Sugar Producer

June 2011

Issue link:

Contents of this Issue


Page 21 of 23

FARM BILL 2012 :: COBANK by Jonathan Logan | SENIOR VICE PRESIDENT, CORPORaTE agRIbUSINESS baNkINg gROUP, CObaNk 2012 Farm Bill should Preserve the economic engine of rural america Rural America is truly one of the na- tion’s bright spots, a strong economic engine that is delivering significant results despite the more difficult outlook for the broader U.S. economy. Congress should seek to maintain the momentum of this vital sector as it crafts the next farm bill. Even with rising fuel costs and increases in other production-related expenses, net U.S. farm income is expected to reach $94.7 billion in 2011, an almost 20 percent increase over 2010, according to the USDA’s Economic Research Service. Adjusted for inflation, that’s the second-highest level in 35 years. Fueled by rising commodity prices and strong demand for U.S. agricultural products, the nation’s agribusiness complex is thriving and growing—buying equipment, hiring workers and making investments in their businesses and communities. “American agriculture is helping lead the recovery and prospects for the coming year are generally bright,” Agriculture Secretary Tom Vilsack told members of the House and Senate Ag Committees earlier this year. Meanwhile, the broader economy is strug- gling to find its footing. Certainly there is some encouraging news—many companies reported rising profits in the first half of 2010, the manufacturing sector has cranked back to life and the stock market has recovered some of its roar. However, the nation’s unemploy- ment rate remains elevated, rising gas prices are reducing the spending power of American consumers and the housing market, a historic indicator of the nation’s financial health, remains extremely sluggish. The economy 22 Sugar Producer JUNE/JULY 2011 is sending mixed signals, and many experts believe the long-range growth prospects for the U.S. economy are cloudy at best. But for the lawmakers drafting the next farm bill, protecting the economic engine of rural America is not as easy as cloning the version approved in 2008—a piece of legisla- tion that is widely viewed throughout rural America as a significant success. The world has become a more complicated place in the intervening years. During the depths of the recession, law- makers in Washington, D.C., used extraordi- nary fiscal and monetary measures to boost economic activity in the short-term, spending trillions of dollars to stimulate the economy and save perceived too-big-to-fail industries and companies. While there remains an ongo- ing debate among economists, politicians and the American public as to whether those steps were necessary or effective, no one can deny that government stimulus has helped push the nation’s public debt to record levels. Today, the focus of many elected officials on both sides of the aisle is on reducing govern- ment deficits—through spending cuts, tax increases or some combination of the two. It’s against this backdrop that lawmakers are trying to put together the framework for the next farm bill. One plan from House Re- publicans would cut spending under the farm bill by 23 percent, about $178 billion, over the next decade. The bulk of that—about $127 billion—would come out of the nation’s food stamp program, another $30 billion would be cut from commodity programs and the remaining $21 billion would be stripped from land-conservation initiatives. It’s difficult to say at this point whether that plan has any real traction. Democrats control the Senate and the White House, and they’re certain to have different priorities. We’re also headed in to an election year. It’s really far too soon to have a sense of what the final farm bill will look like. Crafting farm bills has historically been a controversial and contentious process because of their impact on international trade, environmental preser- vation, food safety and the well-being of rural communities. This iteration of the farm bill will be even more so. “The nation’s tenuous fiscal condition will make development of the next farm bill among the most challenging in history,” Sen. Kent Conrad, a Democrat and senior member of the Senate Agriculture Committee, recently told a group of stakeholders in his home state of North Dakota. As a leading lender to the nation’s agribusi- ness sector—including the sugar industry —we at CoBank will be watching the ensuing farm bill debate closely. While it’s too soon to know any details about the next farm bill, is not too soon to offer federal lawmakers some common sense guiding principles. First, do no harm. Rural America is help- ing lead the nation out of recession. Do not enact policies—either through cuts or new government regulation—that will erode the economic strength of rural communities. Given the relative weakness of the broader economy, the nation can’t afford to have the rural economy falter due to unintended con- sequences from a flawed farm bill.

Articles in this issue

Archives of this issue

view archives of Sugar Producer - June 2011