Tucked into the legislature’s Continuing Resolution for Fiscal Year 2017 was a Christmas present for the nation’s farmers — a life preserver of sorts for the front lines of the agriculture industry, whose family enterprises are facing historic low commodity prices in wheat and concurrent unexplained volatility and low prices in the cattle industry.
The $1.07 trillion funding bill that continues the government through April 28 by maintaining funding at current budget cap levels was necessary once again to prevent another government shutdown, but the stop-gap measure does make a provision for one area of increase.
The USDA’s loan provision, which allows the agency to make loans to farmers and ranchers, will be allowed to extend credit in proportion to demand. That ensures funds will be available at the peak of demand in the winter and spring — instead of running out and creating a backlog.
Attaching the measure to the appropriations bill was a tough go, according to Sen. Jerry Moran (R-Kan.), who is chairman of the Senate Appropriations agriculture panel. Thirteen farm and lending groups sent Moran and others on the relevant committees letters pleading for the last-minute fix.
Montana and North Dakota senators were all pleased that the measure was included.
“FSA loan programs are critical to folks in rural America, especially when commodity prices are at historic lows,” U.S. Sen. Jon Tester, D-Mont., said. “These resources will provide Montana producers more certainty, and allow them to buy seed and upgrade equipment heading into the spring growing season.”
“This will prevent a recurrence of the situation encountered this year, where USDA faced a loan application backlog when it ran out of funds for its direct and guaranteed operating loans, Rep. Kevin Cramer, D-N.D., said. “Our farmers and producers need to know they can move into this next production year having loan options available to them, should they need them, and they almost certainly will need them.
“In times of low commodity prices, it’s critical that farm loan programs have the necessary flexibility to meet the needs of Montana farmers and ranchers,” said U.S. Sen. Steve Daines, R-Mont..
The tandem historic lows in the cattle and wheat industry have particularly hurt area farmers, who over a more than 50-year history have been able to rely on cattle prices being up when wheat is down. That both are down at once has put a double whammy on the many area operations that have come to rely on one to buoy the other.
That has created an increasing need for the FSA direct and guaranteed loan programs for temporary assistance, whose funds have been largely depleted.
“These FSA loan programs exist to help our farmers and ranchers weather low prices,” said North Dakota Sen. John Hoeven, another supporter of the bill. “This provision will help ensure that our producers have access to the capital they need to continue their operations. With today’s low commodity prices, this is an important tool to help our farmers and ranchers through these tough times.”
“This is an important provision for North Dakota farmers and ranchers, especially at a time of tough commodity prices,” said U.S. Sen. Heidi Heitkamp, D-N.D., a member of the U.S. Senate Committee on Agriculture. “I’d like to thank U.S. Department of Agriculture Secretary Tom Vilsack for diligently working with Congress to make sure producers have the resources they need.”
Area farmers said the measure will be particularly helpful to new or younger producers.
“For younger producers, who don’t have equity, it might be the only place for help,” Dennis Johnsrud said. He is second vice president for North Dakota Grain Growers, and was present at the Fall Wheat Conference in Denver to discuss farm bill priorities. “With this year’s problems from vomitoxin, farm incomes will be down. Having a program like this will help, but being told there is no money left would not be helpful.”
Crop insurance is not coming close to taking care of losses the area’s farmers have suffered due to vomitoxin, Johnsrud said, and highlight a gap in the safety net.
“It’s fairly simple: if it’s over 10, you destroy it,” he said. “And under 2 percent, there’s no dockage. But if you’re in that 6 range, the amount of crop insurance recovery doesn’t come close to what the market wants to take away.”
That has sent many farmers to the cleaners — literally — in a last-ditch effort to salvage some value from what was otherwise a record crop by cleaning their grain. The process uses an air stream to blow away infected kernels, which are typically lighter. This is sometimes successful in removing enough of the problem for marketable grain, if the infection occurred at the right stage of grain making. But, even when it works, it takes such a hefty bite out of every bushel’s proceeds, and it is not always economically feasible.
“I don’t believe you recover anything close to the dollars lost,” Johnsrud said. “But it’s the only game in town, so it’s way better than nothing.”
Tester said he expects debate on the Farm Bill to begin in earnest soon.
“It is critical that Montana producers have a seat at the table for that debate,” he said. “I am hosting a series of Farm Bill listening sessions across Montana, including one in Sidney, to ensure that the next Farm Bill strengthens safety nets, addresses low commodity prices, and creates more opportunities for folks in rural communities.”