Farm safety nets should remain in new farm bill: Johansson

WASHINGTON — The next farm bill isn’t due until 2023, but the legislation will undoubtedly face challenges as in the past.

Rob Johansson was on the ground floor when the last three farm bills made their way through the Congress during his time at the U.S. Department of Agriculture and said it’s not too early to tout the importance of safety nets in the legislation.

Johansson stepped down as USDA chief economist Dec. 14 to become associate director of economics and policy analysis for the American Sugar Alliance. He served as chief economist since 2015 and was at USDA for over 16 years.

He was featured in a recent podcast by Farm Policy Facts, a non-profit coalition of farmers and commodity groups created to educate members of Congress and Americans about the importance of agriculture.

There are already comments out there that rural America is doing fine, prices are going up, and farmers don’t need a farm safety net. What is your reaction to those notions?

“Ultimately there are a lot of farms out there that are just breaking even on their operation. We know that more than half and up to 90% by some estimates of U.S. farms are not breaking even on their farm income and have to rely on other farm income to get by.

“Without the farm bills’ safety, disaster programs, crop insurance and commodity programs, many of those farms would have had to close down and sell over the last four years with all of the challenges.

“I think it’s worthwhile to ask what might happen if we weaken those safety nets, if we cutback on the commodity programs or weaken the safety net that we give with crop insurance.”

There is a lot of money moving through these farms because of the high-stake nature and it is a low-margin business, so it makes these fluctuations of commodity prices really difficult to work through.

“If we just go back a few years to say 2014, we were coming off historically high prices that we had seen leading up to that farm bill and we were running a pretty big budget deficit. So, Congress was kind of interested in moving away from guaranteed direct payments and set up the ARC/PLC program to trigger at times when farmers would most need it. It was seen at the time as being prudent from a budgetary perspective.

“Since then we saw commodity prices continue to fall and we saw these rather large shocks to the system that producers needed help to adjust to and address. So, we had to set up the Market Facilitation Program to help with the unforeseen sort of tariff situation we had with our major trading partners — China, Canada and Mexico. And then we had the pandemic. The Coronavirus Food Assistance Program has helped producers of all shapes and sizes in all commodities get through this past year.

“We may see a lot universities doing research looking at the past couple of years and see where we would have been had we not had them in place. But I would venture to guess in certain that we would have seen a lot more farms going out of production without those programs.

“In addition, just think about all of the weather events we’ve seen on top of those. We had the tariffs, we had the COVID, but had a really big hurricane year in 2017 and 2018 and with the record 30 named storms in 2020. We had the terrible planting, flooding and harvest weather in 2019.

“Without the Wildfires and Hurricanes Indemnity Program and crop insurance many farms by just those events would have gone out of business. And we saw indemnities not including WHIP or prevent plant that were $7.3 billion in 2018, $10.5 billion in 2019 and $7.8 billion in 2020. Those were big years for weather events.

“Obviously having the strong safety net that’s provided by crop insurance was instrumental in helping producers deal with those years. I don’t think it’s a good time to think about weakening the farm safety net.”

Even with recent increases, the farm bill still represents less than 1% of the overall federal budget, yet there has been and will be those in Congress who believe they can help balance the budget on cutting farm programs.

“I totally agree. It is questionable on why those critics just confine their discussion to the farm titles.”

A new Congress is seated every two years and it’s important that ag comes together and works together to defend the farm bill policy. What do you think the messages that agriculture should take now to Washington?

“There are a couple of things I keep in the back of my head when I’m engaging in these discussions. I point out that the farm policy needs to provide a stable environment for continued private investments in enhancing farm productivity. We’re seeing new seeds and genetics coming out all the time, the ability to take advantage of new machinery, improved data utilization and improved chemical inputs, as well.

“All of those go hand-in-hand. On a tight margin it’s hard to finance that private investment in research and development. But we can do it. We just need to make sure that farm policy provides that stable investment horizon for producers. A lot of times you’ll hear about public R&D and that’s important, but the private sector investment has outpaced that public sector investment and that’s the reason we’re seeing these productivity gains on U.S. farms.

“It’s key to get that across to policy makers that it’s important that producers are able to make enough to invest in those new technologies that helps not just U.S. agriculture, but globally, as well.

“Another one is when I’m discussing these issues with the Europeans is I like pointing out that the U.S. ag system, food system, is flexible. It’s flexible enough to cater to multiple consumer demands and we don’t need to be prescriptive. We let the markets sort of push production where it gets the best return and because of that we see biotech as a proven technology that’s improved our ag environmental performance, as well as our production levels.

“But at the same time we also can support organics or other premium products that have a place in our system that’s supported by a subset of our consumers. Our system is big enough to allow for both and we don’t have to regulate what and how we produce.

“Along those lines, our farmers have been and will continue to see the impacts of changing climate before other sectors in the economy. I think if you talk to any farmer about this and they may not call it the same thing, but they’ve seen the changing climate and how it affects them, whether it’s water availability or growing degree days or the severity of hurricanes that they have to deal with.

“That’s a reason for keeping strong risk-management tools such as crop insurance as part of their toolbox. Just acknowledging the realities on the ground and having that toolbox available for producers is a really important leg of the stool when it comes to farm policy.

“We saw what happened with the drought in 2012. The crop insurance was able to deal with it. I think that’s the right direction to be moving towards as opposed to sort of moving in the opposite direction and relying more on the sort of disaster ad-hoc bills coming out of Congress every time there’s a problem.

“Scaling back on crop insurance at this time is not a good idea.”