USDA Secretary Sonny Perdue addressed the House Agriculture Committee at a hearing on the State of the Rural Economy on Feb. 6. The hearing was also an opportunity for representatives to ask questions of the USDA leader.
Although questions and answers were kept short so members could be on time for a floor vote, the line of questioning was in line with what one might expect in this setting. Representatives covered a wide range of topics including the farm bill, rural broadband, the Supplemental Nutrition Assistance Program (SNAP), crop insurance and safety nets, as well as agricultural trade.
Chairman Michael Conaway (R-TX) opened the hearing, noting it does not take a hearing to understand the hardships that rural America and the nation’s farmers and ranchers are facing. “Over the last four years, we have witnessed the steepest decline in net farm income since the Great Depression,” he said. “Producers who always operate on thin margins are struggling to cover their costs. Thankfully, we have taken some important steps in lightening their load.”
Conaway went on to say that President Donald Trump’s administration has been moving to unburden farmers and ranchers of unnecessary regulations that “cost producers a fortune and put them in legal limbo.” He went on to cite the new tax reform bill as a positive sign but said news on the earnings side has not been nearly as favorable.
Turning to trade, Conaway said, “Uncertainty over the direction of trade has exacerbated the anxiety in rural America because the U.S. farmer and rancher depends so much on access to global markets to make ends meet.”
Going on, Conaway said the ball on trade issues is, “Naturally more in the administration’s court than it is in ours.” He explained that he appreciates the administration’s desire to strike better trade deals, but addressed Perdue saying, “There is also a very deep concern in the countryside that none of the gains we have made in the way of market access for farmers and ranchers should be lost in the process. In this regard, you have been a critical friend and advocate.”
Ranking Member Collin Peterson (D-MN) commented briefly on how commodity prices have dropped since the farm bill was last authorized. He noted, “I am very concerned that if prices continue to fall, and yields decrease, we could be in for some real trouble. This is one of the reasons I would like to see a new farm bill, with an improved safety net, but with no new money it’s going to be hard to do.”
Acknowledging that Perdue was not in office when Trump called for $231 billion in mandatory cuts to farm bill programs in his last budget, Peterson said, “I hope that we’ll be able to see your influence when the new budget is unveiled next week. I’m not sure anybody in the administration really understands agriculture so we’re relying on you to be a voice of reason at the table.”
Peterson also told Perdue, “I appreciate your efforts to give us some guidance in writing a new farm bill. I hope you will work with us to write a bill that provides an adequate safety net and other tools for our farmers and ranchers.”
Perdue began his comments reiterating a message he shared when he took office, saying he will continue to make USDA the most “effective, efficient, and customer-focused department in the entire federal government.”
Looking to the state of the rural economy, Perdue said farmers are continuing to adjust to low commodity prices in a variety of ways, including increased borrowing, which in turn has increased overall debt-to-asset levels in the farm sector. With that in mind, he said, “While conditions are testing the resilience of the American farmer, the Trump administration and USDA are focused on creating economic conditions where they can prosper.”
Looking ahead, Perdue said projections are for continuing low commodity prices and trade challenges in the face of large global supplies and a relatively strong dollar in the coming year. “As a result, many farmers will continue to face tight bottom lines, even negative returns in some cases,” he told the committee.
He added, “While crop receipts have fallen with lower commodity prices, returns to the livestock sector have been mixed with some sectors seeing higher margins in 2017 relative to 2016.” Perude explained that overall the record levels of crop and livestock production over the past few years, while contributing to low prices, have helped to keep farm incomes from falling further. “We expect global production to continue to expand and that will keep stocks abundant and maintain pressure on prices,” Perdue said.
Looking for success
Perdue said a goal of his since taking office has been to better position USDA to support agricultural producers while providing increased accountability to American taxpayers. He explained this is being accomplished through the OneUSDA call to action. Through this program, he said, USDA employees are being challenged to help and listen to those who rely on the department. Additionally he mentioned the realignment of some USDA offices to improve efficiency and make better use of resources.
Again turning to talk of international trade, Perdue said, “USDA has worked tirelessly to find, open and expand markets for the high-quality food, fuel and fiber that our farmers and ranchers produce.” He cited the reentry of U.S. beef to China, after a 13-year hiatus, as a specific trade victory.
Farm bill
Commenting on the drafting of the 2018 Farm Bill, Perdue said, “I recognize that it is the job of Congress to write the farm bill. But we at USDA stand ready to provide whatever counsel Congress may request or require.” He reminded the committee members that as they move forward with crafting the farm bill, “It is important that it be fiscally responsible in consideration of our future generations and reflect the administration’s budget goals.”
After the hearing, Conaway had this to say, “We are writing this farm bill under dramatically different circumstances than we were four years ago when prices were high and rural America was thriving. Today, a host of factors—including natural disasters and high foreign subsidies, tariff and non-tariff barriers—have all contributed to chronically depressed prices. Secretary Perdue and his team understand the hard times facing farmers and ranchers across this country and will be helpful allies in getting this bill across the finish line.” — Rae Price, WLJ editor
