By Tom Parker
Climate change, country-of-origin labeling, foreign trade, trade deficits, the Trans-Pacific Partnership, biofuels, sequestration, incentive bills for young farmers, education programs and the Food Safety Modernization Act were among the blizzard of legislative discussions coming out of Washington, D.C., National Farmers Union Government Relations Representative Tom Driscoll told members of the Kansas Farmers Union during their annual state convention held last December in Topeka.
While some of the discussions and pending legislation show promise for agriculture and rural economies, others could have disastrous consequences if implemented, he said.
When the bipartisan budget agreement of 2015 was unveiled in late October, the legislation included what amounted to “an attack on rural America” with a reduction in crop insurance funding. Section 201 contained language that would reduce rates of return to crop insurance companies from 14.5 percent down to 8.9 percent. Considering that the average return was around five percent, implications of this reduction would more likely cause average returns closer to zero, thereby killing private sector delivery. “If you lobbied congress to strip crop insurance language from the agreement, it would likely result in reopening the 2014 farm bill,” Driscoll said. “And nobody wants that.”
In recent years, an increasing number of crop insurance providers have sold their operations, opting to leave the sector because it is no longer profitable. Consolidation of the crop insurance sector would be devastating to family farmers and rural communities, he said.
Recent bills introduced into the House and Senate posed new threats to federal crop insurance, aiming to cut $19 billion over 10 years. Some of the bills, including the Assisting Family Farmers Through Insurance Reform Act, would eliminate the harvest price option on policies, cut crop insurance returns and terminate premium subsidies that farmers receive. The provision also included a cap on subsidies and caps on administrative and operating costs of insurers to $900 million per year. However, congressional agriculture committees were able to secure commitment that $3 billion in savings won’t come from ag programs.
Sequestration sets a hard cap on the amount of government spending within defined categories, Driscoll said. If Congress enacts annual spending that exceeds the caps, then across-the-board spending cuts are automatically imposed, affected all departments and programs by an equal measure.
“This is very frightening because if you have to take budget cuts, you want to be able to direct them so they make the least amount of damage as possible,” he said. “Sequestration chops them off at a line—and not only the funding cuts, but the manner in which they’re executed is especially harmful because they just cut the money from wherever it happens to come from. You’re not able to prioritize things properly. It’s a very chaotic process.”
Trade agreements with other countries, often touted as incentives to economic growth, rarely have positive financial influences except for the wealthy in those countries, Driscoll said.
“I would say that trade agreements are designed to benefit the wealthiest segment of a country rather than a particular country itself,” he said. “They’re advertised as a ways to promote economic growth, but with nearly every agreement we’ve seen a downward trend in economic activity.”
American agriculture can benefit from trade agreements in some cases, but they’re often not good for the economy as a whole, he said. The latest trade kerfuffle is the Trans-Pacific Partnership, a major trade agreement with 11 other countries, he said. It sets rules for trade including tariffs, investment and intellectual property, labor and the environment. Though the agreement was finalized in October, Congress still needs to ratify it with a straight up or down vote before implementation can occur.
“Congressional resistance for the agreement has been somewhat surprising as a lot of people in the Tea Party spectrum of the Republican Party are opposed to this,” Driscoll said. “It has proven somewhat of a pleasant surprise that they haven’t been able to hammer this out as easily as they hoped.”
Currency manipulation is another factor that undermines fair trade. In August 2015, for instance, Vietnam devalued its currency due to a major devaluation by China, he said. Other countries such as Malaysia and Singapore followed suit by increased reserves by unprecedented amounts. Sadly, there are no enforceable currency manipulation provisions in the Trans-Pacific Partnership, he said. “Undervaluing their currencies allows countries to boost exports, limit imports and to create large current-account surpluses,” he said. “When we get into the TPP, we’re just inviting more of this behavior.”
The climate is another priority matter for the National Farmers Union, he said. Unusual climate events and climate-related fluctuations pose significant dangers to agriculture, despite improved technology. “Extreme one-day precipitation events can have significant impact on crops,” he said. On a more promising note, climate change can and will be mitigated though the use of biofuels and policies such as the Renewable Fuel Standard.
Beginning or transitioning farmers have new opportunities under National Farmers Union-sponsored programs or new legislation, he said. Two acts in particular—the Food Safety Modernization Act, or FSMA, and the Young Farmers Success Act of 2015—hold potential to benefit new and transitioning farmers. The food safety act was signed into law by President Obama at the beginning of 2015, and while it was a step in the right direction, it wasn’t without flaws.
“It was a classic situation where someone in an office in Washington, D.C. was trying guide how food safety works without being on a farm, and hilarity ensues,” Driscoll said. “We’ve been trying to help them understand how these regulations are really going to play out on the ground, how they should be implementing these regulations, and what enforcement should look like to actually achieve the goals of the law rather than just create a lot of headaches for people who are trying to offer nutritious food.”
The Young Farmers Success Act would classify farming as a career by adding full-time farmers or full-time managers of a qualified farming operation to the Public Service Loan Forgiveness Program. Under the guidelines of the program, individuals who work for a non-profit organization or the government and dutifully make their student loan payments for 10 years can have their higher education loans forgiven. By including farmers, Driscoll said, it would encourage people to consider farming as a career.
The National Farmers Union, while not as robust in membership as other farming advocacy groups, has an “outsized influence” in Washington politics due to its close ties with its members and the grassroots nature of the organization, he said.
“That certainly makes my job as a representative a lot easier,” Driscoll said. “We have a very strong and effective organization.”