War, Pandemic, Disasters Upend Farm Bill Calculations

Ag economists told a House Ag Subcommittee Thursday that the war in Ukraine, trade wars, the pandemic, and disasters have all combined to upend calculations for the next farm bill.

University of Illinois Ag Economist Joseph Janzen says commodity prices and input costs will depend largely on the war in Ukraine, but on other issues as well.

“Some resolution to that conflict will lower commodity prices, both on the output side and on the input side, but I think there’s significant concern that, even on the input side, there are a host of issues around the world that would leave input prices elevated, and that’s a concern for U.S. agriculture.”

Especially since countercyclical Title I safety nets ARC and PLC don’t help much when commodity prices are high, leaving crop insurance and ad hoc disaster aid as critical backstops. Ranking Ag Republican Glenn ‘G.T.’ Thompson.

“ARC and PLC have spent about five billion dollars, or 20 percent less than expected in the four years after passage of the 2018 Farm Bill, and, according to USDA’s Economic Research Service, farm production expenses are expected to jump by over 20 billion dollars in 2022.”

Texas A & M Food Policy Center Co-Director Joe Outlaw suggested higher reference prices and paying the higher of either ARC or PLC each year but also a pilot with crop-specific margin coverage.

“On the cost side, fertilizer clearly, fuel, and labor, and there’s a whole lot of things that would matter for a certain set of crops that might not matter for another set of crops, so we’d have to be really careful to make sure that we did it balanced, but it would be worth looking at.”

Outlaw says prices, high even before the war in Ukraine, will come down, but farming costs will stay up for a while, so what worked in the 2018 Farm Bill may no longer work in the next one.

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