Farmers face a complex landscape for 2021, above and beyond the usual variables that affect them — such as, quite recently, drought and windy weather that is stirring up dust and a potentially harsh spring here in the MonDak.
Not only is America still struggling with economic recovery from the COVID-19 pandemic — which is itself threatening to resurge on the strength of COVID-19 variants amid slower-than-hoped vaccinations — but there is a new sheriff on board, with very different priorities than the previous federal administration, and that shift in focus includes agriculture.
“Elections matter, votes matter, and they matter for agricultural policy,” said MSU professor of agricultural economics Dr. Vincent Smith. “The first, most obvious thing is, compared to the Trump administration, there will be a very different approach to trade.”
The Biden administration has already appointed a U.S. trade representative who has a long history of working on multilateral agreements, Katherine Tai.
“They’re almost certainly going to roll back the one-on-one bilateral tariff war with China,” Smith said. “So many people would say well didn’t the Trump administration already accomplish that. And the answer is yes and no. There was a commitment from China to buy a fairly substantial amount of U.S. soybeans, corn and other traditional program crops.”
But whether China would follow through was a big question. Meanwhile, the Biden administration has engaged directly with China on the tariffs.
“There’s an agreement to lower those tariffs substantially for a three-month period, as a first step to returning to what most economists would argue are more normal trade negotiation relationships,” Smith said. “And that’s also been done with Europe.”
Meanwhile, the Biden Administration has already signaled a shift toward conservation-related programs, including CSP and CRP, which will focus in on farm-level innovations that have a climate change rationales behind them.
Funding from the COVID-19 relief bill for farmers also shifted focus. That money has been targeted toward beginning and socially disadvantaged farmers.
Against this landscape, there is also concern about the future direction of the next Farm Bill, and the preservation of safety net programs.
“The average farm family has a higher household income than the average U.S. family and the average taxpayer,” Smith said. “And those may become important issues in the (2023) Farm Bill debate.”
There are many competing interests that are being pushed by both the party in power and the party not in power right now. Among the discussions that could gain traction is the increasingly severe budget deficit outlined in a recent report from the Congressional Budget Office.
“The context may be, we are spending too much money in general. Which programs is it politically least costly for us to cut?” Smith said. “Is it a program that affects let’s say 40 million people — that would be the SNAP program — or a program that effectively benefits, when you distill where the monies go on the farm subsidy programs, around about 200,000 to 250,00 farms. Because those are the farms that get 90 percent of all subsidy payments right now.”
That kind of calculus has the Farm Bureau and other major farm interest groups nervous about what may happen to the funding traditionally available to agricultural safety nets.
“The Farm Bureau’s current president, Zippy Duvall, received a great deal of flack a few weeks ago from his members at the annual Farm Bureau meetings for engaging and seriously talking with the federal government, particularly about agricultural programs focused on climate change,” Smith said. “Mr. Duvall’s response to his members was, if we’re not at the table, we’re not at the table. And if we’re not at the table our losses could well be greater. And in both contexts, from the perspective of his constituents his position seems entirely sensible.”
Meanwhile, Republican minority leader Sen. Mitch McConnell has already signaled an interest in deficit reduction, Smith said. He has also, based on past history, not been a strong supporter of farm subsidies.
That could land agriculture’s safety nets high on legislator lists for cuts — a concern recently articulated by Sen. John Boozman, R-Arkansas, who pointed out farm programs may be particularly at risk under pay-go requirements, which require Congress to at least notionally find ways of paying for any increased spending by cutting expenditures elsewhere.
“Only a few days ago, Secretary Vilsack shook up agricultural interest rates by stating that inequities in farm subsidies have arisen because they’ve been tied to farm level production,” Smith said.
That comment was in the context of discussing funding for socially disadvantaged farmers that was included in the $1.9 trillion COVID stimulus package.
“Here’s a thought that I have, and I’m not saying I’m right or wrong that this will happen,” Smith said. “But if the principle of basing payments on farm family need, and total family income, rather than farm size, is carried forward into a new 2023 Farm Bill, then it would unambiguously radically alter current programs that are particularly linked to the production and prices of major crops like corn soybeans, rise, peanuts wheat, barley and so on.”