WASHINGTON, Feb. 14, 2013 – The nation’s farmers and producers should expect the historic drought to continue through this year and take measures to protect their operations, such as purchasing crop insurance, witnesses told the Senate Agriculture, Nutrition and Forestry Committee during a hearing today.
The hearing, “Drought, Fire and Freeze: The Economics of Disasters for America’s Agricultural Producers,” featured Roger Pulwarty, director of the National Integrated Drought Information System, USDA chief economist Joe Glauber, and four farmers affected by adverse weather.
Committee Chairwoman Debbie Stabenow, D-Mich., and other present committee members were largely sympathetic to the damage incurred by farmers, ranchers, and producers during the past two years.
“Nobody feels the effect of weather disasters more deeply than our nation’s farmers and ranchers whose livelihoods’ depend on getting just the right amount of rain at just the right time,” Stabenow said. “All too frequently, an entire season’s crop can be lost or an entire herd must be sent to slaughter due to lack of feed.”
Stabenow said 2012 was a year of unprecedented destruction from drought, freeze, wildfires, hurricanes, and tornadoes. However, she said due to the “successful crop insurance program,” many farmers will be able to recover some of their losses.
“For those farmers who didn’t have access to crop insurance, or the risk management tools that would have been included in our farm bill, the future is less certain,” Stabenow said. “Meanwhile, many livestock producers and specialty crop growers who suffered substantial losses won’t receive any assistance.”
Sen. Pat Roberts, R-Kan., urged USDA to provide assistance for livestock producers.
“Even after two years of sustained drought in the plains and facing a third year, Kansas producers once again put seeds in the ground,” Roberts said. “Many will once again fire up their tractor and planter in another six weeks. This is not due to some day-late or dollar-short ad hoc disaster package, but because they managed their risk and protected their operations from Mother Nature’s destruction through the purchase of crop insurance.”
Roberts said livestock producers do not have a similar safety net, but last year the USDA authorized the emergency haying and grazing of Conservation Reserve Program (CRP) acres in all Kansas counties for the first time.
“According to USDA reports last year over 9,000 emergency haying and grazing contracts allowed haying or grazing on over 470,000 acres in Kansas,” Roberts said. “As we continue to experience drought, what considerations has USDA given on allowing emergency haying and grazing of CRP acres for 2013?”
Pulwarty told lawmakers that 2012 ended as one of the driest years on record having had much of the country over or near 60 percent in moderate to extreme drought. He said only in 1964 were there more months with more than 60 percent of the contiguous United States in moderate to severe drought.
He said the nation began the year with about 32 percent of the nation experiencing moderate to exceptional drought. The number peaked at 65.5 percent in September, and the year ended at 61.1 percent.
“An important feature of the weather conditions in 2012 was the persistence of the areas of dryness and warm temperatures, the magnitude of the extremes, and the large area they encompassed,” Pulwarty said. “Broad sectors were affected and continue to be affected by the 2012 drought. Impacts include, but are not limited to, the reduction in crop yields and commerce on major river systems.”
During questioning, Stabenow asked Pulwarty, “Was the weather normal this year?”
Pulwarty said the “event” in 2012 actually began in 2010 and was “very unusual.”
“The conditions look similar for 2013. Our forecast is predicting drier conditions,” Pulwarty said.
Sen. Michael Bennet, D-Colo., said to Pulwarty, “I’ve never said this to a witness at any hearing, but I hope you’re wrong.”
Pulwarty responded, “I hope I’m wrong too.”
For his testimony, Glauber told lawmakers that despite the drought, the U.S. agricultural economy is strong and, in aggregate, farm incomes are near record highs.
“Row crop producers have generally fared well despite the adverse weather, in large part due to higher prices from the federal crop insurance programs which have helped offset losses,” Glauber said. “For uninsured producers or producers of crops for which insurance is unavailable, crop losses have had a more adverse effect. Livestock producers experienced high feed costs and poor pasture conditions, with limited programs to fall back on, particularly since key livestock disaster programs authorized under the 2008 farm bill are currently unfunded.”
Glauber said 2012 started as a promising year for crop production, but then turned into one of the most unfavorable growing seasons in decades.
Crop production estimates for several major crops declined throughout the summer as the drought intensified, he said.
For instance, he noted that by January 2013, USDA’s National Agricultural Statistics Service final production estimate for corn was down 27.5 percent from USDA’s May 2012 projection (USDA’s first projections for major crops), while soybeans fell 6 percent over the same period.
Glauber said USDA’s Economic Research Service revised its farm income forecast for 2012 as well as its first forecast of farm income for 2013. For 2012, net cash income is forecast at $135.6 billion, a record in nominal terms and, the highest since 1973, adjusting for inflation. Farm cash receipts are forecast at $391 billion, up $17 billion over 2011 levels.
For 2013, ERS projects net cash income to be $123.5 billion, a decline of almost 9 percent. Total cash receipts are forecast at $393 billion, up marginally from 2012.
One of the farmers who testified, Anngie Steinbarger, a soybean and corn farmer from Indiana, said the top barrier to increasing yields is the lack of water. Steinbarger was testifying on behalf of the Indiana Soybean Alliance and the American Soybean Association.
“Dry weather in the months of July and August always limits our yield potential,” Steinbarger said. “We find crop insurance an effective tool in managing risk when we experience these weather events.”
She stressed that crop insurance is not a “profit center.”
“We paid a substantial premium for crop insurance and that decision is keeping us in business for the 2013 crop year,” Steinbarger said.
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