Inflation made worse by war, trade wars and disasters is complicating U.S. agriculture, highlighting the need for a more responsive safety net in the next farm bill, according to commodity groups testifying on Capitol Hill.
All the major farm commodity groups agreed, Title I safety net programs ARC and PLC need to be more responsive to market conditions from disasters to wars to trade wars.
American Soybean Association chief Brad Doyle told House Ag members low reference prices failed to trigger any PLC payments to soybean growers during the 2018 trade war with China. “If soybeans, the second largest crop by area planted in the US, did not get help from Title I during this critical situation, it is hard to imagine a scenario where Title I safety net could provide meaningful help with the current reference price.” Producers also complain soybean base acres are set too low versus planted acres, resulting in more than 34 million unprotected acres last year.
That, while soaring fertilizer and other input costs are erasing gains from higher crop prices. National Corn Growers Chris Edgington said; “Prices have soared to record levels, and several companies have unfortunately, made a bad situation worse for growers by applying for tariffs to be applied to imports of phosphate and nitrogen fertilizer, respectfully.” Edgington says NCGA and its state members have urged those firms to voluntarily drop their tariff petitions.
But Ag Chair David Scott predicts the war in Ukraine will raise input prices further and squeeze U.S. producer margins even more. “I believe that the Russia-Ukraine conflict will definitely exacerbate these conditions, because Ukraine is a major exporter of raw materials, and a disruption in these exports will surely raise prices globally.”
Both Ukraine and Russia are or were major fertilizer exporters. Scott says when input prices rise but support prices stay the same, U.S. producers will have to “carry that cost.”