How bad are economic conditions in the Sunbelt as the chances for passage of a new farm bill in the fiscal year ending Sept. 30 continue to diminish?

Cotton producer David Dunlow, who farms in eastern North Carolina, told a House Agriculture Committee hearing that without a new farm bill or comparable relief before the end of the year he and others “may no longer be farming.”

Dunlow, chairman of the American Cotton Producers, which represents grower members of the National Cotton Council, said another extension of the current farm bill would be “extremely insufficient given current costs of production.”

The path to passage of a new farm bill became even more uncertain after Speaker Mike Johnson sent lawmakers home near the end of July to begin a six-week recess. The House members left town having completed action on only five of the 12 annual appropriations bills needed to fund the government in the 2025 fiscal year.

Appropriations bills

When the House returns in September, much of the remaining time before the end of the fiscal year may be spent on the remaining appropriations bills or on passing a continuing resolution to prevent the government from shutting down.

Dunlow was testifying before a House Agriculture Committee hearing on “Financial Conditions in Farm Country” on July 23. He was joined by representatives of the Minnesota Corn Growers Association, the American Bankers Association and GreenPoint Ag Holdings and Ronald Rainey, an agricultural economist at the University of Arkansas.

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He said ballooning operation costs and a seed cotton reference price that has not kept pace with inflation have eroded his equity and prevented him from securing loans from traditional farm lenders.

“I have never experienced a worse time in my 40 years of farming,” said Dunlow. “In previous years, when market prices were below costs of production, growers could benefit from the commodity title to offset losses. However, that is no longer the case.

“The reference price established back in 2018, long before the disruptions brought by Covid, has not kept pace with inflation, rendering the farm safety net ineffective today. The result has been back-to-back years of losses on our farm, and next year could be just as bleak.”

He said he had to refinance his earlier purchases of several small farms to pay his operational debt from last year. Rather than traditional farm lenders, he had to resort to a private equity fund lender at a higher than market rate of interest.

Equipment prices

Farm equipment prices have also outpaced commodity prices and the farm safety net. In 1990, Dunlow said, the cost of a new cotton picker was $40,000 and cotton was about 74 cents a pound. “Today a new cotton picker is $1.1 million, and cotton is still trading in the low 70s.”

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 Dana Allen-Tully, president of the Minnesota Corn Growers, said she did not want to be discouraging in her comments to the committee, “but unless conditions change, I think we are facing a perfect storm in agriculture. I don’t think it will be fully understood until early next year when farmers are unable to secure loans because they can’t cash flow.

“Plummeting crop prices, high costs of production, doubling interest rates, natural disasters and tightening credit are some of the culprits. Working capital is fast-depleting. John Deere’s layoffs of thousands of workers is the canary in the coal mine.”

At the start of the hearing House Agriculture Committee Chairman Glenn Thompson, R-Pa., said he hoped that all those watching the hearing would “understand the urgency” of passing a new farm bill, adding that “for the first time in a long time, this committee has the chance to be proactive instead of reactive…and to establish a foundation for the future of the farm economy.”

Reference prices

In May, the Committee passed H.R. 8467, the Farm, Food, and National Security Act of 2024, which would increase the reference prices for crops included in Title I, the commodity title, of the farm bill.

The bill would also decrease spending for the Supplemental Nutrition Assistance Program, formerly known as food stamps, at a time when inflation has increased food costs across America and restrict the agriculture secretary’s use of Commodity Credit Corporation funding for market facilitation purposes.

Rep. David Scott, ranking member of the Agriculture Committee, reminded members that Agriculture Secretary Sonny Perdue used $23 billion in CCC funds to make market facilitation payments to farmers after China stopped buying U.S. soybeans and other ag products in retaliation for then-President Trump’s imposition of tariffs on Chinese imports.“The former president and his running mate have said they will impose more tariffs if he is returned to office,” said Scott. “The prospect of a new trade war while eliminating the secretary’s CCC authority, the only tool that kept farmers afloat, is nearsighted and dangerous.”