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Change in farm economy happening at breakneck paceArkansas The 2007 farm bill may not become a reality until the spring of 2008, believes Dr. Bobby Coats, economist with the University of Arkansas Cooperative Extension Service. "If I had to make a prediction, I would expect to have a new farm bill in place by April of next year. If Congress remains in session into December, then it is possible to have a farm bill by Christmas," he said. What's taking so long? "Most people don't realize, but it has been decades since a farm bill was this difficult to write," he said. "This is because of the vast array of economic and policy considerations." The U.S. House of Representatives passed their version of the bill (H.R. 2419), and the Senate Agriculture Committee must now draft and agree on their version of the farm bill, which will then move to the Senate floor for debate, probably in October. After the Senate bill is passed, both bills move to a conference committee to be reconciled. Coats said considerable work lies ahead before the new farm bill is sent to the president. Coats said there is a camp of legislators who want to move U.S. farm policy away from the traditional farm policy setting. They believe the continuation of a strong farm safety net is no longer needed. "Further, they believe the current robust global economy is stable enough and that progress has been made in the global trade arena, so that the new global economy can provide farmers a fair return on their investment," Coats said. Coats isn't so sure. "Good progress is being made, but it will take years to develop global economic stability and real market access for food and fiber," he said. "The new global economy and the WTO Trade Agreement have huge potential and are extremely important to a healthy U.S. and global economy, but a reasonability stable global economy and a reasonable and fair global trade agreement don't exist." The problem, Coats said, is economic activity in the global marketplace hasn't been consistent. For the past 20 years, the new global economy has produced huge swings in economic activity from extremely strong to extremely weak. This produces large swings in all commodity prices, but especially food and fiber commodities. An example of this occurred in 2001, when rice and cotton prices resembled prices producers received in the 1950s. "This has produced accelerated change in the row crop sector farms as producers scramble to increase productivity, be low cost and remain profitable," noted Coats. "Change is happening at the fastest pace row crop producers have experienced in a lifetime of farming." Coats said energy prices and input costs in general have increased at "an alarming rate since 2002." When combined with several damaging weather events since 2002, producers are likely experiencing financial stress and concern about their future, "which is the very reason to keep traditional policy in place with a reasonably strong safety net in the new farm bill." Coats said trade is important to the United States, but one barrier will always exist that makes total free trade impossible: All countries protect their food and fiber sectors, and the only issue is how much protection. The problem faced by the United States is that countries want free access to our market but want to limit our access to their market, the economist said. Coats termed the House farm bill "an excellent bill given the challenges created by the economic and policy setting." He said it continues support for farmers through direct payments at the same levels as current law, it preserves the non-recourse marketing loan program, continues the price-based counter-cyclical program and offers producers the option of enrolling in a new revenue-based counter-cyclical program and it addresses payment limit concerns. For more information about the farm bill, go to www.aragriculture.org/agfoodpolicy/default.htm. The Cooperative Extension Service is part of the U of A Division of Agriculture. Date: 9/21/07
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