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Kent Thiesse

The highly-contentious 2020 election is now history, and we will move forward with a new administration and several new members of Congress — along with changes in leadership of the U.S. House and Senate Agriculture Committees.

There are many key issues facing us which potentially could affect the agriculture industry. These issues will likely be addressed and possibly resolved by Congress and the White House in the next few years.

We will now await to see who will be appointed to serve as Secretary of Agriculture and to head the Environmental Protection Agency. These appointments, as well as subsequent appointments within the federal and state agencies, can have a big impact on how various agriculture and environmental policies are implemented and administered. The leadership of key Congressional committees, such as the House and Senate Agriculture Committees, will also influence which major issues are addressed in the next two years.

Following is some perspective on some of the key ag policy issues which will likely be under consideration during the next session of Congress, or by executive action from the administration:

Dealing with Covid-19 — The pandemic did not stop or go away on election night and is likely to be with us for some time to come. The policies which are enacted at the federal level — either through Congressional action or administrative order — certainly could have some impact on the agriculture industry.

Last spring we saw the financial implications which can be incurred by production agriculture when Covid outbreaks closed processing plants and caused interruptions in supply chains. Farm operators received significant financial support in 2020 from coronavirus food assistance program (CFAP1 and CFAP2) payments. A big question going forward is whether the federal government would again step up with assistance payments for farm families if there are similar challenges in 2021.

Trade Policy — There was not a lot of recognition of agriculture-related issues during the recent presidential election. However, one topic which did get some discussion was past and potential future trade agreements. During the past four years, the previous North American Free Trade Agreement (NAFTA) was re-written into the United States-Mexico-Canada (USMCA) trade agreement between the three countries. Discussions to reset previous trade agreements with China lead to serious trade disputes between the United States and China, which resulted in numerous tariffs being implemented on many goods and services. This included tariffs on many ag products China imported from the United States. Finally, a new Phase 1 trade agreement was reached between the United States and China which has begun to be implemented during 2020.

Ag trade with China has increased during the year; however, it is still below levels prior to the trade war with China and under the trade targets which were established in the Phase 1 agreement. The previous administration also withdrew from the Trans-Pacific Partnership (TPP) trade agreement with many Asian countries — including Japan. It will be interesting if the new administration and leadership in Congress goes back to multi-lateral trade agreements such as TPP and if we continue with current trade policy with China, Canada and Mexico, which are the three largest trade partners for U.S. ag products.

Rising health care costs Rising health care costs and access to adequate health care continues to be a major concernfor farm and rural families in Minnesota. Some families have seen health insurance premiums rise 50-100 percent in recent years, with individual farm families and some small business owners now paying $30,000 to $40,000 per year or more for health care coverage.At the same time, many rural hospitals and clinics have been closed and consolidated into larger regional health centers, which has limited access to quality health care services in some rural areas.

Climate change— The current Administration discontinued many of the discussions and negotiations regarding climate change the United States had previously been involved with — both domestically and with foreign countries. The new Administration and many other elected leaders are now calling for a return to a more aggressive approach by the United States in dealing with climate change — both within the U.S. borders and internationally. Many of the proposed ideas involve implementing measures to reduce the man-induced impacts of a changing climate, several of which ultimately could have a major impact on the agriculture industry — both positive and negative. In the past, Congress has been reluctant to take much action relative to climate change due to questioning the scientific evidence, as well as the uncertainty regarding economic implications. However, it appears that this trend may be changing. 

Ag policy The current farm bill expires after the 2023 crop year, so early development of the next farm bill is likely to start occurring in Congress and with agricultural leaders during the next two years. Both the U.S. House and Senate Agriculture Committees will be under new leadership during the next session of Congress. There are many groups and organizations pushing for major policy changes in the next farm bill. As usual, the budget allocation toward the next farm bill will be a big part of that discussion, with some members of Congress already calling for budget cuts when the next farm bill is written.

Some of the key ag policy discussions in development of the next farm bill will include revisions in current commodity and crop insurance programs; expanding Conservation Reserve Program (CRP) acreage and other conservation programs and payment limits; as well as adjustments to food and nutrition programs (SNAP, WIC, etc.), which account for about three-fourths of the farm bill budget.

Renewable energy The next Administration and Congress will need to decide what direction the United States takes regarding the mandated use of renewable fuels through the Renewable Fuels Standards (RFS) and other incentives for renewable fuels, such as tax credits, etc. While there is generally considerable support for development of alternative energy sources, Congress and many organizations have become quite divided on the RFS and other mandated energy programs — especially as it relates to climate change proposals. Ethanol and biodiesel production, which are covered by the RFS, have a major economic impact for farm operators as well as for the overall rural economy in the Upper Midwest.

Broadband access One ongoing issue which has been brought to the forefront by the Covid-19 outbreak has been the inconsistent or the lack of internet service and connections in many rural areas. As public schools have been forced to utilize distance learning models to educate elementary and high school students in the past year, one the biggest limiting factors has been inadequate internet service in many rural areas. Many previous and newly-elected officials have talked about the need for major federal investment into infrastructure upgrades, which hopefully will also include improved broadband capabilities in rural communities.

Immigration reform— Immigration policy continues to be a major issue in many portions of the United States and has a lot of political ramifications. Many industries, including the agriculture industry, could be significantly impacted by any potential immigration reform legislation. Both production agriculture and the ag processing industry are heavily reliant on an immigrant workforce, so major changes in getting needed workers into portions of the United States could greatly affect the rural economy in some locations — including in southern and western Minnesota. If Congress does not act on immigration reform, the Administration could choose to issue some executive orders relative to the issue.

Farm financial stress Low profitability in both crop and livestock production in the past several years has increased financial stress for farm families in many areas of the United States. Even though the increased federal aid and some higher crop prices has improved the financial situation for farm operators in some areas in 2020, there are still many farm families facing financial difficulties and increased stress levels. There will likely continue to be a need in the future to provide programs and support for the farm operators and families who are facing these challenges.

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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