As the dust settles from the 2024 elections and Congress returns to complete action on must-pass legislation, emergency assistance for America’s farm families must be on that list, including for enormous economic and production losses resulting from depressed prices and natural disasters.
Minnesota farm families had a spotty production year, but even if yields had exceeded the average, the revenues from production would still be well below the costs of producing that crop. Without accounting for basis, we are looking at a loss of more than $80 per acre on corn and over $67 on soybeans. Factoring in basis, losses could range anywhere from $117 to $160 per acre on corn and between $82 and $93 per acre on soybeans.
In short, Minnesota farm families will realize serious net losses on their 2024 crop, and with no recovery of prices in sight they will struggle to demonstrate they can cash flow in order to secure loans to continue farming next year. The situation is as serious as we have seen conditions since the late 1990s and, unless Congress acts, we could be faced with a full-blown farm financial crisis not witnessed since the mid-1980s.
Many farms suffered economic loss on the 23 crop, as well as the 24. The farm bill safety net has been below the needed threshold for more than just the 24 crop year, many producers have endured economic loss from the rising input cost due to the inflationary pressures while suffering from lower revenues, further justifying the need for additional assistance.
Net farm income has fallen by almost a third over the past two years, the U.S. agricultural trade deficit – traditionally running at a surplus – is now ballooned to $42.5 billion, the highest on record and the result of a moribund national trade agenda.
Not surprising, farm sector debt for 2024 is projected to reach an all-time high as crops fetch prices that are well below their costs of production.
This is all playing out under a Farm Bill whose safety net was based on 2012 prices and production cost conditions – market conditions of nearly 13 years ago.
Help is needed now.
Many of us can remember the 1980s farm financial crisis, not only for the loss of thousands of farm families but also for the shuttering of Main Street businesses and the losses of jobs in communities across the country, large and small. It took record-spending under a Farm Bill and ad hoc assistance to stop the hemorrhaging, though much of the damage could never be undone. In contrast, in the late 1990s and early 2000s, Congress responded immediately to the threat and did so with a comparatively small amount of funding. Thanks to Congress’ quick response then, not only did agriculture hold its own but it helped buoy the whole national economy even as the country underwent a manufacturing crisis.
The best outcome to avoid a meltdown of the agriculture economy is for Congress to pass a new five-year Farm Bill along with supplemental economic assistance for all producers and production loss help to farm families hit hard by natural disasters. Many farm families suffered economic loss in 2023 as well. The Farm Bill safety net has been below the needed threshold for multiple years and many farmers have endured economic loss from rising input costs due to inflationary pressures while suffering from lower revenues.
But, if a Farm Bill proves to be too much of a lift in too short a time, then Congress ought to do what it did just prior to the 2018 Farm Bill: graft supplemental support right into the existing Farm Bill so the current Farm Bill provides an effective safety net until a new Farm Bill becomes law. This and production loss assistance will ensure that America’s farm families can cash flow and access credit to farm another year next year, giving Congress time to finally enact the new Farm Bill we need.
Rep. Trent Kelly’s FARM Act is a good place to start on the economic side of relief. Accompanied by help to other crops through some combination of purchases, block grants, and a flat per acre payment, the FARM Act’s incorporation into the existing Farm Bill would bolster the safety net to stave off the economic meltdown agricultural economists are warning is otherwise heading our way.
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