BILLINGS, Montana — A bill Sen. John Hoeven (R-N.D.) co-introduced with Sen. Amy Klobuchar (D-Minn.) that would raise the maximum loan amounts for farmers and ranchers under FSA programs was mentioned positively multiple times during a farm bill panel that included cattle ranchers and farmers put on by Sen. Jon Tester (D-Mont.) Monday.
The Capital for Farmers and Ranchers Act is intended to help both farmers and ranchers navigate a low-price environment, in which cattle and wheat — two of the MonDak’s top commodities — are facing historic lows. Meanwhile, on top of that, vomitoxin has struck wheat farmers in both northwestern North Dakota and northeastern Montana, deepening the pain for both. Such high vomitoxin means that even using it for feed can be problematic, and many have said they will have to burn the contaminated crop..
The Hoeven-Klobuchar measure would raise caps on Farm Service Agency direct farm loans, operating loans, and ownership loans, as well as guaranteed farm loans, operating loans and ownership loans.
“This legislation is really important for our farmers and ranchers now, so that they can get access to credit during these challenging times with low commodity prices,” Hoeven said when the bill was introduced. “It will help them to maintain their operations so that they can continue to provide affordable, high-quality food to the American people.”
The cap on direct operating and direct farm ownership loans is presently $300,000. The bill would raise that to $600,000. It also increases the loan cap for guaranteed operating and guaranteed farm ownership loans from $1.399 million to $2.5 million.
Leaders of various farm and ranch agencies in Montana saw the increased levels as largely a good idea, and said they would be particularly helpful for beginning producers trying to get a start in farming. However, there was a caveat to that praise, from executive director of the Montana Department of Agriculture, Bruce Nelson.
“The Hoeven bill would double both our limits, the direct loan and our guarantee loan limits, which is great,” he said. “Except, if they are going to do that, they need to give us more money, or all we can do is serve a lot fewer producers.”
His comments were among dozens of remarks that delved into what a 2018 Farm Bill needs to look like to help producers get through another five years of farming in an increasingly tough market.
Among top concerns were more consistent and timely payments from Agriculture Risk Coverage and Price Loss Coverage, two market-based programs created in the 2014 farm bill to assist farmers when prices hit lows. Presently, these payments are coming along 14 to 15 months later, and are not useful at all for budgeting purposes, says Michelle, Erickson-Jones, who is the treasurer of the Montana Grains Association.
“You don’t know what you are going to get. Not only that, you don’t get it until next year,” she said. “I was not going to put down a number and be wrong, so I put zero there. It doesn’t help your budget.”
One idea, suggested by Gordon Stoner, vice president of the National Association of Wheat Growers, is to make a timely estimate and dole out only a percentage of it. That would get some money to farmers closer to the time of need, while preventing overpayments, which would have to be returned.
Another clear theme was the need for farm groups to keep nutrition tied to the farm bill.
“Decoupling nutrition from the Farm Bill is a disaster in my opinion,” said Chris Christians, legislative and project specialist with the Montana Farmers Union. “The simple fact of it is, it’s only because of votes from members of Congress who live in areas of food deficiency that we are guaranteed a farm bill will pass at all. When it makes up 80 percent of a farm bill, decoupling would be the end of the farm bill in the future.”
Tester agreed with that, and said the effort to decouple nutrition from the farm bill is ultimately an effort to kill both.
“The points made about the nutrition and the farm bill are spot on,” Tester said. “They help pull one another forward to get a big enough block to do what is right in both areas. Getting all the farm organizations together and getting behind this does have power. I know we have different perspectives on everything, but the truth is, we do understand the value of the farm bill.”
Among other strong themes that emerged during discussion was a need to expand research dollars, to identify best practices for vexing problems in the field.
There was also a lot of discussion about what needs to be done to save both the cattle and wheat industry.
Time was, one was up when the other was down, and it was commonly a strategy many used to ride out down cycles in one. But now, both are facing downward trends that seem to have put them in decline, representatives said.
“We’ve lost more than 500,000 producers during the past 30 years,” said Bill Bullard, CEO of R-Calf. “Our industry’s cattle cycle, which once predicted short periods of contraction of three to four years and longer periods of expansion of six to seven years is being disrupted.”
Bullard pointed out that cattle supplies are historically tight and retail prices remain high, yet producers are not benefiting from these historically strong cattle prices. “Producers should have experienced historically strong cattle prices for at least three more years, until 2018,” he said. “Instead, the expected long-term upswing in cattle prices was inexplicably compressed into less than 18 months. Since mid-2015, cattle prices have fallen farther and faster than any time in history.”
Christ Christans, Montana Farmers Union’s legislative and project specialist, wondered how long producers can stay in business with such low prices.
“When you see a 300 to 350-pound calf going through at 80 cents a pound, that’s enough to make you cry,” agreed Christians. “The price of beef in the store is still high, but what the farmer-producer is making at this point is absolutely ridiculous.”
Wheat, meanwhile, is also facing historically low prices, and the trends are concerning, Stoner said.
He used to grow 100 percent wheat, but is now 50 percent pulse, 10 percent corn and 10 percent oil seeds, leaving only 30 percent wheat. Those decreasing trends are reflected nationally for wheat as well, he said.
“If we keep this trend going, wheat risks becoming a minor crop,” Stoner said. “There are already six classes of wheat. Durum alone is only 10 million acres, so it is a niche crop. Some millers and bakers say in 10 years, they’re going to be buying wheat off-shore.”
Stoner added he’d seen the recent attacks on crop insurance by groups like Heritage Foundation and urged fighting back.
“We look at some of the disasters across the nation, and no one is in your office pounding on your desk about crop insurance, so that is working,” he said. “We’ve got to defend that.”
There was broad agreement about the importance of crop insurance around the room, and across both ranching and farming. Without it, banks won’t make loans, it was pointed out.
These and other challenging situations have led to an exodus from rural communities, something that Jillien Streit talked about. She is building a pulse plant in North Central Montana, and felt, based on her experiences, that ag-based economic development can help to revitalize small, rural communities. She would like to see something in the farm bill speaking to that. It’s an idea Tester said has great merit.
Tester, one of the only farmers in Congress, himself joked that he’s been out in the fields digging up scrap iron because prices for the commodities he grows have been that bad. While digging, he found an old fender from a tractor that advertised it had 10 horsepower on firm ground. The Senator reflected that much has changed in his industry, but one thing remains true.
“Family farming is the backbone of this country, and if we lose it, we will regret it,” he said. “The 2014 Farm Bill turned into a partisan deal. There are a fair number who don’t think we should spend a penny on subsidies. There may be merit to that, but we need to work together to provide a safety net for the folks who grow food for the nation.”
Tester said he will continue to solicit input from his constituents and take notes on ideas for the farm bill, to see what kind of coalitions he can build for the 2018 bill.
“We are early in this conversation,” he said. “As soon as the election is over, we will have a lame duck, so this won’t get taken up in a lame duck by any stretch. It will wait until the next session.”
What may get taken up, however, Tester said, are early payments because prices are so low.
“If there is a desire to do that from agriculture states, we may be able to make that happen,” Tester said. “If that happens, I’ll do my best to help with that, but for now, I am focusing on how the 2018 farm bill will look.”
He believes the 2018 bill will have much in common with the 2014 bill, with modifications to improve things like the timeliness of payments, but he said he is very interested in new ideas that have merit, such as ag-based economic development to revitalize rural communities.
“There is merit to the point Jillian made with using the farm bill to help with economic development,” he said. “We need some ideas on how we can create more jobs, whether it’s adding value to agriculture or whatever it may be.”