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Grading the president and Congress

Ag economist shares appraisal, predictions for ag policy with Tennessee leaders
Story and photo by Glen Liford 11/17/2017

 

Keynote speaker Dr. Barry L. Flinchbaugh, Professor of Ag Economics, Kansas State University, offers his appraisal and predictions of ag policy under President Trump and the new Congress at the Tennessee Agricultural Leadership Forum October 11 in Murfreesboro.
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The sixth annual Tennessee Agricultural Leadership Forum brought leaders from all across the state for valuable networking opportunities and to discuss agriculture’s challenges in the coming year.

Held at Embassy Suites in Murfreesboro on Oct. 11, the gathering highlighted speakers with important perspectives on the future of Tennessee agriculture, including Dr. Tim Cross, Chancellor, University of Tennessee Institute of Agriculture, Jai Templeton, Tennessee Commissioner of Agriculture, Brian Cavey, CoBank Senior Vice President Government Affairs, and others.

The event was sponsored by Tennessee Department of Agriculture, Farm Credit Mid-America, and CoBank.

“Each passing day finds it more important that all segments of agriculture work together to tell our story to the rest of the world,” said Mark Wilson, Farm Credit of Mid-America Senior Vice President as he greeted the participants.

Keynote speaker Dr. Barry L. Flinchbaugh, Professor of Ag Economics, Kansas State University, offered his appraisal and predictions of ag policy under President Trump and the new Congress. The engaging economist peppered his presentation with insight gleaned from his storied career examining ag policy beginning in 1967 at Purdue University.

Flinchbaugh identified four areas — the Farm Bill, trade, immigration, and deregulation — on which to assess the progress of the president and Congress as they develop ag policy and he promised to assign them a grade on each area, based on his experience as a professor and adviser to past policymakers.

“I have been predicting ag policy for 50 years,” he said. “And it has never been more difficult than under this president and this Congress. If you don’t like what the president or certain members of Congress have to say, wait until morning, because it will change. Consistency, certainty, logic, stability, moderation — none of those terms fit in the current atmosphere in the White House or in the Congress.”

Flinchbaugh began his assessment by awarding the administration an “A” for their pick of Sonny Perdue as U.S. Secretary of Agriculture. He cited Perdue’s Southern charm, depth of knowledge of agriculture, and experience as a veterinarian, grain farmer, and livestock producer as positive attributes.

“He’s a real farmer, which is unusual for Washington,” said Flinchbaugh. “This secretary is in a unique position, and he knows it. He’s a grain producer and has the tools to take us above party and regional differences.”

The first issue Flinchbaugh examined was the Farm Bill. And he delivered a grade of “B” for the work that has been completed and the possibilities that exist for the important legislation.

The biggest challenge to a new Farm Bill — besides getting the two parties to agree — is that the debate will take place in a “very fragile ag economy,” which could lead to a more sympathetic reception from the Congress as a whole, said Flinchbaugh.

“Don’t expect any big change in the Farm Bill,” he said. “It will have a choice in it just like this one does. It will either provide for a price-base safety net or a revenue-base safety net.”

Flinchbaugh cited a number of economic factors that will impact the debate:

• The federal deficit, though declining, is still too high.

• Interest rates are beginning to rise.

• The value of the dollar is declining, leading experts to forecast a rise in ag exports due to the value of the dollar declining, which could lead to an increase in U.S. ag profits.

• The Gross Domestic Product (GDP), of which agriculture is only a small part is growing very slowly. The estimate for 2017, said Flinchbaugh, is 2.1%, about one half of the historical 4% average.

• Net cash farm income has declined from $136 billion to $89 million in the last three years, but there are estimates it will increase to $100 billion.

The most important issue as far as U.S agriculture is concerned in the modern global economy is trade, said Flinchbaugh, and he gave President Trump an “F” for his handling of the issue so far.

He noted that the president has been consistently critical of trade agreements like the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (NAFTA).

“The Trans-Pacific Partnership, which the president killed on his fifth day in office, pulled the plug on the most lucrative trade deal ever negotiated for agriculture,” he said. “[Pulling out of TPP] is going to cost American agriculture at least $5 million and will hit the beef industry really hard.”

The goal of the North American Free Trade Agreement (NAFTA) was to merge the economies of the U.S., Canada, and Mexico, and then let economics make the decision of who trades with who for what and to stabilize the role of government in all three countries.

“There’s a statistic that measures how much of the debt income for farmers comes from government programs,” he said. “In 2016, it was 9% in Canada, the U.S., and Mexico. Is NAFTA broke? No. Does it need an overhaul? Yes.”

The third issue, immigration, earned a grade of “F” for Trump and Congress.

“The immigration question is pretty simple,” he said. “Agriculture needs a permanent, legal immigrant workforce.”

The H-2A visa was originally designed to meet the needs for seasonal labor, but many of those workers are needed year-round. The program needs an overhaul, Flinchbaugh said.

Finally, efforts on deregulation earned the president an “A” from Flinchbaugh.

“This is the star of the Trump administration as far as agriculture and manufacturing [are concerned],” he says. “What deregulation is really about is who does the regulating: federal or state and local?”

Environmentalists, he continued, don’t like to admit that almost all environmental issues are local.

“All watersheds are unique, and you can’t put them all in one federal basket and regulate them the same,” he stressed. “Trump is attempting to return [regulation] to state and local governments. That’s the real issue – federal verses state and local. We don’t need Uncle Sam telling us how to behave. Trump gets it, so his policies on deregulation will reduce our production cost and make us more competitive.”

“So, that’s two A’s, a B, and 2 F’s,” concluded Flinchbaugh. “Will the president and this Congress be good for ag? I’d say it’s a mixed bag and too early to tell.”

 
 
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