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As Mother Nature Rages, Agriculture’s Critics Attack

May 16, 2018

We published an article on Monday about the letters in support of U.S. farm policy that are currently hitting Capitol Hill.  It stated:

It’s a busy time to be a farmer.  Many are in their fields planting, or preparing to do so….Even so, farmers are taking time to make sure their voices are heard as the Farm Bill debate unfolds.”

Here’s an important nuance to that statement. 

Farmers in West Texas and other parts of the Great Plains would love to be busier planting right now, but they’re having to reconsider because the ground is so dry it could destroy the seeds.

“This time of year, Shawn Holladay is usually sitting atop a tractor, laying cotton seeds into rows of red soil on his farm here on the High Plains,” the Wall Street Journal wrote in a story about the situation.

“But less than 2 inches of rain has fallen across much of West Texas since last October,” the article continued.  “With his fields bone dry, Mr. Holladay and many other farmers in the Texas Cotton Belt have held off putting seeds in all but small patches of irrigated ground out of fear they will simply dry up.”

Parts of Colorado, Kansas, New Mexico, and Oklahoma find themselves in the same situation as conditions range from “severe” to “exceptional,” according to the U.S. Drought Monitor.  The lack of moisture has already harmed winter wheat and cattle production, and it is imperiling cotton, corn, alfalfa and sorghum crops that typically grow throughout the summer.

One economist with Texas Tech University told the Journal that the resulting damage in Texas will be in the magnitude of billions.  And a local equipment dealer said his sales are already down 20% this year as a result.

This isn’t the first time the state has been hit.  A drought in 2011 sent shockwaves through Texas communities and spread throughout the Midwest to become the worst natural disaster in farm country since the Dust Bowl era.   

The droughts of 2011 and 2012 put America’s crop insurance system, which is now a key component of U.S. farm policy, to the test.  And the system passed with flying colors.

By the end of 2011, more than $2 billion in indemnity payments had already gone out to help Texas cotton farmers pick up the pieces from that spring’s failed crop.  And after the conclusion of the 2012 drought, which stretched from Texas to the Dakotas, USDA’s undersecretary noted:

“I have yet to have a single producer call me with a complaint about crop insurance. That is a testament to just how well agents, adjusters, the companies, and the Risk Management Agency worked together in one of the worst droughts in the history of this nation.”

National Crop Insurance Services, a trade group representing crop insurers, published a video immediately following the 2011 Southwest drought that chronicled the experience. 

Texas farmer and rancher Matt Huie was featured in the video and explained, “What we learned from the drought of 2011 is that good policy can create survivors in an industry that otherwise would have no survivors.”

That’s a valuable lesson, which should pay dividends this year as drought returns.  But, some agricultural critics want to make it much harder for farmers to survive this time around.

Several members of the U.S. House of Representatives recently introduced amendments to the 2018 Farm Bill that would greatly weaken the crop insurance system, as well as other key farm policies.

Proposed amendments would cap crop insurance benefits, exclude larger farms from crop insurance, make coverage more expensive for farmers, remove tools used to manage revenue risk, and reduce the economic viability of private-sector insurance delivery.

Such attempts would be a big mistake, according to the House Agriculture Committee, which released a video outlining the proposed amendments’ problems just days before votes were scheduled to take place.  That video used clips of testimony from Committee hearings.

“The crop insurance system today is working,” one Minnesota farmer testified.  “Bottom line is, these amendments will kill the program.”

And that would likely mean there would be a lot fewer seeds going in the ground next spring as farmers would have to focus on foreclosure proceedings instead of working their fields. 

Unfortunately, that appears to be the agenda of many farm policy critics.  Which begs the question: If farmers can’t survive the next drought, or hurricane, or hail storm, or price collapse, who’s going to feed and clothe us?

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Commentary
Ag Market Commentary -

Corn futures closed the Tuesday session with most contracts steady to 2 1/4 cents higher. Traders are still keeping an eye on the Brazilian crop,

Soybeans -

Soybean futures ended the day with most contracts 5 to 6 cents in the green. Soymeal was down $1.60/ton, with front month soy oil 9 points higher.

Wheat -

Wheat futures saw gains of 13 to 14 cents in the nearby HRW and SRW contracts, with HRS up 10 to 11 1/4 cents. For the most part the Southern Plains

Corn -

Corn futures closed the Tuesday session with most contracts steady to 2 1/4 cents higher. Traders are still keeping an eye on the Brazilian crop,

Cattle -

Live cattle futures finished steady to 42.5 cents higher on Tuesday, with nearby June down 2.5 cents. Feeder cattle futures were steady to 22.5

Lean Hogs -

Lean hog futures settled the day with most contracts 15 cents to $1.725 lower. The CME Lean Hog Index was up 62 cents from the previous day to

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