Many corn and soybean farmers are partially shielded from drought damage by crop insurance. But fewer livestock producers have coverage and the main federal disaster program for them expired last year.
This week, House leaders hinted that next week -- in the final days before Congress leaves for a five-week summer recess -- the House may consider disaster assistance legislation under the current Farm Bill.
But the Obama Administration is calling on House Republicans to act on a new, five-year Farm Bill. But GOP leaders have been reluctant to bring up the farm bill, which reauthorizes disaster relief programs, because of divisions among fiscal conservatives.
Mike Pearson sat down with Secretary of Agriculture Tom Vilsack this week to discuss the impact of the worst drought in half a century and what he thinks policymakers should do about it.
Pearson: Thank you for being with us today on "Market to Market." We're talking drought. Many experts are saying this is the worst drought since the Great Depression. As you travel the country, which you do quite a bit, what are you seeing and how bad is it?
Vilsack: First of all, I think you do have to put this in proper perspective. While it is a very serious drought and we are approaching 1988 levels, it's still not, in terms of severity, as deep as some of the problems that we incurred in the '30s and '50s, 1930s and 1950s. Having said that, Mike, the problem with this drought is that it is so widespread that it is basically covering a substantial portion of the United States and therefore is impacting and affecting a lot of crops and certainly livestock producers everywhere. So it's the breath, not at this point the depth, but the hotter it gets and the longer it stays hot, the depth then becomes a serious problem. So there's no question that when you've got 35 percent of your bean crop, 45 percent of your corn crop, and get 55 percent of your pasture and range land in poor to very poor shape, you know you've got some serious issues.
Pearson: You've talked in the past about the strength of the ag economy, especially here in the Heartland and across the country. It's been very strong for three years. A drought like this, a situation like we are in right now, how do you see that resonating across the rest of rural America's economy.
Vilsack: Well, last year, because we had a record farm income, we already had shipments and record food production, manufacturing shipments. We had near record ag chemical shipments, so there were obviously jobs that were created and supported. Our export markets were strong. Our export markets continue to be strong. We obviously have a strong fuel industry, and all of that continues to be strong, but all of that will be stressed a bit. We will have to keep an eye on exports. We will have to keep an eye on our biofuel industry. But I'm still very bullish about the long-term success and prosperity of rural America.
Pearson: There's a lot of reasons to be positive out there. You did mention biofuel and there has been some critics in the past couple weeks, as corn prices have risen, advocating changing the biofuels mandate. Is that anything that you see happening in the future? What are your thoughts on that?
Vilsack: Before, you know, one of the things, and I think that we really have to be careful of the situation is overreaction. I think that we have to get the facts. We don't really know what the yields are going to be. There may be some fields that are in pretty good shape and some fields that are obviously in terrible shape. Until we know what those yields are, we are really not going to know what this impact is going to be. We would expect that there would probably be a little bit less corn for ethanol production, but we are -- is a surplus of ethanol right now, but that will work through the process. Blenders have an excess -- a number of credits that they can use to comply with the renewable fuel standard, so there's really no reason, at this point, to change the renewable fuel standard to walk away from it.
Pearson: What's in the farm bill that's going to help produce it this year?
Vilsack: Well, first of all, I think it's really important for people to understand that the disaster programs that provided help and assistance to both crop producers and livestock producers expired last year on September 30. Now, obviously crop producers, for the most part, have crop insurance, which will provide them some agree of protection, and depending upon the level of protection, it made allow them to get through this difficult time fairly well under the circumstances. But the livestock producers have no such thing as crop insurance. So it's important and necessary I like to call it the Food, Farm, and Jobs Bill because it sends a broader message. It did pass the Senate got through the House Agricultural Committee. It's now stuck in the House of Representatives. The House Republican leadership have indicated they have no plans to schedule it before the August recess, and it's really unclear as to whether or not it will be scheduled even before the expiration date of the existing farm bill, 2008, which expires on September 30. Now, there has been discussion about a variety of other things, but at the end of the day, it is this particular Food, Farm, and Jobs Bill that contains a revival of the disaster programs for livestock producers retroactive to 2012, so it would cover these livestock producers and provide some degree of hope and assistance. Our tools right now at USDA are very limited. You can open up, as we have, CRP land, we can make things a little bit easier. Wetland reserve, easement areas, we can lower interest rates on emergency loans. We can ask crop insurance companies to maybe delay the assessment of interest as we have. But those are very limited in terms of the help we can provide.
Pearson: Amid a whirlwind trip of devastated crop fields, the USDA's point man continued to criticize the U.S. House of Representatives for its failure to even schedule a vote on the 2012 Farm Bill, especially with an August recess fast approaching turn.
Vilsack: The Senate passed the farm bill. They passed it. How often does that happen? They passed it. The House Ag Committee got it through bipartisan -- strong bipartisan. Huge differences between the two versions. Yes, okay, fine, get reasonable people in a room and work it out.
Vilsack: Just to put a finer point on this issue about the farm bill and our Congress, in 1862, in the middle of a Civil War -- in the middle of a Civil War -- and at that time the country faced a huge deficit -- a Congress in one year passed the creation of the USDA, establish the Land Grant University System, funded the railroad system, and also had something called the Homestead Act, which allowed for western expansion. One Congress, one year, the middle of the Civil War, with a deficit. Please don't tell me how hard this is.
Vilsack: Here's the challenge for us, Mike, if we delay and this thing rolls past September 30 and even if they extend the existing farm bill, 2008 Farm Bill, no disaster relief for livestock producers and as importantly it now gets mixed into the whole conversation about deficit and reduction and tax policy. Now all of a sudden people are starting to look for additional resources to maybe get cuts for the Defense Budget or to provide tax relief for wealthy Americans and where will they look? They will look to where the money is. They will say, well, maybe we could do with less in crop insurance or maybe we could do with less in rural development or maybe we don't have to promote trade quite as much. We've got something going in rural America now. This bill and the passage of this bill now will prevent us from getting into that discussion and run that risk and it will also provide more immediate relief for our livestock producers. Why wouldn't we want to do that and why shouldn't we put pressure on our elected representatives? They're about to take a five-week recess, vacation, five weeks. I don't know a single farmer in this country in the middle of the harvest would say, you know what, I'm kind of tired, things are not working out the way I thought they would, I think I'll just let it ride for a couple weeks, and I'll come back. It's not the way we work. We get things done. We get our work done and then we take time off. So it seems to me that we ought to be asking our elected officials to work a little bit harder. I know that this is a show that reaches to all those producers, and I know that there's a great deal of stress out there. You know, we are doing everything that we possibly can to help. We continue to pray for rain, continue to look for cloudy skies. Not often do you want to look for cloudy skies, but we do now.
Pearson: Thanks so much.
Vilsack: You bet.