Rural Economic Climate "Bad with Very Little Hope of Recovery" Says Texas A&M's Dr. Joe OutlawWed, 15 Feb 2017 16:53:03 CST
Chairman of the House Committee on Agriculture Michael Conaway, presided over a hearing today, reviewing testimony from several economists offering their perspectives on the current financial and economic situation of the US rural and agricultural sector. This hearing was called to order with the intention of setting the stage before talks begin in the formation of the 2018 farm bill. Among those that testified this morning was Dr. Joe Outlaw, Professor and Extension Economist at Texas A&M University’s Department of Agricultural Economics. Outlaw responded to the chairman’s opening remarks, in which he stated that right now, “There is real potential for a crisis in rural America… and we must deliver solutions that work for our nation’s farmers and ranchers.”
Beginning with an outline of a focus group structured study, collecting the financial and economic information from participating representative farming operations located in central production areas across the country, Outlaw explained that from his analysis of this data, the current economic situation of farmers and ranchers in the United States is quite concerning.
“To be blunt these results are bad with very little hope of recovery on the horizon given the current price forecasts by FAPRI and USDA,” Outlaw emphasized. “The overwhelming majority of the farms end 2016 with a high likelihood of serious cash flow short-falls. On the other hand, the probability of large equity losses is much lower across all farm types.”
Outlaw reports that of the 300 participating representative crop producers that responded to their survey, incredibly, only one farmer reported making a profit in 2016. To that end, many corn and cotton farmers from high production regions indicated the only reason they broke even in 2016 was due to record yields. Generally, though, most farmers had to either roll loans forward or draw from cash reserves to pay-off operating expenses and notes.
Overall, Outlaw says the current financial environment is very discouraging. However, although general concern for the future is felt by most all producers, he says they all agree there is no future at all without the backing of a safety net program. Outlaw contends that the programs included in the 2014 farm bill worked accordingly for all crops, except cotton, and urges more attention be paid not only to this segment, but really that an overall increase in federal support is warranted.
“It seems like nearly every month there is another report issued from interest groups who want to dismantle the producer safety net often saying programs are too lucrative,” he testified. “Not only are the programs not too lucrative, but there is a growing need to provide additional funding as adverse economic conditions are expected to continue.”
Read Dr. Outlaw’s complete written statement by clicking or tapping here.
To listen to Dr. Outlaw’s full remarks addressing the committee, click or tap the LISTEN BAR below.
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