By TOM PARKER
What might have been a fairly routine update on agricultural legislation and the 2018 farm bill was overshadowed by the U.S. Senate’s promise to ramrod through a tax reform bill that would add an estimated $1.47 trillion to the deficit over the next decade, provide corporate America unprecedented tax cuts, and enrich the wealthiest Americans at the expense of nearly everyone else. Suddenly, tax reform was the topic du jour, guaranteed to trigger a head-shaking, eyes-rolling, blood-boiling reaction.
The ironic thing about the measure, Matt Perdue said, was that it was pushed through by fiscal conservatives.
Purdue, Government Relations Representative for the National Farmers Union, and Barbara Patterson, National Farmers Union Government Relations Director, addressed members of the Kansas Farmers Union at the opening of their annual convention on Friday, Dec. 1. That the Senate vote was virtually guaranteed to succeed later that evening cast a palpable cloud of weary disdain and uncertainty over the room. From farm economies, markets and trade agreements to rural healthcare, hospitals and climate change, the news from Washington, D.C. was almost all bad, and the timing of the legislation was especially unfavorable for American farmers and ranchers.
“We’ve had four bad years now,” Purdue said. “Net farm income in 2017 saw a 48 percent drop from 2013, and projected figures for median household farm income in 2018 will be much the same. If the farm economy doesn’t turn around in the next few years, you’re not going to have anywhere to go. We’re constantly making the point that farmers and ranchers have enough struggles, and this isn’t the right time.”
And because it adds $1.47 trillion to the deficit, that gap will have to filled somehow, he added. So far, however, negotiations on the Hill have fallen on deaf ears.
“We keep hearing that there’s not going to be any new funding beyond the farm bill baseline, that we have to find some kind of offset. They’re saying, ‘If you want something, you have to get rid of something.’”
The proposed tax reform bill includes changes to the carry back of net operating losses that reduces the time limit from five years to two. Under the former legislation, producers could usually carry their losses back to a favorable year, but because farm economies have been in a slump for so long, having a good year to pick from will be difficult if not impossible, Purdue said.
Changes to Pay As You Go (PAYGO) are also under consideration. Under PAYGO, or the practice of financing expenditures with funds that are available rather than borrowed, the Office of Management and Budget has the responsibility to sequester non-exempt mandatory programs, of which the Credit Commodities Corporation is the second largest. Waiving funding to make up for the deficit would be disastrous, he said. Programs such as Price Loss Coverage (PLC), Agriculture Risk Coverage (ARC) and Margin Protection Program (MPP) would vanish. “We keep getting the rebuttal that they will reinstate or waive PAYGO, that it isn’t going to be an issue,” Purdue said. “If they do waive PAYGO, if we do get these payments in 2018, the 2018 farm bill is going to be exceptionally hard to pass, if possible at all.”
Though the NFU has been asking for a smoothing of ARC disparities between counties, Purdue expects that ARC will be a less effective program in the future due to low farm revenues, leading producers to move to a PLC program when enrollment opens following the passage of a farm bill.
NFU Government Relations staff Barbara Patterson
and Matt Perdue provided the Washington Update.
Support for affordable health care and rural critical access hospitals is being undermined by provisions in the tax bill, as well. The Senate’s removal of the Affordable Care Act mandate will essentially lead to the collapse of the act, Purdue said. He compared the ACA to a three-legged stool, with the legs representing guaranteed issue, which forces insurance companies to cover everyone regardless of preexisting conditions, the individual mandate and tax credits or premium subsidies.
“The Republicans are doing anything they can to dismantle it,” he said. “Through all this mess that’s been said about the ACA, all the bad things and the back and forth politically, because of the structure of the tax subsidies and the premiums, eight out of ten people are eligible for premiums under 75 dollars, for the first time ever.”
The health marketplace is out of control and becoming increasingly unstable, he said, especially in rural areas. One of the miscalculations of the ACA was that the expansion of Medicaid coupled with the individual mandate would add so many healthy people to the rolls of the insured that rural critical access hospitals would no longer need as much government support. But the expansion of Medicaid wasn’t universal, so rural hospitals are struggling. Since the ACA passed, 82 rural hospitals have closed and more than 600 more are in danger of closing. Not surprisingly, 75 percent of those rural hospitals that closed were in states that did not expand Medicaid. “We’re telling Congress they have to keep supporting rural hospitals,” Purdue said. “We want to increase high quality, affordable healthcare for all. We’re in favor of a single-payer universal health plan.”
On other matters, Purdue said the NFU is working to protect the Conservation Stewardship Program (CSP) and the Environmental Quality Incentives Program (EQIP), to expand rural broadband, and to keep the Supplemental Nutrition Assistance Program (SNAP) in the farm bill. The House version of the farm bill is expected to be introduced in February, with the Senate following in the spring, he said.
Patterson thinks spring is too optimistic.
“It’s going to be incredibly challenging for them to pass a farm bill in 2018,” she said. “The FDA is something of a ghost town now in terms of employees. Some of the agency heads haven’t even been nominated and several still have to go through confirmation hearings, so the Senate is going to be tied up with a number of things.”
Like trade, for instance. The trade deficit stands at a half billion dollars, and now Mexico is talking about buying corn from somewhere other than the U.S., Patterson said. American corn shipments to Mexico totaled nearly $2.6 billion last year, and the threat has shaken farm communities across the Midwest. Corn has become leverage in talks over the future of the North American Free Trade Agreement, or NAFTA, a situation that has been exacerbated by the Trump administration’s erratic diplomatic record.
“Our president has an interesting approach to diplomacy in trade negotiations,” she said. “But we’re clearly not doing trade right, we can all agree with that.”
Even though KFU was opposed to NAFTA and the manner it was passed, and has a lot of concerns over the nation’s trade regime, she said, cutting off those trade agreements at a time when markets are so unstable poses risks.
Consolidations and mergers among the world’s largest ag companies continue without much concern on the part of the Department of Justice, Patterson said. The European Union will make their decision on the merger of Bayer and Monsanto in March and the United States will follow.
The idea of purchasing seeds and chemicals from the same company is deeply troubling, she said. Patterson arranged listening sessions with farmers and took their concerns to the DOJ, but the concept was clearly beyond their rationale.
“They don’t understand how markets work, don’t understand how farmers purchase seeds, don’t understand how farm incomes work,” she said. “Under anti-trust guidelines, if you have a five percent change in cost due to a consolidation issue, that’s not a big deal. But if you put it into the perspective of a five percent increase in seed purchases each year, plus your chemicals, that’s a big problem for farm incomes.”
Meanwhile, the NFU is trying to set up a two-year moratorium on mergers. “This is the worst it’s ever been, and we need to put a stop to it,” she said.
The U.S. withdrawal from the Paris Agreement signified a quantum shift in the nation’s focus on climate change, Perdue said. Climate change research has been a priority for the USDA as well as the NFU, and while he was cautiously hopeful that the USDA would continue its climate work, he was informed that it would remove all mention of climate change from USDA publications.
When taken together, Patterson said, the changes pose dire consequences for rural Americans. “Congress created a situation that farmers and ranchers will lose on,” she said.
Later that night, in the early hours of Saturday, Dec. 2, Senate Republicans, with gleeful backslapping and hullabaloo, passed the tax reform bill.
Get updates from Washington D.C. at: nfu.org/connect/