Senate Agriculture Committee Chairwoman Debbie Stabenow told farm groups Tuesday that costs for fertilizer and diesel fuel have dropped sharply since last year, undermining a key argument the organizations are making for increasing support rates in the major commodity programs.
“We're going to watch it closely because hopefully (2022) was an anomaly,” the Michigan Democrat said of the rise in farm input costs last year. “When we look over 10 years, hopefully, you know this is this is just something that happened because of a number of bad circumstances coming together.”
During a Senate Ag subcommittee hearing with farmers representing 10 major commodity groups, Stabenow also pushed back on the idea that the organizations were united in what changes Congress should make to the Agriculture Risk Coverage and Price Loss Coverage programs.
“There's no consensus on how to address all of the programs because different regions have different responses,” she told the groups. “This is always the challenge of the farm bill … It’s less of a partisan exercise and more of a regional exercise based on what we grow where you are.”
Stabenow’s remarks marked a sharp departure from the committee’s top Republican, John Boozman of Arkansas, who has said repeatedly in recent weeks that he won’t support a new farm bill that doesn’t increase PLC reference prices.
PLC triggers payments to growers for years in which the average market price for a commodity falls below its reference price. ARC provides payments when the revenue in a farmer’s county falls below the previous five-year average.
Major commodity groups generally agree that reference prices need to be addressed, but they are not united on how and they haven’t asked for a specific increase.
The National Corn Growers Association has called for modifying an escalator provision that allows the PLC reference price to rise as much as 15% following several years of elevated market prices. The statutory reference price for corn is $3.70 per bushel, but the escalator provision is expected to push the effective rate to $4.01 in 2024 because of the higher market prices farmers have seen in recent years. The 15% limit caps the effective reference price at $4.26.
Harold Wolle, a Minnesota farmer and first vice president of the National Corn Growers Association, told the senators Congress should either increase the 15% cap or otherwise modify the escalator provision so that the effective reference price can go higher.
NCGA also wants Congress to increase both the maximum payment rate in ARC, currently capped at 10% of a county’s benchmark revenue, and the program’s maximum coverage level, which is now capped at 86% of the county revenue benchmark.
Other groups support increases in the statutory reference prices. During a House hearing last week and again on Tuesday with the Senate Ag, the groups said the reference prices didn’t reflect the cost of producing crops. The prices were set based on 2012 data.
“I’m not sure when that safety net is two inches above the concrete that it’s doing much good,” said Texas farmer Kody Carson, who represented the National Sorghum Producers at the Senate hearing.
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Rich Hillman, an Arkansas farmer representing the USA Rice Federation, said, “Right now the costs are out of control, certainly fertilizer. A lot of the inputs rice and cotton (rely on) have exceeded anybody’s guess.”
Ahead of the hearing, a collection of conservative and progressive groups released a joint letter urging the Senate committee not to support an increase in reference prices.
“Overall, net farm income set records in 2021 and is expected to remain high, according to USDA,” the groups said. “While some farm groups cite rising input and land costs in support of these proposals, gross farm income has outpaced and will likely continue to outpace the cost of farm production. Farm bankruptcies have recently fallen to their lowest level in recent memory.”
The groups that signed the letter included the Council for Citizens Against Government Waste, Environmental Working Group, FreedomWorks, Independent Women's Forum, Land Stewardship Project, National Sustainable Agriculture Coalition, Taxpayers for Common Sense and U.S. PIRG.
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