How critics of U.S. farm policy have it wrong

Editor’s Note: Farm Policy Facts is pleased to publish a guest editorial from Congressman Kevin Cramer of North Dakota that examines the challenges facing America’s farmers and ranchers and the path for keeping American production agriculture competitive in a global market increasingly distorted by high and rising foreign subsidies, tariffs, and non-tariff barriers to trade.

By Representative Kevin Cramer

When it comes to U.S. farm policy, some folks who don’t know much about risks of farming and ranching want to cut twice before measuring once. Common sense says we should measure things first.

Net farm income is down by 42 percent from just three years ago, the largest plunge since the start of the Great Depression.

Yet, under these very tough economic conditions the current Farm Bill’s commodity title — crafted to deal with market forces beyond a farmer’s control ‎such as depressed prices brought on by unfair predatory trade practices of foreign countries — is helping farmers while saving taxpayer money.

In fact, the 2014 Farm Bill’s commodity provisions are saving an estimated $16 billion when compared to an extension of the previous law.

And, crop insurance outlays are also down — by a whopping $9 billion — as compared to the Congressional Budget Office’s (CBO) estimates during the Farm Bill’s consideration.

Despite these policy successes the fact remains times are very difficult for our nation’s farm and ranch families. In announcing the issuance of Farm Bill commodity title support for farmers recently, the U.S. Department of Agriculture (USDA) acknowledged the help is in response to roughly $28 billion in losses sustained in just one year alone.

The Farm Bill and Crop Insurance ‎will not make our farmers and ranchers anywhere near whole from these heavy losses. But these policies will help hard working families — who feed, clothe, and increasingly fuel us in a manner unrivaled in history — to repay their loans and secure financing for the coming year.

Still, as we look forward to the next Farm Bill, we are going to need to focus on shoring up the farm safety net in places where it really needs some work. For instance, I often hear from my farmers about problems with the Agricultural Risk Coverage (ARC) option and dairy, and my colleagues in southern states tell me cotton policy must also be fixed.

These are areas where current policies must be strengthened or otherwise exchanged for more durable risk management tools our farmers can more effectively use during hard times like these. And, of course, any changes we make must be made while honoring the mantra of nearly every farmer in the country — first, do no harm to crop insurance.

But, far beyond any alterations to farm policies that are designed to mitigate the symptoms of much larger problems, we must actually tackle at least some of the larger problems themselves.

Among these problems that make it difficult for farm and ranch families to make ends meet are regulations, including the Environmental Protection Agency’s (EPA) Waters of the U.S. and the so called Clean Power regulations, which drive up the cost of doing business.

Tax burdens‎ on our farmers and ranchers must be reduced and, in the case of the death tax, repealed. And, unfair predatory trade practices by our largest foreign competitors need to be tackled aggressively and head on.

Recently, the U.S. government finally challenged China’s excess subsidies on just three crops — corn, wheat, and rice — totaling $100 billion in a single year. Put in perspective, in 2015 the U.S. spent about $11 billion on the safety net for all commodities.

Not long ago, U.S. sugar farmers sued Mexico, a country that owned one-fifth of its industry and heavily subsidized the rest, for dumping sugar onto the U.S. market at below Mexico’s cost of production. The International Trade Commission unanimously ruled in favor of our sugar farmers.

Similarly, my colleagues in southern states say China drove the price of cotton up to $2.20 before altering policy and subsidizing its domestic farmers, driving world cotton prices into the 50-cent range.

These examples are not notable exceptions to the rule that trade is somehow free and fair. These examples are very much the norm our farm and ranch families must contend with every day.

Some have argued the United States should simply unilaterally disarm our farmers and ranchers, repealing U.S. farm policy and even our trade remedies currently available against cheaters, and that foreign countries, moved by our good deed, will follow suit. This is Pollyanna.

During the Doha Round negotiations the U.S. offered to repeal 70 percent of its domestic support in exchange for meaningful market access for our farmers and ranchers to other countries. The answer from our foreign trading partners was a resounding no.

We saw this during the 2014 Farm Bill when the U.S. was cutting domestic support for farmers and ranchers, foreign countries not only did not follow suit, but they doubled down on subsidies, tariffs, and non-tariff trade barriers.

‎I believe the sound approach to creating free and fair markets in agricultural trade around the globe can be found in the zero-for-zero legislation authored by Rep. Ted Yoho of Florida. The bill would repeal U.S. sugar policy when major sugar producing countries around the world fully repeal their subsidies and protections. The one change I would make to this legislation is apply it to all agricultural commodities.

We need to negotiate from a position of strength if we really want truly free and fair world markets.

Federal crop insurance and livestock disaster aid will always be necessary because Mother Nature will always throw curveballs. And, protection from multiple peril losses is not available in the private market because of the high risks involved in farming and ranching.

But, what if we could truly open up foreign markets and create a level playing field for our farmers and ranchers that actually passes the smell test? If we also reined in taxes and regulations, the natural effect could be Farm Bill safety net costs would fall even more as markets recover and farmers and ranchers get a decent return on their investments.

Now, that’s a win for taxpayers, consumers, and America’s farmers and ranchers.

Rep. Kevin Cramer is North Dakota’s only member of the U.S. House of Representatives. He serves on the House Committee on Energy and Commerce.

Crop insurance: What a difference four decades make

For nearly four decades I have worked with Connecticut River Valley farmers to help protect their livelihoods. Over that time, I’ve seen many changes, both in the make-up of farms and the tools farm families have to manage uncontrollable risk.

As our population has grown, the amount of available farmland has gotten smaller. This means our farmers have had to adapt to survive. More and more local farmers today also work jobs off the farm to help support themselves, meaning we have more part-time farms. We’ve also seen an increase in diversified farms here. Many of our dairy farmers, for example, are growing their own crops for feed to help improve their bottom lines.

Our farmers—those with a passion for the land often stretching back generations—have proven to be amazing innovators in the face of challenges. But even for the best agricultural innovators, there is one thing that always remains out of their control: Mother Nature.

Here in the Connecticut River Valley, we know this all too well. We’ve seen spring seasons that have been too dry or too wet for planting. We’ve seen hailstorms come through the Upper Valley like tornadoes, bringing destruction to one area, while miraculously sparing another area just a few miles down the road. We’ve even seen hurricanes, like Irene in 2011, and blizzards in recent years.

Thankfully, as a crop insurance agent, I have also witnessed positive changes to the crop insurance system, enabling many of our farmers to protect their operations against circumstances beyond their control.

During the 1980s, which marked the beginning of the public-private partnership between the U.S. government and private insurance companies, I was among the first crop insurance agents in the region. And the program experienced plenty of growing pains.

Participation was lacking due to high costs, spotty service and slim margins. Congress was spending considerably more each year cleaning up messes after disaster struck than beforehand on protection. Lawmakers also paid far more attention to traditional Midwest crops than those specialty products more prevalent in New England.

Even as late as the early 1990s, crop insurance participation rates nationwide hovered in the 30 percent range.

Things began to change in the mid 1990s, with the passage of the Federal Crop Insurance Reform Act of 1994, which dramatically restructured the program by strengthening the partnership between the federal government and private insurers. Through premium discounts we also started to see increased participation.

Then in May 2000, Congress approved another important piece of legislation: the Agricultural Risk Protection Act (ARPA). The provisions of ARPA made it easier for farmers to access different types of insurance products including revenue insurance and protection based on their own historical yields.

All of this has resulted in more crop insurance participants than ever before, but there was still work to be done. The Farm Bill of 2014 made crop insurance a cornerstone of U.S. farm policy and took steps to make it more affordable and available to specialty crop growers, organic producers and young farmers.

Today, crop insurance protects more than 90 percent of planted acres nationally. And it’s so popular that farmers are willing to collectively contribute about $4 billion a year from their own pockets to purchase protection and help remove some degree of risk from a very volatile business. That cost-sharing structure makes it a good investment for taxpayers as well, replacing expensive disaster bills of the past, while ensuring a safe and plentiful food supply.

No, a crop insurance check will never come close to what a farmer can get from a good harvest. Like homeowner’s insurance, farmers don’t collect a dime without a verifiable loss and paying a deductible. But crop insurance does offer farmers some peace of mind, which allows them to focus on producing higher-yielding, better-quality crops.

Connecticut River Valley farmers are inventive and hardworking businessmen and women and it has been an honor to work with them for the past 40 years. Given their ingenuity, and the important safety net crop insurance provides, the next 40 years should be exciting to watch.

Randy Odell is a Vermont crop insurance agent who has been in the industry for four decades.