net is supposed to be there to help farmers in bad times—not in good times—is one that Congress might better take to heart this go around.
Every hole in the current safety net that now requires mending is the result of our not fully heeding that wisdom. Had we followed his counsel more closely, I doubt that there would be anywhere near the current urgency in writing a new Farm Bill. That wisdom isn’t just from a guy who’s been around the block a few times in writing Farm Bills. It’s from a guy who actually farms and ranches.
Another context we need to take into account when writing the next Farm Bill is this Committee’s contribution to deficit reduction. I am hard pressed to admit it but the critics of the Farm Bill were absolutely right. We didn’t save taxpayers $23 billion. We saved them $100 billion. We saved more than four times what we promised under the last Farm Bill and we achieved these savings despite a very severe and sharp downturn in the farm economy.
Because we were asked during the last Farm Bill — when times were good — to cut twice before measuring once, in the upcoming Farm Bill debate we will measure our requirements first and then determine what kind of a budget we will need to meet these needs.
The vast majority of Americans recognize the need for a strong farm safety net. They see what Mother Nature can do and so they strongly support crop insurance. And, they also see the effects of the predatory trade practices of foreign countries that depress the prices our farmers and ranchers earn at the farm gate.
For example, in a single year on just three crops, Chinese subsidies are said to be $100 billion over their WTO limit. That’s what the entire safety net for all America’s farmers and ranchers costs over the life of a Farm Bill — plus more than half of another Farm Bill.
The President of the United States has stated that our farmers and ranchers deserve a good Farm Bill and one that is passed on time. This will require resources, bipartisanship, and unity in farm country. But, this is our duty and it’s what we aim to do.
With that, I yield to my friend, the Ranking Member, for his opening statement.