A panel of farmers, retailers and lenders on Tuesday urged lawmakers to pass a new farm bill by the end of this year, saying the legislation would help offset the impact in 2025 of falling crop prices as well as high production costs and interest rates.
The slate of speakers, a mix of commodity farmers, extension specialists and bankers, told the House Agriculture Committee that farmers are taking on more debt as they navigate increased production costs amid a period of “historically low” commodity prices, despite higher interest rates making their turn towards credit a riskier proposition than in previous years.
Farm income is projected by the Agriculture Department to fall $43.1 billion — or 27% — between 2023 and 2024, when adjusted for inflation. Crop receipts are expected to see a drop of $16.7 billion, or 6.3%, with corn and soybeans being two of the crops with the largest impacts. And production expenses are anticipated to reach $455.1 billion this year, an increase of $16 billion, or 3.8%.
Recent layoffs by equipment manufacturer John Deere represent “a canary in the coal mine” when it comes to the looming economic hit rural places may see in times ahead, Minnesota Corn Growers Association President Dana Allen-Tully suggested.
"Unless conditions change, I believe we’re heading into a perfect storm, a storm that I don’t think will be fully appreciated until early next year when farmers try to get loans but are unable to do so because they cannot demonstrate the ability to cash flow," Allen-Tully said.
Producers’ working capital, Allen-Tully warned, is “fast being depleted.” To break even, she suggested a typical U.S. farm family would need to grow an average corn yield of 219 bushels per acre, 27% more than what they would need under an average of the past 10 years. The target would be 56 bushels per acre for soybeans, 12% higher than the 10-year average.
Bankers have so far been able to help fill some of the gaps. The USDA expects total farm debt to reach $547.6 billion this year, a 40% increase since 2017 and a 5.2% increase from last year. Tony Hotchkiss, current chairman of the American Bankers Association's agricultural and rural bankers committee, said farm banks have increased lending to farmers and ranchers by 6.7%.
Farmers have been quickly working through the liquidity they’ve built up over the past few years and are now beginning to refinance their debt, though some are struggling to meet the new payment requirements due to the low commodity prices they are receiving, Hotchkiss said.
“The trend of refinancing debt may become more commonplace and more challenging as lenders and producers work to bridge the low prices we are experiencing in ag commodities,” he said.
Declining commodity prices have driven a wider gap between what farmers in 2023 and 2024 are paying for inputs like chemicals and fertilizer and what they are able to sell their crops for when compared to previous years, said Ronald Rainey, the assistant vice president of the University of Arkansas’s Division of Agriculture. If both input and output prices continue on this path, “an improved safety net will be warranted,” he added.
“With the profit squeeze right now where input prices are above commodity prices — that’s going to require some intervention,” he said. “That’s just the bottom line.”
Another extension of the 2018 farm bill will not be enough to “head off the economic hemorrhaging that is coming,” Allen-Tully of the Minnesota Corn Growers said. Even if Congress were to pass a new farm bill with the reference price increases requested by producers, it “may not be timely or sufficient to address the current situation,” she added.
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This call for speedy passage of a new farm bill was echoed by David Dunlow, a cotton farmer who testified on behalf of the National Cotton Council, and Joey Caldwell, a vice president for GreenPoint Ag who testified on behalf of the Agricultural Retailers Association. Not approving one soon, both warned, could have consequences for farmers currently struggling to break even.
“Without support in 2024, I may no longer be able to farm,” Dunlow warned. “Many others are in the same situation.”
The committee advanced a $1.5 trillion farm bill in May that includes reference price increases and crop insurance modifications, but floor action has not been scheduled. And lawmakers, during the hearing, gave little indication of additional movement thus far.
Committee Chairman Glenn Thompson, R-Penn., said he is “willing to entertain” an informal pre-conference negotiation with the Senate, but noted that his counterpart in that chamber, Wisconsin Democrat Debbie Stabenow, has yet to release the text of her draft farm bill.
“I cannot reconcile nor negotiate a bipartisan 900-page bill with a partisan 90-page summary,” Thompson said, referring to the section-by-section outline Stabenow released this spring.
Stabenow, who isn’t running for reelection, told Agri-Pulse last month said she didn’t want to bring a bill through the Senate Ag Committee with a low chance of being enacted. Her proposal includes more modest reference price changes for row crops than the House bill and would be funded with $5 billion from an unidentified source that Senate Majority Leader Charles Schumer, D-N.Y., helped her find outside of her committee’s jurisdiction.
Stabenow may not even have the votes for her bill; Sen. Raphael Warnock, D-Ga., has said the reference price increases in her bill are inadequate. Democrats control the committee by a single seat, 12-11.
Stabenow and Thompson are at odds over a proposed spending framework for the farm bill, with their disagreements centering around GOP-led proposals to restrict future updates of the Thrifty Food Plan, remove climate guardrails on the IRA funding and limit the Agriculture Department’s use of the Commodity Credit Corporation’s spending authority.
Similar divisions were also on display during the hearing, as Thompson defended the cost-saving measures as a way to meet commodity groups’ safety net requests and bemoaned being “saddled with a meddling Senate Democrat and others who do not seem to appreciate the dire circumstances in farm country.”
“I am tired of the politics and gamesmanship, and I know folks out in the countryside are, too,” he said.
And in return, House Ag Democrats raised complaints about that same funding framework, with most of their criticisms centering around the CCC restrictions. The committee’s top Democrat, David Scott of Georgia, noted Republican presidential candidate Donald Trump’s suggestion of new tariffs on Chinese goods as he warned against limiting the Agriculture Secretary’s CCC authority, which was used to compensate farmers for trade war losses in 2018 and 2019.
“The prospect of a new trade war while eliminating the secretary’s CCC authority, the only tool that kept family farmers afloat, is nearsighted and dangerous,” Scott said.
