Peterson on Farm Bill: No extra dollars to boost safety net

Tom Weber: I have Democrat Collin Peterson with me, Minnesota congressman from the 7th District, and he is a key player in Congress on the Farm Bill, which is a major piece of legislation. A lot of people don't really necessarily realize its importance — about $100 billion a year — and up for renewal next year.

You're the ranking Democrat on the Ag Committee and you're already having hearings. You've been having listening sessions, including one at Farmfest earlier this summer. As you dive into this debate, what's the most pressing issue in your mind?

Rep. Collin Peterson: We've had a number of listening sessions, we've just scheduled the last one which is going to be October 7th in New York, but the you know what we should do and what we will do are two different things. We're going into a very difficult time in agriculture. The prices are such that hardly anybody is making money in any aspect of agriculture at this point. I think next winter we're going to see a lot of people in financial trouble. And the current safety net is not adequate to offset what's going on in the marketplace.

That having been said, in order to improve our safety net it takes money, and we don't have any extra money. We're not exactly sure where we're at with that at this point because the original budget resolution put forward by the Republicans would have reduced the amount spent on the Farm Bill by $10 billion a year. Now it's looking like it's potentially going to hold it even. So they would be able to use the baseline, the amount of money that's currently being spent in the Farm Bill, as a basis for writing the new bill. What that means is we're probably going to be a status quo situation, and we've got certain things that people feel they need to be done. Like the cotton program, which the cotton people were sued by Brazil. They lost the case, so they had to change the cotton program and what they put forward didn't work. And so now they want to have a new program, which is going to cost $2.5 billion. We don't have that money. The dairy program hasn't worked the way it was intended. That's going to require extra money, and there is no extra money. We have historically not been willing to take money away from one part of the bill and give it to another, so it remains to be seen just how this is all going to play out. Tomorrow afternoon I'm having the first sit-down with the chairman where he is going to start laying out to me what he'd like to see done and where he thinks this is heading.

So we're just getting started in that process. And even though the bill doesn't expire until September 30, 2018, he and I both want to get this done sooner rather than later. And so there's a possibility that we could move this bill even this year in the House.

Tom Weber: With the last Farm Bill a few years ago there was a big change in one of the overriding visions, I guess, of how the Farm Bill plays out. You had this debate over whether farmers get these direct subsidies or do you ensure the safety net on the back end with crop insurance? My understanding is it came down more on the side of crop insurance with this last Farm Bill. Do you think that remains in place for the next farm bill or do you do you go back?

Rep. Collin Peterson: No. We hope that there's going to be no changes to crop insurance, because that is the bedrock safety net, if you will. But the crop insurance is based on the current prices. And so the prices being what they are, the amount that you can buy of coverage is going to basically guarantee a loss. So that's the rub. And the other part of it, the direct payments, were replaced with two other programs — one called the ARC program and the other the PLC program. One of them puts a floor under prices. The other one gives payments to people based on their production history and pricing history. Most people took the ARC deal because they got money the first two years. And later on when they needed it they didn't get money but they went ahead and took it because they figured you're better off to have it in their hand. So that's the part of the bill I think is going to be debated most seriously about. Are we going to do anything about that aspect of the safety net? Now there are people out there that want to change the crop insurance system, that want to put limitations on who can get into it and so forth. We think if they do that they would actually cause the program to fail and they would not be available, and if that happened, you would see a situation where you would have no new farmers. You'd have a lot of people having to exit the business because there's many people there without crop insurance to be able to take to their banker they're not going to be able to get the money to farm the next year. So it's complicated, and what we end up with may not be what people want but it probably will be the best we can do.

Tom Weber: What is your take though, you alluded to it a moment ago, you have to buy all this equipment in order to get to work the land, especially if you have huge acreage of crops. There's this conversation about young people even getting into ag because the costs are so prohibitive. Is there anything you foresee that can happen in the Farm Bill proactively to address this issue that the future generations of farmers may be dwindling. Can you get into that into this Farm Bill proactively?

Rep. Collin Peterson: We have done that starting in 2008. We created a beginning farmer rancher program in the Farm Bill. And we do a number of things there. One is we give advantages to people when their land is coming out of the Conservation Reserve Program going back into production that they can get tax breaks and other incentives if they rent or sell it to a beginning farmer. There's also tax benefits in the code for people that rent or sell to beginning farmers. There's special financing available and there's special provisions in crop insurance that allow for a better crop insurance safety net for beginning farmers. So we've done a number of things and there's proposals out there, which I'm supporting, which would put more money into the beginning farmer program and more incentives because it is very expensive to farm and most beginning farmers, if they don't have a father, some way to get started, they're going to have to have a friendly banker that's going to be willing to bankroll them.

Tom Weber: But that program you just talked about is almost 10 years old. Has it worked? It just seems like it's still a prevalent problem.

Rep. Collin Peterson: It is working, but it's the economics of farming. People don't realize that an average commercial farm that's going to make enough money to support a family, it would cost probably $500,000 in cash to be able to farm for a year under that situation. Most people don't have $500,000 in cash laying around. So they have to go to the banker. Now these are people that are not necessarily beginning farmers.

So what we see now is a lot of these beginning farmers are taking a different approach. They are not necessarily going into the normal, commercial agriculture that we would think about like corn and soybeans. But they're setting up the local food operations, grass-fed beef operations, organic, smaller farms that have access to local markets. So you're seeing the new farmers are, a lot of times, taking a different approach than what we have traditionally been used to in agriculture. I think that's a good thing, because there's a substantial market out there for local foods, there's a substantial market for organic, those are more profitable markets and take more labor and less equipment. So there's opportunities and we're seeing a lot of young people come into agriculture with a different point of view than maybe they did 20 years ago.

Tom Weber: The Farm Bill, as you know, has a huge percentage for nutrition programs like SNAP, formerly called food stamps. SNAP actually is funded at a higher level than anything we've just been talking about, crop insurance and things like that. And the result is that the Farm Bill has been traditionally bipartisan. Last time this bill was up there was a couple kerfuffles over that bipartisanship — there were calls to split those bills up and questions about whether either of those bills could stand on their own. Do you see that bipartisan traditional bipartisanship holding up on this bill this time?

Rep. Collin Peterson: I hope so but we're not sure at this point, and the discussion that I'm going to have tomorrow with the chairman, that's probably going to be what the discussion is about. I've been warning the Republicans not to split this bill because I think that would make it sure that it will fail. There are reforms that they want to do; some of those I think are misguided. I think there are some reforms that can be done — SNAP — but if the Republicans don't approach this carefully, they will poison the well and they will have no Democratic votes, and without Democratic votes I don't believe they can pass a farm bill because the Freedom Caucus on their side will not support it. So the jury's out about how this is all going to go, but I've been warning them for a year that we need to take care of everybody in this bill -- not just the farmers. The nutrition part of it is about 85 percent of the spending. In Congress there are 38 of us out of 435 that have farm districts. So you've got the same kind of percentage of farmers versus the rest of the population.

To hear the full discussion use the audio player above.