Chairman Frank Lucas today released the following statement on Scott O'Malia's last day as Commissioner of the Commodity Futures Trading Commission (CFTC). Last month, O’Malia announced he would resign to pursue other opportunities.
Subcommittee Reviews State of U.S. Farm Economy
WASHINGTON, D.C. – Subcommittee on General Farm Commodities and Risk Management Chairman Jerry Moran today chaired a hearing to review the state of the U.S. farm economy and the impact of Federal policy on agriculture. Net cash farm income levels reached record highs in each of the past two years; however, United States Department of Agriculture (USDA) forecasts for 2005 indicate a $10.7 billion dip in net farm income from 2004. Higher costs for energy, fertilizer, manufactured inputs, crop and livestock losses, and interest rates contribute to the projected decline in net farm income. The effects of recent natural disasters, including Hurricanes Katrina and Rita, are expected to further increase production costs for farmers.
Chairman Moran voiced concern that factors such as high energy prices may further steepen the decline of farm income projections. “I am concerned that these numbers do not portray the economic conditions being felt in the heart of farm country. They seem to mask the real personal and economic pain that some refer to as the “perfect storm”: record high fuel and input prices combined with commodity prices that are declining steadily but not at a level to trigger a countercyclical payment,” said Chairman Moran.
USDA Chief Economist Keith Collins testified that higher energy prices are already cutting into net farm income and “will likely continue to affect production input and marketing costs in 2006.” According to an Economic Research (ERS) report, the total production expenses in 2005 are projected to be $218.7 billion, up $8.9 billion (4 percent). Rising costs of energy-based inputs and increasing interest expenses will account for over 60 percent of the increase in costs in 2005. Collins also noted that while energy-related costs have contributed to increased farm production expenses, “net cash farm income has continued to rise as cash receipts have stayed strong.”
The Subcommittee will continue to monitor the factors influencing the farm economy in the U.S. and the impact of these factors on U.S. producers.
Dr. Keith Collins, Chief Economist, United States Department of Agriculture, and Chairman, Federal Crop Insurance Corporation, Washington, D.C.
Dr. Howard Gruenspecht, Deputy Administrator, Energy Information Administration, United States Department of Energy, Washington, DC.
Dr. Patrick Westhoff, Program Director, Food and Agriculture Policy Research Institute (FAPRI), University of Missouri, Columbia, Missouri
Mr. Sam Funk, Administrator, Kansas Farm Management Association, Kansas State University, Manhattan, Kansas
Dr. Daryll E. Ray, Director, Agricultural Policy Analysis Center, University of Tennessee, Knoxville, Tennessee
Dr. Nicholas Piggot, Associate Professor, North Carolina State University, Raleigh, North Carolina