Keystone Today

Today, a panel of witnesses before the House Committee on Agriculture—including producers, a lender, an input supplier, and an Extension economist—warned of the dire outlook facing the agricultural supply chain. Plummeting crop prices, escalating input costs, worsening credit conditions, and sustained natural disasters are creating a “perfect storm” of headwinds for farm country. Witnesses urged policymakers to “head off the economic hemorrhaging” and take advantage of the opportunity to substantially course correct the farm safety net through the enactment of enhanced risk management tools.

“The testimony from today’s hearing painted a dark picture of the American farm economy and should be a wake-up call for my Democrat colleagues," said Chairman of the House Agriculture Committee, Glenn “GT” Thompson (PA-15). "This Committee advanced a bipartisan bill that effectively responds to the crises outlined today and the pleas of rural America.”

Notable Testimony:

"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," said Ms. Dana Allen-Tully, PhD., a family farmer and President of the Minnesota Corn Growers Association. "There are a myriad of factors contributing to this situation, including plummeting crop prices, very high costs of production, interest rates that have doubled, natural disasters for so many around the country, and tightening credit. Our working capital is fast being depleted."

"I have never known a worse time in my 40 years of farming, and the stress has led to personal health issues as I wonder how our operation will survive. Inputs such as labor, supplies, equipment, parts, fuel, land rent, fertilizer, and seed have skyrocketed," said Mr. David Dunlow, Chairman of American Cotton Producers."Some of these expenses have nearly doubled and my margins have narrowed over the last several years. Things have gotten so bad that these days a bumper crop is required just to break even... The bottom line is we need a new Farm Bill this year."

"The agricultural economy is in a position it has not been in for many years. There is a return to cyclical agricultural conditions that were present before the surge of government support during the COVID-19 pandemic. Rising input prices combined with lower commodity prices have resulted in USDA projecting a 25% reduction in net farm income in 2024 compared to 2023..." said Mr. Tony Hotchkiss, Chairman of Agriculture and Rural Bankers Committee at American Bankers Association."The meaningful changes proposed in the 2024 Farm Bill will allow bankers to better serve their customers and ensure they have high levels of credit availability in future years."

"The rising cost of doing business and inflationary pressures are chipping away at farmers’ margins," said Mr. Joey Caldwell on behalf of Agricultural Retailers Association. "It is for this reason that passing a Farm Bill sooner rather than later will lighten this burden of uncertainty... The Biden Administration's climate policies have increased costs for crop inputs in agriculture. Higher natural gas prices have made nitrogen fertilizer more expensive while rising diesel prices have elevated transportation costs for products to farms and operation agricultural equipment. Diesel crucial for ag retailers grain shippers farmers now costs significantly more."

"Farmers across South continue adapt challenging agriculture environment made worse relatively high input prices historically low commodity prices current relatively high interest rates," said Mr Ronald Rainey Ph.D., Assistant Vice President University Arkansas System Division Agriculture.

Key Takeaways:

In 2023 agriculture sector represented nearly 20 percent country’s economic activity.

Agriculture represents more than $9.6 trillion outputs yielding $181.4 billion exports $1.3 trillion tax revenue $2.8 trillion wages provides 48 million jobs.

However collapsing on-farm prices lack market expansion increasing input prices driving decline farm financial security.

Farm sector net income forecast fall second consecutive year 2024.

Net farm income (NFI) broad measure profits forecast decrease $43 billion (27 percent) from 2023 $116 billion 2024.

Represents most significant two-year decline NFI history.

While cash receipts continue decline year-over-year production expenses forecast increase $16 billion (3 percent) from 2023 total $455 billion.

Producer sentiment expectations regarding future declining face financial pressures.

Last time significant resources added farm safety net was 2002 Farm Bill.

At time enactment Congressional Budget Office (CBO) projected $142 billion outlays through Title policies following decade ($248 billion dollars).

Comparison June CBO scoring baseline projects outlays under current safety net roughly $44 billion accounting inflation amounts percent cut Title baseline from 2002.