Failure to develop a meaningful farm bill could have far-reaching economic consequences, says Tom Gary, president of Mississippi's Delta Council.
The agri-industrial complex within the organization's 18-county region “contributes more than half-a-billion dollars to local and state tax coffers,” money that is “vital to continuing basic services such as schools, fire protection, law enforcement, roads/bridges, and other infrastructure,” he says.
“Even the value of our most basic resource, the land itself, is tied closely to the domestic policies that are driven by farm laws,” Gary said at the council's conference for allied agribusiness and industrial leaders, held in conjunction with its mid-year board meeting.
“Should Congress depart from its long-standing policy of food and fiber security, a Kansas State University study estimates Mississippi land values would drop by 29.2 percent, with similarly precipitous declines in other states.”
For generations, Gary noted, “the U.S. Congress has supported a policy of food security that insured that Americans would never have to rely on foreign interests or foreign soil and water resources to provide our basic food and clothing needs.”
That continued reaffirmation, he said, has resulted in “the most cost-efficient and sophisticated agricultural industry in the world.”
For the next 18-24 months, Gary said, nothing will require more attention or time than preparation for passage of the next farm bill.”
Crafting that legislation, said Delta Council Executive Vice President Chip Morgan, “is going to be a new and different experience,” that will require intense effort to generate support.
In a discussion with the council's guest, Rep. Jerry Moran, R-Kan., Morgan said the congressman was emphatic that “we need to reach the leadership in companies that do business with farmers and tell them, ‘We need your help to build coalitions around agriculture and get the votes to advance our cause.’
“When we told Mr. Moran that a lot of Delta agribusiness is globally-owned, his response was: ‘What they need to do is decide who are their preferred customers?’
“If the farmer is your primary, preferred customer,” Morgan told the agribusiness leaders present, “we want you to be informed about these important issues, because you can have an impact on them.”
As an example, he noted that should the Grassley amendment on farm program payment limitations be imposed, agricultural states would lose millions of dollars.
While payment limits have generally been thought “a southern issue,” Morgan said, “the facts don't support that. Mississippi would lose $38 million under the Grassley amendment; Rep. Moran's home state, Kansas, would lose $52 million, mostly in wheat payments. Secretary of Agriculture Johann's state, Nebraska, would lose $46 million.
“Farm program payments as a percentage of production costs are fairly relative across farm states.”
Another fundamental issue “and one that creates crisis in the minds of lenders,” Morgan said, is the relationship of farm program benefits, land values, and lending.
“A Delta banker told me that 90 percent of the loans in his $100 million agricultural portfolio would be non-performing if the Grassley amendment were in effect.
“The statement was made, ‘Yeah, but that land's still going to be farmed.’ And the banker replied, ‘Maybe so — but not with my bank.’ If a grower has to farm only 400 acres to qualify under Grassley, the economics of scale become such that he couldn't afford a four-row cotton picker, let alone a six-row.”
Morgan cited a Kansas State University study showing the estimated reduction in land values when farm programs are decoupled from land.
“Mississippi land values would decline 29.2 percent, Louisiana 39.1 percent; Arkansas 30 percent; Tennessee 5.2 percent; and Missouri 17.1 percent.”
It will be vital, in the upcoming farm bill debates, Morgan said, that farmers, farm organizations, and agribusinesses “reach out to states that have constituencies that are not voting with us on farm programs, and enlist their support.”
Kent Wyatt, chairman of the council's executive committee, said the current farm bill “has served to revitalize areas like the Mississippi Delta. It has returned your people to our region who are working with agriculture, and it has helped stabilize the exodus of business activity which was occurring prior to 2002.
“Going into this farm bill, our message will be aimed at making certain that changes in the current farm law don't undermine the tax base and economic activity created by agriculture.”
The council, Wyatt said, “will defend the current U.S. farm policy and resist change that undermines world price competitiveness and income protection features that recognize the complexity of world trade and domestic food security.”