farmfest farm bill

MinnStar Bank's Kent Thiesse (left, holding microphone) introduced one of the popular Farmfest forums.

Over the past few years, Farmfest has been a major event for discussing key issues affecting farm families, the ag industry and rural communities in Minnesota and the Midwest. Many of these same issues will likely frame the discussions on agriculture and rural policy issues in Washington, DC in the next few years.

Farmfest is held in early August and brings together elected officials and appointed officials together with national and state ag leaders to analyze these key issues and offer perspectives on solutions and future legislation. Following are some of the main issues that were discussed during the 2021 Farmfest forums:

Impacts of the 2021 drought and available resources — Nearly all of the forums at Farmfest centered around the impact of the drought on crop and livestock producers. Based on the “U.S. Drought Monitor” in early August, over 75 percent of Minnesota was categorized to be in either the extreme drought (D3) or severe drought (D2) category, with only the Southeast quarter of the state being largely spared from these conditions. Nearly all of North and South Dakota were at some level of drought, with over two-thirds of North Dakota and a large area of north central South Dakota in either extreme drought (D3) or exceptional drought (D4). Areas in extreme or exceptional drought are likely seeing significant crop loss and extremely limited forage production, as well as longer term effects on lakes, rivers, streams and ground water supplies.

The weekly U.S. Department of Agriculture Crop Report released on Aug. 2 listed the condition rating of the corn in the United States at 64 percent good-to-excellent. However, the higher-level crop rating in Minnesota was only at 36 percent, which is the lowest in many years. The early August crop report listed 60 percent of the U.S. soybean crop as good-to-excellent, with Minnesota again well below that average at only 34 percent in the higher categories. The only major crop producing states with lower good-to-excellent ratings for corn and soybeans than Minnesota were North and South Dakota.

Throughout the summer of 2021, drought conditions have intensified in most of the Northern Plains and Northwest Corn Belt states. Livestock producers in those areas are being especially hard-hit by the extended drought conditions with exhausted pastures and depleted feed supplies. Many beef cattle producers are being forced to reduce their herd sizes due to limited pasture and hay resources.

USDA has announced the potential for emergency haying and grazing on land enrolled in the Conservation Reserve Program (CRP) in areas of Minnesota which are the most severe drought. Livestock producers should check with their local Farm Service Agency office regarding eligibility, enrollment details, and requirements for emergency haying and grazing of CRP acres.

USDA also has other programs available to assist livestock producers. Eligibility requirements and details on all USDA drought assistance programs are available at local FSA offices. Details and updates on the USDA drought programs can also be found at https://www.fsa.usda.gov/programs-and-services/disaster-assistance-program/index.

Grain markets and rising input costs One of the major discussion items at Farmfest was the trends in the grain and livestock markets in the coming months. Crop production expenses and land rental rates have risen sharply in the past six months, which has some producers and analysts concerned about profit margins as we look ahead to 2022. Prior to 2020, profit margins in crop and livestock production had been quite tight in recent years, which put many farm operations at the brink of financial disaster by the end of 2019. Fortunately, a combination of one-time government aid programs, together with the strongest grain prices in several years, allowed farmers to rebound financially in 2020, which is a trend that has continued into 2021.

Carbon sequestration and carbon credits — Carbon sequestration, carbon credits, and potential legislation to address climate change garnered considerable discussion during the Farmfest forums by elected officials, ag leaders, and experts in the carbon industry. One quote of note was, “the carbon market is like the wild, wild west”, meaning there is no clear-cut path as to where the United States or the ag industry is headed related to the carbon market.

There was considerable discussion regarding opportunities for crop and livestock producers to participate and benefit from carbon credits. However, it was very unclear how those carbon credits will be valued or traded. It was also very uncertain as to what practices will qualify for carbon credits, and whether producers who have already adopted carbon-friendly practices will be eligible for any compensation. The bottom line from the Farmfest forums was that it is probably better to walk before you run when it comes to make major changes in a farming operation strictly targeted toward gaining value from the emerging carbon market.

U.S. energy policy — There was considerable discussion at Farmfest as to how climate change legislative proposals, such as the “Green New Deal” or further implementation of the California Fuel Standards might impact agriculture industry and future development of biofuels. On one hand, farm organizations and commodity groups point to the climate benefits of expanding the use of biofuels by moving toward E-15 blends of ethanol and higher levels of biodiesel. On the other hand, many special interest groups are calling for reductions or elimination of the federal renewable fuel standards (RFS) and other measures — which would hurt the renewable fuels industry — while calling for additional resources into expanding electric powered vehicles, as well as wind and solar energy.

Many states in the Upper Midwest, including Minnesota, have a well-established corn-based ethanol industry, which utilizes over 35 percent of the corn produced each year in the United States. In addition to the direct benefits to farmers, renewable energy plants have become cornerstones in rural communities by providing jobs, adding to the local tax base, and enhancing the overall economic vitality of the communities.

Livestock-related issues There were many issues affecting the livestock industry which surfaced during Farmfest. The pork industry is being challenged by the implementation of Proposition 12, which would restrict a significant amount of the pork being produced in the Midwest from being sold in California. Pork producers also want to keep export markets open for U.S. pork and are concerned with outbreak of African swine fever disease in the Dominican Republic and ongoing challenges with porcine reproductive and respiratory syndrome disease.

Beef producers are very concerned with the worsening drought situation in many cow/calf production areas of the United States, as well as monitoring the Department of Justice investigations into the beef processing industry.

Dairy farmers have seen some improvement in profit levels during the past year. However, the long-term trend in the dairy industry is for continued tight profit margins. This will likely result in a continued trend of smaller dairy producers exiting the industry in the next few years.

Looking ahead to the next Farm Bill — The current Farm Bill expires on Sept. 30, 2023, so congressional discussions on the next Farm Bill will likely begin later this year and continue into 2022. It will be interesting to see how issues such as providing adequate safety nets for crop and livestock producers, climate change, and social issues affect the Farm Bill discussion.

Some key questions relative to development of the next Farm Bill which surfaced at Farmfest include:Will crop insurance continue to be protected as a corner-stone risk management tool for farmers? Will crop producers still have farm program choices (PLC and ARC-CO)?Will carbon sequestration efforts be linked in the commodity title?Will there be a move to further expand CRP acres or add set-aside acres for carbon sequestration?Will enhanced risk management tools be added for livestock producers? What will be the budget allocation and how much will be allocated the Nutrition Title?

There are numerous other issues and programs which impact greater Minnesota in a variety of ways which surfaced during the Farmfest forums including rural health care, labor shortages, expansion of broadband coverage, and infrastructure needs. Congress is likely to make some key policy decisions in the coming years.

Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com.

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