Impacts of Three-Year Decline in Ag Market Prices

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House Agriculture Chairman Mike Conaway (R-Texas) announced a series of hearings to examine the economic ramifications of a three-year decline from record market prices for major commodity crops for farmers, their suppliers, rural communities and the 2014 Farm Bill (PL 113-79) policies. The General Farm Commodities and Risk Management Subcommittee launches the first hearing this Thursday.

The agenda. Let’s hope those hearings (and hopefully more later this year and early next year) will dig into some of the following topics:

• Low dairy prices. How is the new dairy safety net stacking up with the big drop in milk prices? And how many producers chose the safety net and in what fashion? If not, why not?
• Low corn, soybean and wheat prices. Let’s assume the bad-news-bear analysts being quoted a lot lately are correct… that corn, soybeans and wheat are in the throes of multiyear bearish markets, with prices under $3 for corn and at similarly bearish levels for soybeans and wheat. How do the current safety net options – Ag Risk Coverage and Price Loss Coverage – stack up under that price scenario?
• Cotton. A primer of sorts should be made as to why the cotton safety net was ineffective. And what options are possible in a new safety net for the next omnibus bill. Perhaps the first suggestion would be not to let Brazil write the program. But more short run, USDA Sec. Tom Vilsack has made it clear he will not (and to him, can not) announce a cottonseed program that farm-state lawmakers and cotton producers have asked for. Vilsack and others at USDA have been talking about an alternative assistance program for the cotton industry that the Department could implement. Let’s hope we get an update on that.
• Cost of the 2014 Farm Bill. It looks like the hoped-for savings in food stamp spending are definitely coming in faster than initially thought, though some of this may be due to lower subscription to the program.. What about combined farm program safety net payouts and crop insurance spending – if you combine those two, it looks like the 2014 Farm Bill projections are in line. Some official numbers would help put perspective on this, rather than anti-farm bill lobbyists defining the topic.
• Livestock indemnity funding. With the PED virus, and the hopefully contained bird flu, it’s time to see what changes and funding are needed to provide these sectors with an effective safety net – the “program crops” should not be the only sectors with such assistance.
• Sugar program. Before the anti-sugarites gear up for their next attempt to axe the program, how is the current program working? And some in the U.S. sugar industry say some tweaks are needed in the U.S;-Mexico trade suspension agreement to avoid several “bypasses” Mexico has been taking – all within the framework of the agreement, but not the spirit of it.
• How did the Land Grant colleges spend those millions of dollars they garnered to help educate farmers regarding the 2014 Farm Bill?

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