Policy needs to keep ag on top

Macroeconomic policy to spur growth, aggressive trade agreements, more rational regulatory policy and more research funds are necessary.

Agriculture is cyclical, and despite the downward trend that started in 2015 that is expected to continue until at least 2017, there’s still plenty of optimism about food and agriculture over the long term. However, it’s important, from a policy standpoint, that legislators get some things in line to help U.S. agricultural producers meet the challenge of producing more food in the next 40 years than the last 10,000 years combined.

This was the main message from Randy Russell, president and partner in the agricultural and food consulting firm of The Russell Group, to the Senate agriculture appropriations subcommittee during a hearing on the state of the farm economy. The roundtable discussion featured top economists from agricultural groups and from across the country, as well as U.S. Department of Agriculture chief economist Robert Johansson.

The world’s population is projected to grow to as many as 9.3 billion people by 2050, with 80% of those people living in developing countries. But how does the U.S. farmer weather the current down-cycle to help meet the growing demand needs yet still capture profits?

Russell said instituting a macroeconomic policy that fuels growth is essential. The difference between 2% and 3% growth in gross domestic product is $4 trillion to the economy. Job creation brings with it lower deficits and leads to more demand for agriculture.

Russell also said there is a need for a more aggressive trade agenda, and although he would love to see a completed World Trade Organization deal, the reality is that the greater emphasis needs to be on regional and bilateral trade agreements. “That is the future of our growth,” he said. These opportunities allow for a focus on non-tariff trade barriers, such as phytosanitary barriers that currently limit exports of meat in particular.

A more rational regulatory policy is key to the future success of farmers. Dale Moore, executive director of public policy at the American Farm Bureau Federation, said regulatory creep is a major issue facing farmers today. He said the pressure for farmers to make sure all those boxes are checked and ensure that someone isn’t standing over their shoulder saying they’re out of compliance can be burdensome. “It’s not even the economic cost to comply with the regulation but the time farmers and ranchers spend away from managing to being paper pushers,” Moore said.

Rusell added that whether it is U.S. Department of Labor standards or the Environmental Protection Agency, the cumulative impact of all the regulations on farmers and the agricultural suppliers that serve them is essentially acting as a tax on them.

The final need is to more effectively reinvest seed money – research dollars, Russell said. “If we’re going to meet global demand, we need to be reinvesting in the right way,” he said to the subcommittee. Some improvements have been made to make it more competitive in recent years and matched with private funds, but investments in fundamental sciences will be crucial to meet future challenges.

Farm bill working

Another main message during the hearing was that the farm bill is working and should not be reopened prior to its expiration.

Tom Sell, co-founder and managing partner of Combest, Sell & Associates, noted that no one knows how long swells in agricultural downturns will last, but what farmers do have as a tool is the farm bill — and it is working. “I can say with confidence there will be farmers who will be in business in spring of 2016 because of the 2014 farm bill,” he testified.

Collin Woodall, vice president of government affairs at the National Cattlemen’s Beef Assn., added that the permanent disaster program kept many producers in business when the drought hit. Conservation programs – notably the Environmental Quality Incentives Program – are another farm bill policy that has benefited many livestock producers.

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