Farm Progress

Trump administration appears to be sending mixed signals on budget proposals, promises to help ag sector.

March 16, 2017

4 Min Read
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Farm organization leaders said they had a “substantive and productive” meeting on Wednesday (March 15) with Trump administration officials that focused on the need to increase food and agriculture exports.

But within hours reports began emerging that the Agriculture Department and many of its programs would be hardest hit among the agencies selected for budget cuts so the administration could increase defense spending.

“It is clear from this meeting and other interactions that the Trump administration understands and intends to pursue expansion of U.S. food and agriculture exports which contribute to U.S. manufacturing, job creation and economic growth,” the farm groups said following the (March 15) meeting.

“We are committed to offering substantive proposals and ideas, and look forward to further opportunities to work with the administration and its trade team as they develop specific strategies for engaging in trade negotiations with our most important trading partners. We are pleased that we received assurances from the Trump team that it will take us up on that offer.”

Exactly how those assurances will square with reports the administration will cut 21 percent of USDA’s discretionary spending budgets wasn’t clear. Details were scarce, but it appeared USDA Farm Service Agency Centers, which have already been through several rounds of consolidations, could face further reductions among other areas of the Ag Department budget.

‘Misses the mark’

“The president’s first budget request misses the mark entirely when it comes to the needs of rural America,” said a spokesman for the National Sustainable Agriculture Coalition. “He is targeting these detrimental cuts right at the people who helped bring him to the White House – America’s farmers, ranchers and rural communities.”

The administration’s budget proposals were also in contrast with a letter sent this week by 12 farm organizations calling on the congressional budget and appropriations committees to increase funding for farm programs in the 2018 farm bill.

The coalition that included the American Farm Bureau Federation underlined in its letter the need for a strong farm safety net in the face of financial hardship in farm country not seen for decades.

“While we do not yet have a full-fledged financial crisis in rural America, a good many farmers and ranchers are not going to be able to cash-flow in 2017,” the groups wrote. “With USDA projecting continued low prices in 2018 and beyond, this situation threatens to quickly and vastly expand with each and every crop year.”

The advocates noted that net farm income has dropped 50 percent in the last four years—the largest four-year percentage decrease since the Great Depression.

Burning through reserves

“With no relief in sight, many farmers and ranchers are burning through capital reserves, and beginning farmers may be forced out of business altogether without reserves from good years to carry them through,” the groups said.

“Banks and other community lenders are finding their hands are tied as well. Without a strong safety net, farmers are unable to secure the loans they need to help with operating costs to keep their businesses running.”

The groups said farmers also face the challenges of a strong American dollar as other countries heavily subsidize and protect their producers. A higher value for the dollar means U.S. farm exports cost more than those of competing nations with weaker-valued currencies.

“U.S. farmers have long said they were willing to compete with farmers elsewhere on a level playing field, but they cannot compete with the treasuries of foreign governments,” the groups wrote.

The administration’s budget proposal does not address spending in the 2018 farm bill, but Washington think tanks that are linked to conservative groups such as the House Freedom Caucus have been calling for reduced spending in the next farm law.

Importance of trade

The farm group representatives that met with National Economic Council Director Gary Cohn on March 15 have been stressing the importance of agricultural trade following a number of statements by the president in which he canceled U.S. participation in the Trans-Pacific Partnership and indicated he wants to renegotiate the North American Free Trade Agreement and other trade pacts.

The U.S. Food and Agriculture Dialogue for Trade, as well as a number of the individual organizations, have written the administration pledging “to work actively and constructively with the administration in preserving the major benefits of the North American Free Trade Agreement to the sector while seeking further improvements to modernize the 23-year-old accord.”

Among the organizations participating in the (March 15) meeting were the American Farm Bureau Federation, American Soybean Association, Corn Refiners Association, National Association of Wheat Growers, National Corn Growers Association, National Cotton Council, National Grain and Feed Association, National Oilseed Processors Association, North American Export Grain Association, Southern Peanut Farmers Federation and the USA Rice Federation.

During the meeting, the agricultural organizations noted that 95 percent of their potential customers live beyond the U.S. border and that the diverse food and agriculture sector supports more than 15 million U.S. jobs, creates more than $423 billion in annual U.S. economic activity, and is the single largest U.S. manufacturing sector, representing 12 percent of all U.S. manufacturing jobs.

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