What Goes Into Aid Package for Ag?

MINNEAPOLIS (DTN) -- As Congress looks to craft a disaster package, Republican senators are making the case that disaster aid for farmers should be broader than just those producers hit by hurricanes this fall and include "market-related disasters."

The U.S. Senate Appropriations Committee held a hearing Wednesday with officials from multiple federal agencies dealing with disasters. The hearing comes just days after the White House proposed a nearly $100 billion disaster package that includes $21 billion in aid for farmers and ranchers.

Senators from Georgia and North Carolina testified about the devastation facing their farmers after Hurricanes Helene and Milton hit those states this fall. Sen. Jon Ossoff, D-Ga., said Georgia farmers are in "acute distress." Winds destroyed fall crops, wiped out roughly 48,000 acres of pecans, destroyed nearly 300 poultry barns and damaged 1.5 million acres of timber.

"The numbers are staggering but this isn't about numbers, it's about families and rural communities and without our help, the simple fact is many of these family farms will fold and they may fold soon," Ossoff said.

Sen. Thom Tillis, R-N.C., also talked about the devastation in his state that included 5,000 miles of roads destroyed just in North Carolina and as many as 20,000 farms reporting damages.

Xochitl Torres Small, deputy secretary of Agriculture, testified that it is a critical mission for USDA to get the resources out quickly and to those people who need the most aid. Torres Small talked about a pecan farm she visited in South Carolina that lost about 75% of its crop after they had just built a new processing facility.

Beyond those disasters, however, senators highlighted financial losses facing row-crop farmers in their states. Sen. Cindy Hyde-Smith, R-Miss., said there is a "looming farm crisis" in the country and called on Congress to provide aid for "all types of disasters" as well as "market-related disasters." Hyde-Smith said farmers are in a financially precarious position because lenders are saying they won't be able to provide financing to farmers unless some financial relief is provided.

"We need to be focusing on market disaster as well, which doesn't seem to be getting the proper attention," Hyde-Smith said.

Smith detailed the costs to produce an acre of cotton is around $895 this year, but that acre would generate about $569 in revenue. That's a $326 shortfall, she noted, which isn't sustainable.

"These types of scenarios are playing out all around the country for all major row crops," Hyde-Smith said.

Hyde-Smith highlighted different ad-hoc disaster assistance that Congress has provided to farmers over the past two decades because of challenging market conditions. She said Congress needs to address those challenges again. "Today, American farmers and ranchers are experiencing literally unprecedented market conditions."

Torres Small responded that financial aid would "need to look at which farmers are struggling." She pointed to net farm income over the past four years, and noted all four years "are all above the 20-year average."

"So that means we've really got to dive into those details about who are the farmers who are struggling and how do we support them."

That comment about the 20-year average income came back to bite Torre Small as other senators weighed in.

Sen. John Boozman, R-Ark., the ranking member of the Senate Agriculture Committee, said "a 20-year average doesn't mean anything," pointing to strikes among union workers demanding higher wages right now.

"I agree with Sen. Hyde-Smith that it's really dire in farm country right now."

Boozman said the numbers show economic conditions for livestock overall are good but added, "If you are growing something in the ground right now, it's very, very bad."

He reiterated that bankers are saying they won't be able to provide financing to farmers.

"That's not the 20-year average. It's not a rosy picture. It's a dire picture."

A survey of agricultural bankers released last week showed lenders expect 42% of their agricultural borrowers will not make a profit this year. A growing number of lenders also expect to tighten credit standards in the next 12 months, the survey showed.

In the hearing, Torres Small said she met with rice growers this week from Arkansas and Mississippi about some of their challenges. "I've certainly talked to farmers who are struggling."

Sen. Jerry Moran, R-Kansas, added his concerns about disaster and said Congress shouldn't dismiss the impacts of drought on farmers' bottom lines. "Drought is a damning circumstance to many places across the country, especially home in Kansas."

Moran said Kansas produced its smallest wheat crop since 1961 "because we can't grow a crop."

Moran added, "This is as dire a circumstance that I have seen in my time in trying to address the saving of rural America. So, this is something that we ought not consider as unimportant because it is hugely important."

Moran said, Congress needs to provide specific directions to USDA "about how ag disaster funds should be spent" with some flexibility to address issues that should be addressed. That ties back to how USDA used funds from the last relief package and changed the formula for how farmers are paid. Smaller producers got a higher percentage of disaster dollars than larger farmers who also have crop insurance.

Sen. John Hoeven, R-N.D., also questioned Torres Small on the 20-year average comment. "Think about that for just a minute, that probably puts you about 50% below your actual costs."

Hoeven also highlighted drought, saying it doesn't generate the headlines like hurricanes, but drought is still a crisis for farmers.

"That's the rest of the story that has really put the rest of our farmers and ranchers up against it."

Hoeven added, "We're losing farms at a high rate and the farms we're going to lose as a result of these disasters and the drought and everything else, are the ones on the edge. Those are the ones that get hit the hardest."

Torres Small noted the last four years actually included "one has been a banner year, setting record numbers" for net farm income -- 2022, when net farm income hit $195 million. The last three of net farm incomes are all higher than any other year since 2014, she said.

Hoeven responded, "I know you have a job to defend some of those statistics that USDA is putting out there."

Sen. Katie Britt, R-Ala., talked about soaring input costs facing producers in her state due to inflation and higher energy costs, calling it a crisis for producers. Net cash farm income in Alabama dropped $1 billion in just one year in 2023, Britt said.

"It is hard to find a farmer in the entire state of Alabama who isn't hurting."

Also see, "President Details Disaster Relief for Farmers and Ranchers as Part of Bigger Package," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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