Is the CCC an answer to today’s profitability challenges?

Browsing through news headlines the past few weeks has been sobering, because these are tough times in production agriculture.

Last week, NBC News reported on the state of family-owned dairy farms in the United States; specifically, in the hills of Kentucky, where dairy farms are closing at a rapid pace due to consolidation in the grocery business. Since 1970, the number of dairy farms in the U.S. has decreased from 650,000 to 50,000, although the number of cows per farm has increased from 75 cows in 1987 to 900 in 2017.

To those smaller dairy operators, Farm Aid worker Joe Schroeder is quoted in the story: “I don’t see anything that would give them hope at this point. The best advice I can give to these folks, dairy farmers, is to sell out as fast as you can.”

A week prior to this story, The Centers for Disease Control and Prevention reported that workers in the field of farming, forestry and fishing have the highest suicide rate in the country, at 84.5 deaths by suicide per 100,000 people. (For men, the rate is even higher: 90.5 persons per 100,000 people). The CDC clarified this number as farm workers, not farmers. Nevertheless, it is a sobering statistic—nearly 1 percent of all farm workers committed suicide in this 2012 dataset. 

Although these are two separate stories, there are parallels. Dairy farmers are producing milk at below the cost of production, thanks in part to consolidation and vertical integration by processors. Meanwhile, between weather unknowns, trade battles, escalating input prices, consolidation from input providers that reduces competition…there is a lengthy list of factors affecting profitability that are out of farmers’ control.

The worst of these, however, is price.

In the last 90 days, soybean prices have decreased about $2 per bushel. Corn and grain sorghum prices are down nearly 15 percent in the same time. Wheat prices have dropped more than a dollar since May.

While some of this price decline is due to ideal growing conditions and surpluses of these key crops, much of the blame can be placed on trade disputes with America’s international trade partners.

President Donald Trump recognizes this, and in April voiced his support for American farmers: “These are great patriots. They understand that they’re doing this for the country. And we’ll make it up to them. And in the end, they’re going to be much stronger than they are right now.”

Back to the future

In the meantime, the Trump administration is considering dusting off rules of the 1933 Commodity Credit Corporation to help ease the burden of low prices. According to the Financial Times, the CCC has “…$30 billion in borrowing authority from the Treasury department and latitude in how the funds are spent. The corporation has the purpose of ‘stabilizing, supporting and protecting farm income and prices. Its powers include making loans and payments to farmers and buying their crops, according to its charter.”

U.S. Department of Agriculture Secretary Sonny Perdue has said on record that he will make a decision on whether to roll out CCC programs by September, before the U.S. soybean harvest begins in earnest and before Brazil makes its 2019 soybean planting decisions.

Only time will tell if America’s farmers will be stronger in the long run, as President Trump suggests.

Right now, things look pretty uncertain.

Bill Spiegel can be reached at 785-587-7796 or [email protected].