Federal agriculture policy is an interesting topic in rural America.
Ask 100 rural residents about the good and bad federal ag policy, and you’ll get 100 different answers, many depending on their political bent. However, recent discussion is in uncharted territory after COVID-19 arrived in 2020.
There’s no question that COVID put a terrific dent not only in the domestic agricultural economy but on economies around the world. Professor Pat Westhoff of the University of Missouri’s Food and Agricultural Policy Research Institute notes global GDP dropped sharply. Experts estimate the world’s economy lost $2.9 trillion in GDP during 2020, and ag took a good share of that loss.
“The good news is we do have fresh economic growth occurring (in 2021), which is always a positive thing,†Westhoff said. “However, the downside is we won’t get back to where we would have been without COVID for many years to come.â€
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Payments Congress made in 2020 gave many Americans, including farmers, a bump in disposable income.
“Federal intervention was part of the reason why several economic sectors survived as well as they did despite the reduction that occurred in production,†Westhoff said.
The challenge with federal programs like this is they eventually disappear, which Westhoff expects to happen in 2022. The U.S. could see a year of increased GDP, but people may have less cash on hand. That means less buying power for folks to spend on agricultural products that are seeing prices rising rapidly.
Climate, carbon big drivers
The last year brought some good things for American agriculture. Competition in the meatpacking industry is a big concern for the livestock industry and has been for some time. John Hansen, president of the Nebraska Farmers Union, says a White House mandate was a good first step on the road to solving the problem.
“The president’s executive order on competition is the high mark of any president in my lifetime because it tries to seriously address market consolidation,†Hansen said. “That alone gives us some leverage we’ve never had before.â€
Jordan Dux, the director of national affairs with the Nebraska Farm Bureau, says the Biden administration is a big change from Trump’s approach, and the difference in governing philosophy is quite extensive.
“A new party came into place in D.C., so not only do you have different people, but you also have a different way of governing,†Dux said. “The last group had secretaries and undersecretaries with some real autonomy. This one takes a more wait-and-see approach and looks for direction from the White House.
“Unfortunately, that’s put agriculture into a wait-and-see pattern on several policy items,†Dux added. “The grade we give the administration so far is a mixed one.â€
One area that the Farmers Union gives the administration high marks is on climate change. Agriculture is looking at carbon sequestration as good for the environment and potentially good for farmers’ bottom lines. Hansen said the administration has done a good job of listening to how farmers can help achieve those goals.
“There’s a level of commitment that hasn’t been there before,†Hansen said.
He thinks that the administration’s work to create a reasonable and reliable carbon sequestration marketing program is taming an area that’s been like the “Wild West†with rules and players going in all different directions.
In order for that market to reach maturity, agriculture needs some dependable and verifiable criteria regarding the actual amount of carbon getting sequestered, he said.
“I’ll give the administration credit for being willing to meet with us and discuss policy issues,†Dux added. “But we have concerns, such as the new Waters of the U.S. proposal from the EPA. The agency’s already announced its three-phase approach to eliminate the Trump-era rule, and we have some real concerns with that because they want to go back to the pre-2015 WOTUS rule.â€
While the Biden administration has been more than willing to listen to Farm Bureau concerns, Dux said the “wait-and-see†approach to policymaking is causing difficulties in several agricultural sectors, including biofuels. While Democrats criticized the Trump White House for its use of waivers to the Renewable Fuel Standard, Dux pointed out, the Biden administration took a long time to issue its targets for renewable fuels.
Organizations had mixed reactions Dec. 7 when the Environmental Protection Agency announced new rules.
“We would have liked to have seen higher retroactive numbers for 2020 and 2021. And, we would like to have the 2023 volume announcement that was due the end of November,†said Kevin Scott, a soybean farmer from Valley Springs, South Dakota, and American Soybean Association president. “We are heartened, however, by the 2022 (renewable volume obligations for refiners) and hope 2023 remains on that upward trajectory.â€
Trade talks, farm bill on horizon
Looking into the future, the agricultural “crystal ball†reveals several concerns. When considering what’s ahead, the University of Missouri’s Westhoff has questions about the next farm bill. One of the biggest is who will be running Congress when it’s time to write the new bill, and what will be the overall balance of power?
“There is a long-term question on future federal biofuel policy,†Westhoff said. “Provisions in the Renewable Fuels Standard are spelled out very carefully through 2022. Starting in 2023, things are a lot more open-ended for changes by the Environmental Protection Agency or new legislation.â€
The Nebraska Farm Bureau narrowed the future success of agriculture to some specific agenda items, the biggest of which is trade. American agriculture knows how important trade is to its success, Dux said, but also says America has “rested on its laurels†for too long.
“When an overseas market is taken from us, it’s very hard to get it back,†Dux said. “That’s why we need a sound footing on trade.â€
While they don’t want “massive reforms,†the Nebraska Farm Bureau also wants changes in how cattle get marketed, given how important cattle are to the state’s economy. The organization supports a bill introduced by Sens. Deb Fischer of Nebraska and Chuck Grassley of Iowa.
The Farm Bureau also wants farmers to remain included in ongoing climate conversations, especially about carbon markets financially benefitting farmers. They also want to see conversations kick-started on the next farm bill.
The Farmers Union wants more progress on solving the supply chain issues. Farmers are paying two to three times more for inputs, and there are serious doubts about whether the inputs will be available when needed. This shows more competition is needed in the supply side of the equation, according to Hansen, noting the concentration of fertilizer and chemical manufacturers.
He’d like to see an overhaul of antitrust regulations and the definitions for the Packers and Stockyards Act.
“To us, it’s crazy that for a producer to bring an action to a packer that may have just taken them out behind the woodshed, the farmer has to prove that the action harmed the whole industry,†Hansen added. “That’s an impossible thing to prove.â€