House Agriculture Committee Cites Farm Budget Needs

Mar 15, 2001

House Agriculture Committee Cites Farm Budget Needs
Combest: "Farmers need a farm program that they can bank on at this time of year"

(March 15, 2001)

House Agriculture Committee Members have recommended that the House Budget Committee be prepared to provide needed assistance for 2001 and to permanently increase the budget allocation for agriculture so that future ad hoc bills can be avoided.

Writing on behalf of the House Committee on Agriculture, Chairman Larry Combest (R-Texas) and Ranking Minority Member Charlie Stenholm (D-Texas) noted the Agriculture Committee's ongoing hearings with farm group testimony detailing specifics on strengthening the farm safety net. The testimony will not only be useful as the Agriculture Committee works to bolster current commodity laws, but also serve as a good foundation for comprehensively addressing the needs of rural America in the next farm bill.

"In the letter, we first wanted to make clear that the crisis in Agriculture is not over. In fact, with increasing input costs and little to no price recovery, it is only getting worse, and based on this, assistance will be needed in 2001," said Chairman Combest regarding the letter of agriculture's needs to the House Budget Committee. "While the $25 billion in assistance that has been provided over the past three years has been effective, farmers need a farm program that they can bank on at this time of year. To make such long-term structural changes to our agricultural policy, we are clear that money needs to be added to the agricultural baseline. However, by making this investment in policy that will support farmers in times of need, we believe we could actually save money in the long run."

The text of the letter details certain factors beyond the control of producers that have contributed to wheat, corn and a soybean prices being 31 percent below USDA projections from the time the current farm bill passed.

· For the 2001 crop year, energy costs are expected to contribute to an additional $1.5 billion increase in production expenses.

· USDA estimates that the value of the dollar is up 25 percent relative to our customers' currencies and up 40 percent relative to our competitors' currencies.

· U.S. producers face the daunting challenge of competing with the average 1997-99 European Union subsidy level of $342 per acre, while the average U.S. subsidy level was only $43.

"We recommend that, rather than providing additional assistance on an emergency, ad hoc basis, the budget allocation for agriculture be permanently increased," wrote Combest and Stenholm. "Our rationale for this recommendation is twofold:

· First, ad hoc assistance is by its very nature unpredictable — producers and lenders alike are justifiably nervous about including any dollar figure for ad hoc assistance in cash flow calculations. The inability to count on this assistance affects not only producers and lenders, but ripples throughout the rest of the agricultural sector. When farmers are not sure about income, bankers are not sure about lending — and that uncertainty ultimately affects retailers, input suppliers, equipment manufacturers, and everyone else in rural America.

· Second, increasing the allocation for agriculture is a more predictable and disciplined approach to budgeting. The past three years have shown that Congress has the will to provide necessary assistance when existing programs are inadequate, but emergency waivers of the budget act have led to spending greater than it might otherwise have been. Indeed, we believe the more disciplined approach of providing monies up-front in the budget would result in savings over the long run."