November 19, 2018
CONGRESS FACES KEY AG POLICY ISSUES
The highly contentious 2018 Mid-Term Elections are now history, and we will now move forward with some changes in leadership in the U.S. House of Representatives. After January 1, 2019, the U.S. House will switch over to a Democrat majority, which means that all House Committee leadership positions will also now change. In addition, there will be many new members in Congress in 2019, some of which have had very limited experience on ag-related issues. After January 1, Minnesota Congressman Collin Peterson will be the Chair of the House Agriculture Committee, which is a role that he has previously held. The leadership of key committees in the U.S. Senate should remain the same in 2019, since the Republicans will retain a majority in the Senate.
There are many major issues that could potentially affect the agriculture industry, which still need to be addressed and resolved by Congress, and ultimately signed by President Trump in the coming months and years. Following is some perspective on some of the key ag policy issues that could either be considered during the “lame-duck” session of Congress in November and December, or the 2019 session of Congress:
The Next Farm Bill
By mid-Summer, both the U.S. House and Senate had passed their versions of a new Farm Bill. This created optimism that the new Farm bill could be finalized and voted on by the time the current Farm Bill expired on September 30, 2018. However, no compromise Farm Bill was agreed on by the leaders of the Senate and House Conference Committee, so no action has been taken by Congress on the next Farm Bill. Now, the hope is that a compromise Farm Bill can be drafted, and that a vote in Congress can be taken before the end of 2018, during the so-called “lame-duck” session of Congress. Key differences still existed in the Nutrition, Conservation, and Commodity Titles of the House and Senate Farm Bills.
It appears that the Conference Committee may have resolved some of the difficult issues, so there is optimism that a new Farm Bill can be approved during the current “lame-duck” session. If no agreement can be reached by the end of 2018, another alternative may be a one-year extension of the current Farm Bill for 2019, which would allow for continuation of various USDA programs governed by the Farm Bill legislation. This would also allow time for Congress to work out differences between the current U.S. Senate and House versions of the Farm Bill; however, that would also provide an opportunity to make changes in the proposed Farm Bill.
USMCA and Other Trade Agreements
On September 30, 2018, the Trump administration announced a new trilateral trade agreement between the United States, Canada and Mexico. The new trade agreement called the U.S.-Mexico-Canada Agreement (USMCA) will replace the current North American Free Trade Agreement (NAFTA). The NAFTA trade agreement was originally set up in 1994 between the three countries, eliminating many tariffs and other trade barriers among the participating countries. The Trump administration has challenged some of the provisions under NAFTA and threatened U.S. withdrawal, if a new trade agreement is not reached.
Many times, trade deals between countries are very complex and difficult to understand, as well as taking several years to be fully implemented. The new USMCA agreement, or any other new trade agreements, will likely be no different. The USMCA agreement and other new trade agreements will need to be approved by all participating countries, as well as by the U.S. Congress. Getting Congressional approval for USMCA or any other trade agreement may be difficult, as there are certain members of Congress in both parties that tend to oppose most trade deals. It is not clear if the Congressional changes following the 2018 mid-term elections will help or hurt passage of USMCA or other trade agreements. Most likely, arriving at final Congressional approval of USMCA and other trade agreements will require some bipartisan support in both Houses of Congress.
Farm Financial Stress
Low profitability in both crop and livestock production for the past few years has increased financial stress for farm families in many areas of the U.S. This financial stress has been accentuated in 2018 by the reduced commodity prices associated with the ongoing trade issues that the U.S. currently has with China, Mexico and Canada. In addition, crop yield reductions in portions of Minnesota, Iowa, and other Midwestern States that were impacted by excessive rainfall and severe storms during this past growing season are likely to reduce 2018 farm income levels. Many ag experts expect this trend of very tight profit margins in crop and livestock production to continue into 2019 and 2020. Some ag leaders are questioning if current farm risk management tools and Federal “safety net” programs are adequate to protect farm operators from financial collapse during these downturn periods. This may become a major point discussion by Congressional leaders in the coming months, either as we finish a new Farm Bill or move beyond the Farm Bill with ag policy discussions.
High Health Care Costs
High health care costs and access to adequate health care services was the lead issue in the recent mid-term elections in many Midwestern States, and continues to be a major concern for farm families and other rural families across the country. Some families have seen health insurance premium costs double or triple in the past few years. Some farm families and sole small business owners are now paying $30,000 to $40,000 per year or more for health care premiums, if they are even able to find adequate health care coverage. We will now see if Congress and the Administration can collaborate on finding some workable solutions to the health care crisis that exists for many rural families in the U.S.
One area that the Trump Administration and key leaders from both parties in Congress seem to agree on is the need for a major “Infrastructure Bill” to address the many existing and future infrastructure needs in the U.S. However, there is likely a vast difference, both politically and geographically, on what the needs are and how is the best way to address and fund these infrastructure needs. Obviously, there are many needs that affect agriculture and rural America, which includes improving roads and bridges, railroad upgrades, updating locks and dams, enhancing broadband access, just to name a few. It will be interesting if the leadership in Congress can reach some agreement on putting forth a major piece of legislation that could address some of these very big infrastructure needs in the coming years.
Other likely ag policy issues that will be on the agenda in the next two years include renewable energy, immigration policy, climate change measures, and environmental regulations. There is obviously no shortage key ag policy issues and other issues affecting farm families and rural communities that need to be addressed at the federal level in the next few years. However, it is not clear if the changing leadership in Congress, as well as the large number of new members of Congress, will have any impact in getting beyond the partisan political atmosphere that currently exists, in order to find some bipartisan solutions to these very challenging policy issues. It is also not clear how cooperative the President and the Administration will want to be in working with Congressional leaders on these important issues.
Note — For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960);
E-mail — (email@example.com)