tv House Agriculture Subcommittee Hearing on State of the Farm Economy CSPAN July 3, 2019 9:18am-10:54am EDT
officer and skriebts the soviet's role in world war ii. >> one month before d-day we had been occupying 65% maybe of the best german troops fighting us. if we hadn't done that, if we had failed at moscow or stalin grad, all of those troops could well have been on the normandy beaches and it could have been a different outcome. so the story that has to be told is that that's a significant contribution to winning the war. >> watch on american history tv on c-span 3. next a hearing to review the state of the farm economy. four farmers testified about the financial and trade issues facing their agriculture operations, including access to credit, international trade tariffs and finding farm labor. this house agriculture subcommittee hearing runs 90 minutes.
the hearing of subcommittee on general farm commodities and risk management entitled "reviewing the state of the farm economy" will come to order. good morning and thank you for joining us, as we look into this critical aspect of our economy. every one of us seated up here has heard from farmers in our districts about the bad farm economy. commodity prices are low, input costs are rising and financial pressure is mounting on farmers across this country. while we hear so much about the booming state of the overall economy, our rural and farm economy continues to struggle. you cannot have a successful national economy when such a vital component hurts the way our farmers are currently. the numbers paint a rough picture. usda forecasts net farming level
for 2019 to be only 77% of the annual average for 2000 through 2017. it's down 50% from 2013 alone. inflation-adjusted farm debt is the highest it has been since 1980 and the debt to asset ratio for farmers is rising steadily. this hearing offers a glimpse into how the economy has affected four particular farms in different parts of the country. these are four stories about what the downturn in the farm economy means to them. the 2018 farm bill provided certainty for farmers by reauthorizing commodity programs and continuing crop insurance. the farm economy is better off because the farm bill passed, but is that enough to fix the downturn in the agricultural economy? in agriculture policy circles we are always hearing about the 1980s, is the farm economy just as bad as the 1980s? that's what we are here to find out.
with he should not stand down just because economic indicators today don't look exactly like the run up to the 1980s. with err here to consider what can still be done to help struggle farmers and truly make this an economy that works for everyone. thank you to all of our witnesses today for sharing your perspectives and i look forward to your testimony. >> i recognize ranking member thompson for his opening statement. >> chairman, thank you very much and thank you for holding this important hearing to highlight the state of the farm economy. it doesn't seem like all that long ago we were in the midst of the great recession, but the agriculture economy was booming then. unfortunately as those involved in agriculture know all too well markets are cyclical and mother nature is unpredictable. now the rest of the economy is booming but for our farmers, prices have fallen lower and have stayed there longer than anyone could have predicted. to add insult to injury over the past couple years almost every region of the country has seen its share of widespread devastation from natural
resources including hurricanes, floods, fires, droughts and even volcano i can eruptions. it was against this backdrop and in the face of the budget challenges that we wrote in 2018 farm bill. one of those challenges came in the form of our friends in the united states state who proposed to spend $700 million less on farm safety net than proposed by the house. i was proud of the work house republicans did to finalize a conference report that not only protected the farm safety net but actually made improvements to farm policy. despite these successes the current recession, the agriculture economy is a sobering reminder that farm policy while incredibly helpful does not make or farmers and ranchers whole. in talking to many folks in my district there are a lot of farmers who are either already getting out of the business or one bad crop away from being forced to call it quits. while there are many factors plaguing our producers that are well outside of congress' control, there are some things that we could do now that might
provide a modicum of relief. for example, our friends in the southeast who were impacted by hurricanes and other disasters in 2018, including one of our witnesses here today, anxiously await a sign that assistance might be on the horizon. congress needs to quickly act to reach a compromise to help address the devastating losses so many experienced last year. also this congress needs to ratify usmca, the united states mexico canada trade agreement which would provide some certainty for our farmers that our neighbors to the north and south will remain the two largest customers of our agricultural products. it's now up to speaker pelosi to allow ratification to move forward. time is of the essence. finally i want to say a sincere thanks to the witnesses who are here today. i know this is a busy time back home for all of you, but it is invaluable for members of this subcommittee to be able to hear your perspectives as we consider
policies that directly impact you, your farm, your families. mr. chairman, i very much look forward to working with you this congress as we use the subcommittee to highlight the issues that are of vital importance to recall if aers and ranchers across the country and thank you again for convening this hearing and i yield back. >> thank you. the chairman requests that other members submit their opening statements for the record so the witnesses may begin their testimony and to ensure that there is ample time for questions. i would like to welcome our witnesses. thank you for being here today. at this time i will introduce our first witness. mr. matt huie, owner of huie barms in beeville, texas. he is the owner of huie farms in beeville texas and is my constituent from the 34th district of texas. mr. huie farms cotton, corn and sorghum and raises livestock. he has a degree of agricultural development from texas a&m university and currently serves as the president of the southwest council of agri
business. mr. huie is an active member of the south texas couldn't and grain association. thank you for making time to testify about this very important topic. i would now like to recognize ms. craig for an introduction of our second witness. >> thank you, mr. chairman. i'd like to introduce to everyone mike peterson, a farmer from my district in northfield, minnesota. mike farms about 800 acres of corn and soybeans with his wife kay and his two sons blake and shane. they also finished 1,200 hogs a year. in addition to their farming operations the petersons also have a welding and fabrication business and a kwofl driving range on their farm. each year mike and his family play host to the dakota rice, corn and soybean growers annual plot tour, giving area farmers a chance to learn more about new corn hybrids and soybean varieti varieties. he's helping his son shane start out his own operation with a focus on growing corn and soybeans at the highest levels of environmental stewardship.
mike is a proud fourth generation farmer and has previously been recognized as a rice county farm family of the year. mike is an alum of randolph ffa, is a past president of rice county farmers union and is a member of minnesota corn growers. mike, thank you so much for being here. >> now i'd like to recognize mr. carbajal. >> it is my pleasure to introduce dan sutton, pove located in oceano, california. he is my skon stit went from the 24th congressional district. dan has worked for pove for the last 18 years. he oversees the day-to-day operations of pove including sales, marketing, accounting, operations and food safety. currently he is the board member and past president of the san
louis he is business poe county farm bureau. has been selected as chairman of the california leafy greens marketing agreement advisory board. as you can see from his past and current experience mr. sutton has played an extraordinary role in our local economy by working to represent our central coast growers and producers. i am glad to welcome dan to washington, d.c. welcome, dan. >> i now recognize mr. austin scott for an introduction of our fourth and final witness. >> thank you, it's my whoen for introduce a friend and farmer from my district, mr. bart davis. he grew up in dell ron, georgia, home of the sun belt ag expo. he attended high school in worth county. when he was 18 he and his sister vicki lost their mother and father, they decided to stay in the family home and while vicki took care of the house bart took over the 500 acre farming operation that produced cotton, peanuts, wheat, soybeans, hogs
and beef cattle. today still there, they farm over 5,000 acres. approximately 3,100 acres of cotton, 1,600 acres of peanuts, 300 acres of corn along with hay and cattle. bart has the pleasure of working alongside his family daily. the family farm today consists of bart and his wife paula, their sons trey and jed and their daughter lakin. bart is part owner in dell ron peanut buying point. he has served on the georgia cotton commission board of directors, served as chairman since 2017. he is the director of the southern cotton growers and he also serves on the county committee for the local farm services agency office in georgia. he has a tremendous amount of knowledge about agriculture and i look forward to his testimony. >> thank you all for introducing our witnesses. before we begin testimony i'd like to thank the chairman of our full committee, mr.
peterson, for being with us today. each witness will have five minutes, when one minute is left the green light will turn yellow as a signal for you to start wrapping up your testimony. mr. huie, please begin when you are ready. >> chairman vela, ranking member thompson, members of this subcommittee, thank you for this opportunity to be here. as mr. vela so aptly said, i'm a farmer and rancher and together with my wife and our three children we live near beeville texas and farming ranch in five counties of the coastal bend. i'm honored to be mr. vela's guest, he so ably represents the 34th district where i live and appreciate him being the chairman of this subcommittee. i'm honored and humbled to be in this room an with you as the ag leaders following such great traditions and i know what ag
policy does and i appreciate the opportunity to be here. along those lines, i would be remiss if i didn't recognize the extraordinary leadership of chairman peterson who i have known a long time and appreciate everything that he has done and continues to do for agriculture and also mr. conaway and the work they did in completing the 2018 farm bill which serves as the groundwork for policy and production agriculture. mr. chairman, this hearing is timed so well because of all the things that you talked about in your opening. i've gotten written testimony that's long and drawn out, i'm going to try to shorten that to three things to be quick. one is the farm economy in the coastal bend of texas is lousy. it is bad. 2018 was not a good production year, that was compounded by the fact that despite great -- a
great mfp program by the administration, it only paid on production, so if you didn't have production, it did not pay. i'm hopeful that that can be addressed here. 2018 follows tariff issues from -- from trade disputes, which drove the price of crop insurance down and, therefore, erodes the safety net as we work toward what our ability is to borrow and other things. for 2019 we look here at likely negative cash flows again, snls we make an extraordinarily large crop because we don't have a price market where we can get that done and we've got enormous exposure based on the value dropping in crop insurance. despite crop insurance being a great tool when you have a systemic decline in price, we have a systemic decline in what
we're able to insure. the stakes have never been higher than they are right now. i didn't live through the '80s -- i did, but i was a very young man. i did live through the '90s, that was when i started farming. it was miserable, but i was so young i didn't know better and my wife and i, she worked in town as a banker and we managed to sneak by those first few years starting in 1998 and making it through 2002. 2002 we barely got by. we had to move banks, we had to do a lot of different things. that's part of the reason i'm here today. i understand how important farm policy is and i appreciate washington stepping in in those times and helping us because that's how we survived. historically when we've seen moves like we have -- like we have now where you have a decline in price, you also have a decline although slower in
input costs. that has not been the case in this current environment. input costs have continued to rise, the rest of the economy is doing well, so as our input costs have risen due to tariffs, due to industry consolidation, due to all other things in the economy booming, we're still trying to sell stuff for the same price we sold stuff for 30 or 40 years ago, none of our input costs reflect that. third, i want to be clear that i think additional action will be required from this committee, from this congress and from this administration. i think if the tariff war, trade war, ends tomorrow, this dispute will not be resolved. these prices, the bins are full, the warehouses are full, there's not a system in place to move that stuff out. we've got a world glut of grain. everything about history would tell us that this will not be
resolved tomorrow. there are things you can -- that are on the table right now in terms of disaster talk, about making some corrections to mfp, that language exists here in the committee, we're hopeful that that can move forward and i think we need to be talking loudly about another mfp-type program, whether it's done through the administration or through this committee, but there are some things about that program that need to be made more equitable as we move forward. mr. chairman, again, the farm economy is complex, trade policy, labor, ultimately this comes down to farm profitability and that is where this committee has excelled in the past. i appreciate the opportunity to be here and i appreciate the opportunity to visit with you about this. thank you. >> thank you, chairman vela.
thank you for the opportunity to testify here today. the last five years have been incredibly challenging on our farm and on farms across the country. in 2018 median net farm income in minnesota was at its lowest level in the past 23 years. in southern minnesota we are entering our sixth consecutive year of growing corn at or below the cost of production. strong soybean yields and fair prices had kept many farmers profitable until the trade disputes with china took its toll on the markets last year, no you our problem with oversupply is only getting worse. with the continuing slump in commodity prices, financial stress continues to grow. farm debt is at an all time high and most farmers a know from burnt through their equity they built up in the good years leading up to 2014. we are now seeing a big increase in the number of chapter 12 bankruptcies in minnesota. unless we get our markets back and the prices rebound i feel many more farmers will be forced
out of business. in addition to our current challenges with low prices, market consolation and the increase of monopolies on the supply side has caused input cost toss rise dramatically. the cost of seed corn, soybean seed and fertilizer even when adjusted for inflation have each doubled since i started farming full-time in 1996. while we are more productive now than we have ever been, the increased input cost has outpaced the gains we have made in productivity. on our farm we have adopted methods to cut our input costs, the usage to levels that puts us on par with the most efficient operations. we plant cover crops, use no till and zone till analogy practices which reduce weed presser and cut down chemical costs and usage, with he pair that with precision fertilizer application which helps further reduce fertilizer costs and cut down on fuel usage. with he also don't grow late season hybrids to keep our drying costs low on our corn
hybrids. all together these practices reduce our carbon footprint and put us in a better position to survive in this tough farm economy, however, we simply don't have the cash flow we need to install practices that will further improve our productivity, efficiency and stewardship. the reality is despite all we've done to adjust to tight margins and low prices, there's just no way to be profitable with the market scenarios facing the american farmer today. i'm currently enrolled in a farm business management course at south central college. our adviser provides us data and management assistance so we can find the best economic scenarios. even with his guidance and expertise, we're faced with an economic scenario that's hard to present to a lender. like most farmers, i'd prefer a fair price in the market, but during periods of low prices i'm grateful that we have a farm safety net to fall back on. for the last five years i've been en vold in the arc county program which at least offsets some of our losses. i'm not only at the ammersy of
the markets but i'm at the mercy of the weather. the federal crop insurance program is critical in helping me manage risk on our operation. last year a tornado and strong straight-line winds came through and knocked down about 85% of our corn crop. without crop insurance indemnity that loss would have been devastating to our operation. as farmers we can handle a slump in commodity prices and volatile weather, but we can't prepare for the situation that was brought on by our trade disputes last year. i will be the first to admit that i originally supported the effort to secure better trade agreements and to hold bad actors accountable, but the approach to these trade disputes has caused damage that i'm afraid will take us decades to overcome. the market if a sill tags payments helped last year, but i feel if policymakers are going to continue to affect our markets we may need to look at some sort of supply management. we've just started our spring planting without any assurance
that we are going to have an opportunity to lock in a feasible price for our production. if our markets don't come back and we don't have any additional support, we would be better off not producing. the bottom line is there's no way to make a profit if we don't have markets for our product. i want to close by saying that i have a 23-year-old son who is purchasing his own 80-acre farm a few acres from ours. i'm doing everything i can to prepare him for the challenges i have discussed here today, but it's hard to be optimistic about the future. rural america embodies the character and skill sets that have always made america the greatest country in the world to live in. i want my son to have the reason to apply his energy and skills into the family farming tradition. if we want the next generation to get into farming, we have to at least give them a fighting chance. if it's not his generation, maybe we can all try to tell ourselves or you can tell me who we think will be running these
farms next. thank you again for the opportunity to testify and i look forward to your questions. i really appreciate it. >> u. new york city mr. -- thank you, mr. sutton. i'd like to start by thanking chairman vela, ranking member thompson and members of the subcommittee for having this hearing today. i'd also like to thank congressman carbajal for representing our district and industry of specialty crops in congress. our business is a cooperative located on the central coast of california. we are comprised of five family farms that collectively market our products through the co-op. we've been in existence since the early 1920s and we currently have our fourth generation of growers coming back into the co-op. much like the others have testified before me, there are significant management decisions that we have to make and things
that we have to manage day to day to keep our cooperative continuing for the next generation. to give you a little bit about what we grow, we grow napa cabbage, bok choy, baby bok choy, leafy greens, iceberg lettuce, romaine, green leaf, en dive,-esque role, red and green cabbage. our crops are very timely. we need to harvest our crops and get them out to market usually within three to five days of harvest. as they are perishable. 75% of the leaf -- of the nation's lenation a nation's leafy greens comes from the central coast of california which is also known as the salad bowl. there are three major things i'd like to talk about today that make our production on the central coast challenging. the first is water, we have two main water systems in california, there is the state water system and private wells.
our farms are on private wells, but in order to get that water from our aquifers to our crops it takes electricity to do that. the electricity costs over the years have increased the cost of our water to get to our crops. for those in our state that use the california water system, they have seen allocations reduced and our infrastructure for storing water in california is outdated. the second is labor. we are very dependent on labor in our industry and as you all know immigration reform is something that is extremely important to agriculture and something that we are watching very closely. a lot of people say how come you don't just raise wages. well, we have. our employees are currently earning anywhere from $14 to $16 an hour on the farm and much like the prices we're getting
today are not that much different from the prices we were getting back in the early '90s and labor continues to increase, the labor shortage continues to increase and yet we are still unable to get employees to work on our farms. we are needing to utilize the only option available to us and that's the h-2a program. the h-2a program is very costly, but it is an opportunity for us to get the labor we need to get our crops to market. the other thing i'd like to discuss really quick is in our industry we are very concerned about food safety. as you may be aware, last november in 2018 the romaine industry was shut down and there was not romaine on the shelves, i doubt that you found romaine here, and we were impacted by that in that we had romaine in the ground but we could not get
it to market because the advisory. all of us in the specialty crop production in california take food safety very seriously, it's something that we have to do day to day, it's an investment we make in our crops. through programs like the california leafy greens marketing agreement we are placing upon leafy greens growers in california some of the most vigorous and strict food safety rules that we have to comply with production of our crops. i have a rule in our house that if i grow it on the farm, my wife is not allowed to buy the same products in the store. now, she understands that rule, but i get in trouble a lot because i forget to bring it home, but the point i want to make here is that the products we grow i feed to my family, i feed to my three young children. the products we grow go to your families, they go to our
consumers and the people in the nation and food safety will be something that we continue to address moving forward. i'd like to thank the committee again for having this hearing. the issues facing agriculture not only in california but across the nation are significant and the fact that you're here allowing us to speak today is very much appreciated and i'm grateful for this opportunity. thank you. >> thank you, mr. sutton. mr. davis. >> good morning, chairman vela, ranking member thompson and members of the subcommittee. thank you for the opportunity to provide a perspective on the current economic conditions for farmers in southwest georgia. i believe this situation reflects what crop producers across the southeast are currently experiencing. our family farm raises cotton, peanuts, corn, along with hay and beef cattle in georgia. south georgia is one of the
leader regions for cotton and peanut production. the price outlook for these commodities is bleak and economic climate in agriculture makes it difficult for crop producers to remain viable. this economic situation is the result of multiple factors that have combined to create almost a perfect storm for farmers in most parts of the country. first, commodity prices have generally been flat to trending downward due to the global supply demand situation, trade policy uncertainties and strong crop yields and large production in other countries. second, most major crop producer regions in the u.s. have been hit with severe natural disasters in the past two years. hurricanes in the southeast, drought in the southwest and flooding in the midwest. third, the trade uncertainty and ex property market disruptions caused by tariffs are harming
exports which are critically important for most commodities. last year's hurricane caused $600 million in cotton and seed cotton losses in georgia alone, plus $74 million in direct loss -- indirect losses. across the southeast region estimates range between 700 and 850 million in cotton and molen seed losses, while some of last year's crop were salvaged, production was down 40% statewide and many fields suffered a complete loss. since the hurricanes struck the southeast last fall, my fellow producers and i along with our lenders thought federal assistance would be made available to help offset this historical loss we experienced. beyond traditional lenders most of our seed, chemical, fertilizer, equipment dealers have extended credit where repayment could be dependent on getting a disaster bill passed.
we never anticipated that seven months post hurricanes we would still be left waiting and wondering what will happen. i'm very grateful for the house passing disaster assistance. i want to recognize the leadership and support on this issue by representing scott, davis scott, rick allen on this committee and chairman bishop on the agricultural appropriations subcommittee. on behalf of my fellow producers, our families and the rural communities across the southeast where agriculture is the backbone of the local economies, i implore congress and administration to resolve the remaining differences to ensure a disaster bill is passed this month. the 2018 farm bill provides a strong foundation for farm safety net, but these policies are not equipped to adequately respond to the losses when catastrophic natural disasters hit. coupled with the lost exports
due to ongoing trade disputes, it is clear that supplemental assistance is needed across the agriculture sector for producers to withstand the economic pressures we are facing. the china trade dispute with tariffs on cotton are increasingly harming our industry. u.s. cotton market share in china is down 75% while brazil has quadrupled its market share. farmers cannot continue to withstand the economic impact of the trade dispute on our bottom line. the m if. p provided by the administration last year has helped partially offset our market losses. those of us that suffered crop losses due to last year's natural disasters were unable to fully benefit from the mfp. where prospects for increased production this year u.s. cotton must have increased access and market share in china. the cotton industry also strongly supports approval of the u.s.-mexico-canada
agreement. i believe it is vit cal for the house agriculture committee and congress to take action by providing the much needed assistance that will help producers withstandwithstands the economic downturn occurred in our sector. thank you for supporting u.s. agriculture, and i would be pleased to respond to any questions. >> thank you all of you for your testimony. members will be recognized for questioning in the order of seniority for members who were here at the start of the hearing. after that, members will be recognized in order of arrival. i recognize myself for five minutes. mr. davis, thank you for your testimony regarding the disaster relief. i'm hopeful that our next hearing in june will be focused on that issue and we'll do a much deeper dive into it. i'm hopeful that by then we'll have the disaster relief that you so -- we so sorely need in florida, georgia, and along the
missouri/mississippi river. most of us on a subcommittee represent pretty large swaths of land. and i can't go to any farmer in the 270-mile stretch of south texas that i represent without hearing about how difficult it is for farmers to get loans and financing and things like that. what i'd like to hear from each of you is, you know, given the geographic diversity that is represented here today, what you are seeing and what your fellow farmers are seeing on that front. >> thank you, mr. chairman. as you said, credit is a challenge right now. a couple of fundamental reasons that that's a problem relate directly to the market. the first is that most credit in our area is calculated based on your historical production times a given price, and that's what
the beginnings of loans are built out of. and as though prices decrease, so does your ability to finance up to that level. secondly, as crop insurance values decrease and the ability to collateralize crop insurance therefore decreases, that changes your ability to borrow. and so both of those have put a squeeze on. and the third which is the one i guess i didn't anticipate individually is that as my fellow growers, i'm -- i'm grateful that thus far my lender has been supportive, although we've had to refinance some things, i've got some fellow peers who have not been as fortunate as i have, and in scenarios where they owe money that's unsecured, for example i pick cotton for a neighbor -- picked cotton for a neighbor who couldn't afford his own cotton picker. i moved across the road and picked his cotton with the
expectation that he would pay me. he has not been able to get refinanced, so he owes me about $100,000. and i guess i'm not going to see that again. so there's a third tale to that thing that i did not anticipate. we've got sort of three different issues there in my mind related to just sort of the total shrink in what's been able to be borrowed from credit. thank you, mr. chairman. >> thank you. mr. peters? >> yeah. the current lending situation, we bank on a -- a main street bank in northfield. happens to be the same one jesse james tried to get money out of. but anyhow, they've been supportive, and you know, they're a small town lender. as i said, we've been there forever. it's basically on equity of past generations. our diversification in our
livelihood and their ability to believe in us. we can't present them with favorable numbers. we're just -- we're trusted friends i guess because the numbers aren't working, and in years past there's been a little bit of a -- my wife does a lot of the marketing, and there's been a little bit of a burp in the market or positive where we could forward contract. we're an older established farm, and we have on-farm storage so we can bridge into carrying the market and things like that. but as we plant our dlcrop this year, i don't see a lot of frontiers in the markets. it's hard to price a commodity that we're growing, and it's hard to ask this of our trust lenders. so i guess what i'm trying to say is if we were across the desk, we'd have to believe in the individual or we'd have to make the decision from some other means because we just don't have the numbers before us
to present positive cash flow. >> well, thank you. and in the interests of time, i'll go ahead and move on to my colleagues. i recognize the gentleman from pennsylvania, ranking member thompson, for five minutes. >> chairman, thank you so much. thank you to each of you gentlemen for being here, taking time away from your farms and your families. just hope you know how incredibly value thable that is us, your sacrifice to come here. giving us your personal experiences is so important. mr. davis, good to see you again. mr. davis, you mentioned that the need for congress to pass disaster assistance -- i certainly agree with you, it's unfortunate that it's taken this long, but given that what is being considered legislatively is very similar to what congress passed to address the 2017 losses also caused by hurricanes in the southeast, would there be
any changes in how the whip program is designed either legislatively or administratively that would help the program operate better for producers? >> yes. in 2017, one of our challenges with the program was the signup process was very time consuming. they had to manually calculate all the math due to software issues, and one thing was when the producer signed up, he could only get 50% of his eligible payment at that time. and he had to wait to the end of the signup to get the remaining 50%. and that sort of hurts. another thing, we have asked to increase the coverage from a 70% to a 90% loss so you would trigger a payment quicker. and a lot of people had losses in 2017 in my area did not qualify even on my farm. we had a loss, but we didn't
have -- a shallow loss, we didn't qualify. we also ask that we'd like to just instead of deducting the gross indemnities from your payment, deduct net indemnities. what i'm saying there is on gross indemnities, you consider the insurance premium in there. that way a guy would be getting benefit from what he's paid for insurance if you follow what i'm saying. >> yeah. thank you. thanks for the concrete recommendations. this question's really for anybody on the panel that would like to address it. you know, i know when i visit my producers in my area, crop insurance really is critical. for the most part, lenders require farmers to carry insurance and generally it works well most years. could each of you briefly comment on your experience with crop insurance? what type of policy you
typically carry, and are there changes or improvements that we can be working with the administration on to better provide risk protection? mr. huey? >> yes, sir, and thank you for letting me speak to that. i was also part of the whip program after hurricane harvey. and the way crop insurance interacted with the whip program was not particularly positive. he hit on a couple of those things already. as far as improvements to crop insurance, my recommendation would be to have a discussion about what happened in our area during harvey was that we had a giant crop in the field, much larger than what our historical production was, and if any portion of that was harvested, then it ruled out crop insurance and, therefore, ruled out the whip program. there was no system in place to get any assistance. you know, as evidenced by the fact that it didn't spend any money.
i mean, it was appropriated at $2.6 billion and spent $1 billion. all that money still, it didn't go out into the countryside in my part of the world. >> i'd like to make a comment on that crop insurance. as you all know, crop insurance on a crop's unlike homeowners or car insurance. with crop insurance the highest coverage we can normally afford to purchase is 80% to 85%. so we're left to incur a significant deductible ourselves before crop insurance covers, triggers to help offset our losses. but the losses from the hurricane last year, crop insurance would not cover the magnitude of the losses we experienced, and it does not take into account the crop potential before the storm hits. we're insuring based on historical yields that don't always keep up with the pace with production due to improved practices and farming technology. what i'm saying is we had to
work off of aph, a ten-year average. and that always is not really fair because we continuously making better and more production as time goes by. and most farmers can spend, you can spend whatever you want. you can spend from $15 to $60 an acre. if you are insured to the max on irrigated which -- your premium's based on how much revenue you can collect. in other words, the higher the yield you got and the higher the prices set the more it costs us. so therefore, you have to use good management to decide, get more bang for your buck. you still have -- you're going to have a 20% normally risk out there if you collected the full insurance. you could still lose $100 to $200 per acre on irrigated cotton. >> thank you, chairman. and i recognithe gentlewoman, m
craig. >> thanks, i would to submit a britain testimo written testimony from the national association of wheat growers, please. first of all, i really want to start my comments by saying that i'm going to focus on the effect of the administration's efforts on trade for most of my questions. to me it's just undeniable that this administration has continuously used our family farmers as political bargaining chips in a senseless trade war. when i talk to farmers in my district, the notion that this is short-term pain for long-term gain is getting old. as our farmers are planning for the year ahead, the threat of withdrawing from nafta continues to loom, and there is still no resolution with china. just this week, we saw the impact of the administration's trade actions play out in realtime.
ahead of negotiations with china, the president in a tweet talented a new round of tariffs on china going as far as to say that these tariffs are, quote, partially responsible for our great economic results. this tweet sent soybean futures plunging to record lows, all part of a sustained period of market volatility and sharp decline of soybean prices over the last year. even if the administration reached a deal tomorrow, we may never regain our international market share for u.s. crops. if we don't reach an agreement quickly, stocks will continue to grow, and prices will continue to fall. this market volatility is threatening to change the make-up of rural america for years to come. farmers are resilient and hard-working people who just want a fair shot at a market and a fair price.
so with that, i do want to start with you, mr. peterson. you mentioned in your testimony that you originally supported the goals of securing better trade agreements to hold china accountable. i, too, supported that. do you feel our rural communities, places like northfield and those surrounding rice county towns and townships have received the great economic results that the president claims, and how has the administration's trade war impacted your life, mr. peterson? >> just to be kind of humorous, the trade war impacted steel, aluminum, and soybeans. but we were on a welding and fabrication shop that deals in steel and aluminum, and we also grow soybeans, so it didn't affect me much, right. anyhow, on a serious note, it
all comes down to markets. you mentioned our community. our community is pretty diversified and resilient. kind of its own economic engine. but if we go farther out into rural america, there's my concerns. it's about the communities. it's about the farmers that can spend money in those communities that keeps schools, that keeps the medical industry, that keeps infrastructure, even fire departments and things like that, it keeps up roads and bridges. it's just commerce in rural communities, smaller towns, are so vital to our whole demographic and our ability to keep family farmers on farms and keep our cropland from being owned by corporations which, in turn, i feel would turn into foreign investment in farmland and eventually possibly some of the loss of our own food supply or control of our food supply, excuse me. so to answer your question, you know, and put it into numbers, i'm not going to speculate or
guess. it's -- when farmers don't have money, they can't spend it in town, and not having the markets that are checkoff dollars and all of our negotiations in the past had negotiated for, we need to get ships tied up to docks in foreign countries. that's just the way it is. and i don't think we can accomplish that by telling our customers how to act. >> thank you. just want to follow up on one other topic real quick, and that really is climate change. you know, there's a lot of talk here in this town about climate change. and i believe our farmers are really on the front lines of conservation in this country. so what role do you believe farmers are play here in addressing climate change? and what should the ag committee do to continue to promote conservation practices? >> i believe that on our farm, i want to be proactive. you know, the soil, carbon
sequestration thing is intriguing to me, and i'm going to morph, further morph our production practices into building healthier soils. primarily from a me-first standpoint. i want to create healthy soil, reduce inputs, and keep the thin layer topsoil we have in place. that's what i feel a lot of farmers can do on climate change, and it would be cooperative venture whether it's through supply management and we do a short-term set-aside program where we could amend soils. we're in the northern portion of the corn belt. and it's hard to get a window to cover crops or anything outside of corn and soybeans. that takes 100% of the growing season. if we need answer to some sort of a climate change initiative, i'd appreciate the ability to move the portion of my production acres into soil stewardship applications. >> thank you, mr. peterson.
i yield back. >> i now recognize the gentleman from georgia, mr. scott, for five minutes. >> thank you, mr. chairman. and just briefly, while texas and georgia were both hit with hurricanes, the difference in the -- in the -- what happened in texas is the crop was already harvested. it was just still sitting in the field because you didn't have time to get it out of the field before the storm came in. sir -- both. but a lot of your crop was harvested. where in georgia, our crop was still on the stalk. that's where the difference in when crop insurance pays and doesn't pay makes such a big difference. the storm hit us mid-october, and i was at the sunbelt ag expo as i know bart davis was, others in this room may have been there -- i know some of the other people in this room were there. and the vice president, who i know and i like, flew in there
and gave a speech. i'd like to read part of his speech, and then -- he says, let me say to all the farmers gathered here today in the wake of hurricane michael, we are with you, and we will stay with you until we rebuild and recover better than ever before. as big an applause as i've seen in a long, long time when he said that. and he talked about decatur county, in congressman bishop's district, not in my district. georgia farmers and producers lost up to 70% of their fall vegetables, 90% of their sweet corn, 90% -- 95% of the unharvested cotton crop, 95% of poultry, 100% of pecan crop. and in fact, many of them lost the whole pecan orchard. those of us in the house worked pretty hard in putting a disaster package together, and the -- we were able to move up to $3 billion the number
available for crop losses. the losses in georgia alone are better than $2 billion. and we're talking about $3 billion for the whole country for all of the 2018 storms, not just hurricane michael. so the $3 billion number is still short. i want to read the statement of administrative policy that the office of management and budget put out. crop and livestock losses. the administration does not support, the administration does not support the $1.1 billion -- again, we through work in the house got it moved to a more reasonable number -- provided for crop and livestock losses. existing usda safety net programs including crop assistance can provide this assistance to providers. i appreciate the vice president's comments. i appreciate the president's favorable comments about agriculture and the agricultural community. but when things are then handed
off to people at office of management and budget who consider the american farmer and the american farm family nothing but subsidy-sucking freeloaders, then there's a disconnect in what is actually coming out of the administration and what the administration is telling us they're going to do. mr. davis, can you explain to us why existing crop insurance programs just won't do it in the case of an event like hurricane michae michael? >> yeah. like i said a while ago -- like i said a while ago, 80% to 85% is the most you can insure crops for. so when i started farming in 1982, austin, you could take
$100,000 and work a lot of land. i borrowed hundreds of thousands of dollars. now we've borrowed millions of dollars. i virtually, our operation has to feed three families. i don't really like having to farm 5,000 acres. that's what it takes to profit margin -- it's so thin, that's the acres it takes for us to have, to make a living for three families. and with insurance like it is, we still have -- it's costing so much, the cost of production has went up dramatically the last several years, it's costing me on my farm between $900 and $100,000 to grow an irrigated acre of peanuts and irrigated acre of cotton. you see the risk there. when you see there 80% to 85% is the most i can insure for, you do the math. you see what's left. that's what happened to me last year. we had the maximum insurance, and i'm not going to say the figure here, but it was several
hundred thousand we still lost on our farming operation last year. >> i appreciate all of you being here. i will tell you one of the things that -- and this is true in the county. if you go into the northwest portion of the county, the loss is totally different than the losses in the southeastern portion of the county, the way that storm came through. and as this committee looks into crop insurance and how we handle the losses, it's very clear to me we're going to have to figure out what happens in the event of these catastrophic losses where you have a 100% loss and how that's calculated into base figures and other things going forward. so i -- mr. chairman, i know my time's expired, but i appreciate the members of this committee helping to pass this disaster relief. my colleague, david scott's, been a big help in that, as well.
and i sure hope we get something done before memorial day. >> and i recognize the gentleman from california for five minutes. >> thank you, mr. chairman. question for mr. sutton. as you state department in your testimony, access to labor is one of the most essential inputs in specialty crop insurance. labor shortages continue to challenge your central coast operations. due to impracticalities of our current immigration system, can you please explain the challenges central coast farmers are seeing due to the lack of access to a sustainable work force? what do you predict your industry will face if the outgoing labor issue is not resolve resolved? >> thank you, congressman. yes, labor is one of the most concerning issues that we are
facing day to day. you know, ten years ago, we had the ability to access domestic labor and pay those folks that worked on our farms the current wage. what's happened in recent years is that domestic labor pool has gone away, and please understand our operation is one of several hundred in california that are working in the specialty crop industry. and our labor needs are pretty intensive because no one likes a head of romaine that doesn't arrive to your refrigerator that doesn't look good. and so our crops take that personal touch. it takes hand labor to get that crop as it's out in our farm to your dinner table. because of the shortage of
labor, we've had to start using the h2a program more extensively. i will estimate this year that with all of our harvesting crews, 85% of the labor that we need is coming from the h2a program. the h2a program gives us the labor we need to get our crops out of the ground, but it is extremely expensive. it's not only the adverse effect wage rate, the a that has to be complied with, it's also the california laws with minimum wage increasing, ag overtime decreasing. we have to provide housing for these h2a workers. we have to provide transportation. and all those costs that go in, and we look at things at a per-box rate. when we factor all the costs that go into that one box of production that's at times that doesn't pencil out. and then we have to make the
decision of do we harvest this crop or not. without consistent consistent a labor force the h2a is being used. we're trying to go into mechanization. and there are barriers to going into mayor-elect an izatiechani. one being the pure cost. if there was a machine that could do what 12 farm workers do, we definitely would be interested in looking at that, and then we have to look at the price tag to see if we could make that happen. so having a stable work force for our industry is extremely important to us. >> thank you, mr. sutton. to all the witnesses, in addition to the pressure felt by the farmers during nafta renegotiations, the president
has state that he might fully close the southern border for an unspecified period of time. can you describe the impact that such a closure would have on your operations? starting with mr. sutton if we could. >> thank you, congressman. so our southern neighbors to our southern border are one of the largest recipients of our products. and not only that, but in the specialty crop industry, our market's a global market. and mexico is definitely part of that global market. one of the effects -- one, it's not good for u.s. farmers, it's not good for u.s. businesses, and it's not good for the u.s. economy. immediately after the announcement was made that that may happen, the price of an avocado went up 34%.
that's how significant our neighbors are to the south and to part of the global economy. so closing the border to the south of us would have drastic effects on the ag economy. >> thank you. i -- i'm in a closs proximity of -- close proximity to the border and for years that has been an incredibly important part of our trade. all the sorghum was shipped across the border and into mexico. the importance of that has been further compounded by other trade barrier issues that are currently in play. so it's made nafta even more important and, therefore, passage of u.s. mca even more important. those concerns for us all over the country but especially in proximity to the mexican border
and the canadian border where we need a home for those products. we in america think we are and believe with all our hearts that we are the best producers and most efficient producers and safety producers in the -- safest producers in the world. and we need trade for those markets, for those products. so we need stability in that system. i appreciate you. >> thank you, my time has run out. i yield back, mr. chairman. >> i recognize the gentleman from arkansas, mr. crawford, for five minutes. >> thank you, mr. chairman. mr. davis, i think you made the comment about consolidation. i'm not sure which of you addressed this, but how consolidation is impacting input costs and so on. you want to weigh in on that, how that's affecting your operatio operation? >> consolidation -- >> consolidation and how that's
affecting your input costs. >> it is affecting our input costs. i mean, the -- it causes things to go up. i mean, i guess -- i guess the question you're asking is about the tariffs? >> no, i'm talking about -- let me -- i may have -- i may need to redirect this question to mr. huey. i think maybe you're the one that might have addressed that. >> yes, sir. i'll take a run at that. part of the free market economy that we believe is necessary in agriculture is competition. and as competition has shrunk in the -- in the marketplace both where we buy and where we sell,
our ability to both sell products and buy products at a reasonable cost has changed. this has been further exasbait with tariffs from -- exacerbated with tariffs from china which have begun shrunk our ability to bring things in from other companies. there have been some major consolidations recently. the baye-monsanto merger and a couple of others that have taken competition out of the marketplace for things like technology and seed. they're all selling the same products. and that's part of what has held our input cost high because there isn't really a great option out there in competition to lower our input cost. so there are a bunch of different things related to that that are holding input costs up even as our ability to sell declines, but consolidation is certainly a component of that in the major companies. >> thanks.
mr. davis, back to you. disaster relief is obviously front and center for you right now. i've been working on this particular issue, what i would consider probably like an hsa account for farmers. that is to allow farmers to essentially fund their owner disaster relief while they -- their own disaster relief while they await a crop insurance payment or appropriation or whatever. i think in many cases it could make the difference in folks being in business today and making it another year or not. let me ask you this -- if you had such an account, if you had access to a tax-deferred account that you could deposit with up to $50,000 a year and be able to draw on for operational use in the time of a disaster, is that something you find would be beneficial to you? >> yes, it could be beneficial if the farmer's got the money, can make enough profit to make that money in there every year. >> it's really kind of a tough
scenario right now because now's the time you need it. >> right. >> congress has historically not been proactive. sometimes you could say the ag industry in general, and i've been in the ag industry most of my adult life, is sometimes not proactive. we don't go where we need to be but rather wait until circumstances dictate that we act a certain way. so you know, if -- we can't turn back the clock. but you know, if five years ago we've had an account like this, you'd be fully funded right now potentially. >> yeah. >> and could -- could mitigate the losses you're suffering right now. so my point is this -- that we have limited authorities here in the ag committee. we've wrestled with this because there's obviously a tax component here. so we have to rely on people outside of the ag committee who really kind of lack the understanding of why that's important. so we're asking folks in committees like ways and means who may not have the same understanding of agriculture to understand why we're making
these suggestions for you. can you kind of envision an account like that being beneficial to keep you in business another year while you're waiting on a disaster supplemental or possibly a crop insurance adjustment? >> yeah. i mean, it would be according to the way this thing is set up. would this be something that we would, you know, get a tax credit for? i mean, if -- >> certainly that's -- >> paying taxes -- certain amount of tax money, if you made money, put that money in there. you're going to have to make a profit before you have that account -- >> that's exactly the point. rather than when you have a good year invest in another combine because you're trying to reduce your tax liability, you put that same amount into an account that can be used to mitigate disaster on your farm. >> we -- you know, we work toward disaster to try to prevent disaster -- we put money in center pivots for drought.
and we put money in crop insurance for other losses like we just had. i mean, i've been paying crop insurance for several years, and hardly ever collected. i'm -- i collected a lot -- i got a lot of my money back there year. i mean, if you look at it in a certain way, that sort of works like what you're saying, but it wasn't enough to fully get me out. >> right. >> but i paid premiums for years and never collected. it paid off when hurricane michael come. >> i appreciate that. >> i mean, i guess that's a possibility. i mean, that's the first i've heard about that. that's something we'd have to -- in the cotton industry, have to look at and talk about and see how it would work for us. >> appreciate it. i apologize for going over. >> and i recognize the gentleman from georgia, mr. scott, for five minutes. >> thank you very much, chairman. i really appreciate you holding
this hearing. it's very timely. the state of our nation's farming and agriculture economy has to be and should be and must be the number-one agenda that we in congress get forward to and resolve. foremost is the fact that we have not treated our farmers right. i mean, we've had time after time needs expressed to us from our farmers. they've suffered through hurricanes after hurricanes, wildfires after wildfires, lava spewing up. i mean, the damage is there. and yet not one dime has this congress given down to help our
farmers. many of our farms are hanging on by their fingernails. they're losing their farms. the suicide rate of farmers is second only to our veterans which is both shameful. now we have a bill, we're supposed to vote it in today or tomorrow, and i just hope that this house will stand up and unanimously pass this. get it over to the senate. and then let us hope that our republican colleagues who have a problem with our puerto rican fellow americans, put it behind them, and put the interests of our farmers foremost.
agricultural is the single most important industry we have. you can do without a lot of things, but you cannot do without food, you cannot do without clothing, and we cannot do without shelter. but yet we are treating our farmers like second-class citizens. so i hope the message goes out. and i also hope -- and i want to get y'all's opinion on this, we've got to figure out a way that this will never happen again. i've got farmers in georgia who haven't had a crop since 2015. and if we can learn from this
inability of congress to be able to appropriate and get money down through the normal appropriations way and the time of these great damaging natural disasters, then we may have to look at another way because if every time we get a bill going -- my colleagues on this committee and congressman scott and i, sanford bishop in georgia, senator purdue, and so many of us have been working, working trying to get it done through the appropriations processes there. but maybe we need to examine another way where we can have money set aside that doesn't have to go to the rigors and the
give and take of politics. it is absolutely shameful that we have not responded to our own farmers because of some disagreements or differences or disdain even for our puerto rican citizens. so i want to ask you, i have a question here. given the current market conditions, has it been difficult to access credit? would you all answer that for m me? >> yes, mr. scott. not only has it been a bad year and losing part of your crop, but when you go to borrow money to make a operating loan every year, the cheaper the price is the harder it is to show payback to pay back the money. i mean, you've got to do -- >> and why is that -- why is
that? >> because a bank which to start off with, to borrow money to farm, you got to have an ag bank or ag lending institution. they do not -- a lot of banks don't understand farming. they don't -- they'll look at it and say this ain't going to work from the get-go. i mean, they've got to be sort of willing to help you like they have -- a lot of banks and lenders have stuck their neck out to help keep farmers in business now because they know rural economies is important, but they've done it banking on this disaster is coming. if this disaster don't come, we're going to have more problems. but when you do a cash flow every year, you figure your average yields times what's you think you're going to get for that crop opener the contract or whatever the market is to figure your income versus the expenses. so the cheaper the prices every year on cotton, the harder it is
to make a cash flow. >> do we have any idea, any of you have figures or numbers on how many farms have closed down as a result of our inability to get aid to them? >> i don't. i know there's still some out there hoping. i think if this disaster bill can get passed, bankers are still holding up, i think they'll go ahead even though they know the money's going to be a month or so getting there. i think they'll go ahead and pull the trigger, you know, and help the people out. but as far as a number, i do not know. >> that's good. god bless our farmers for sticking in there. thank you, mr. chairman. >> i now recognize the gentleman from georgia, mr. allen, for five minutes. >> thank you, mr. chairman, and i want to thank all of you for being here today and sharing a little bit. i just wanted to thank you, congressman scott, to kind of piggyback on some of the things
that he was talking about. but obviously because of the fiasco in 2008 the banks have been heavily regulated. that has had a huge impact on farm credit now. i can tell you. i've -- had a meeting with lenders the other day, they're also being stared down by the federal government, but they are -- they have said and promised me that they were going do their best to fund a crop obviously with the disaster issue -- and it needs to be severaled, and it needed -- solved, and it needed to be solved yesterday. when i came to congress in 2000 -- 2014, ariana grang income wa from the farm bill that was written. that was in 2014. in 2016, secretary purdue sat right there where y'all are, and i asked what do we do about
commodity prices. and his response was terrible trade policy. you know, we're getting killed on trade because we're a so-called developed nation, and our competition is called undeveloped. so wto, we lose everything with those folks. and so i said, well, we need to fix that. since being in congress, i have voted for multiple disaster relief for louisiana, texas, north carolina, just to mention a few. within a week of the disaster. since 2018 we've been sitting here for, what, almost six months, and people say why is this place so dysfunctional that we can't do what's right for the american people, particularly for our farmers that are so critical not only it's the largest industry in the state of georgia, it's the largest industry in my district. it's sad, truly sad.
and hopefully we can fix that this week, but then of course we've got to get it through the senate. but you know, it -- and then on the labor issue, we were 20 votes short of true immigration reform, of fixing our labor problems in agriculture, 20 votes. and it would have fixed everything. and that's what's sad. and you know, this place has got to get its act together or we're going to -- to have problems with our entire economy. as far as the farm bill goes, i guess, you know, i think if you -- you covered all the questions i was going to ask. if we can get the disaster thing done, and of course the farm bill was the hardest thing i've ever worked on in my life. i couldn't convince colleagues on both sides of the aisle -- i mean, i'm an investment return, i believe you can't operate with an empty wagon. i was taught that early in life. my dad was a farmer.
you got to invest money to make money. i see the farm bill as an investment so that we can have a robust agricultural economy which, you know, the payback is enormous. and then you've got the national security interests. i mean, 42 days, your grocery stores are empty. that's not going to be pretty. so the bottom line is, you know, we get through disaster, and i just open this up to comments. as far as the farm bill, how is it going to work as far as with commodity issues like we've got, and how do we fix this? and i'll just start -- we've got a minute to -- i'm sorry, only got a minute to some this. you got to be -- to answer this. you got to be quick. >> thank you and say for the farm bill, that provides the baseline, the underpinning, we understands that. i don't believe the farm bill was designed to address how much
prices have fallen and this idea that there's not any real light at the end of the tunnel right now. there's -- the tension in the farm community because you can't look out and see a profit a year or two or three from now is palpable. and so the question becomes, you know, the administration saw that last year. secretary purdue did mfp. there's some ways to do that that would be much better, but we're grateful that it was done. there's something along those lines. we've got this sort of fiscal cliff that we've looked at from f.y. '19, we're including mfp, agricultural outlays more than $15 billion, and for 2020, the cbo projection is five. that's a huge change that -- that this committee has some jurisdiction over. and there's some things that we need in production ag to address that. >> i'm out of time, and i hope
that like i said, people here -- your representatives can come together and end this dysfunction and do what's right for the american people, particularly as far as national security and ag is concerned. thank you so much. i yield back. >> i'd like to first of all thank the ranking member of the full committee, mr. conaway who with mr. peterson helped steer this congress toward a successful 2018 farm bill and recognize him for five minutes. >> i thank my fellow senator for those remarks. it was a group effort. and i appreciate us getting that done. i just want to thank you for coming up again. ask a couple of this and that because most everything has been covered. you were talking about the impact of having fellow farmers around you go out of business or whatever. actually made a poor credit decision of your own across the neighbor -- the neighbor across the street. what impact does that have on
land values and equipment values and others in terms of collateral value for i guess your loans and your bank -- what's the impact there? >> thank you, mr. conaway. the impact -- we haven't seen a dramatic fall in land values yet for which we are incredibly grateful because ultimately that's part of what we use as collateral. and in this environment, there's no liquidity without some of those pieces of collateral. the problem is equipment costs continue to go up, and used equipment prices continue to go down. and we're in the scenario -- i'm going to -- i chuckle about this. i was fighting sand easter morning, so for those of you who know what fighting san ining sa we had cotton up. a group of us that are -- have a text chain were fighting sands on easter morning. one of my fellow friends chuckled to another and said, well, my farm is for sale for about $15.
he said, my farm is for sale for $15, i'm tired of this. the other responds, you'd have to pay me to take it. and that -- what that does in the long term is none of those things have -- other than lands have value, right? you have a farm auction or two. and you saturate the market with equipment. and all of this stuff will disintegrate. it's going to be a snowball effect. and i think that's what the bankers are trying to figure out how to mitigate when they look at how they're going to do loans now because they're -- they're already starting to shrink the value of equipment that's sitting on your asset list in order to deal with -- with those discussions. >> so secretary purdue and i were in your part of the world relatively soon after harvey hit. and still remember the, you know, rotting cotton doesn't
smell very good. >> no, sir. >> it leaves a lasting impression on you. there was a question at that time as to you had crops that had not -- you had cotton that had not been harvested yet. you had others that had been harve harvested, was in modules, had tarps on it, destroyed in the field. then you had modules that had been moved to the gin. at that point in time, there was a question as to who owned the cotton and whose insurance would pay for it. has that been cleared up as a result of actually having to live that experience? >> it has somewhat been cleared up. but i think in terms of financially how it was all rectify rectified, some of those answers are still out there. as you know because you saw it, the cotton that was harvested, once it has a tarp on it, theoretically is owned by the gin or is part of the gin's insurance. so long as the gin has insurance which is a whole other issue for
hurricanes. however, if you've got cotton sitting out in the field that's part of the -- part of the field is harvested and part belongs to the gin and the rest still belongs to the farmer and part of it goes against crop insurance and part of it doesn't go against crop insurance, those are where you run into issues with whip. and it's why whip underperformed so badly. any of the cotton that didn't get harvested or didn't get gin, didn't turn into production whether because it was on the plant or whether because it rotted in the module and you weren't able to get it through a gin, none of that's eligible for stuff like mfp because it doesn't turn into production. so it's another reason why this mfp fix is so important. so i think in terms of who owns what, there were probably some answers that everybody worked through as best they could. i think in terms of getting made whole by whip that didn't happen. and i think that as we go forward with this disaster package to address other places we need to understand that, a,
doesn't matter what kind of disaster it is, whether it's a hurricane or a wildfire or a drought. it's still a disaster. and b, crop insurance in this environment is not going to make you whole. best case scenario, in texas, you buy 70% crop insurance. and if your break even is 110% of your production history and you buy 70% crop insurance and collect on it, then you have a 40% loss. that's a pretty tough pill to swallow. >> all right. again, thank you, gentlemen, for coming up and testifying today. appreciate that. mr. chairman, i yield back. >> i don't think i -- since you're my constituent, i don't think i remind you of the decision quite the same way. but before we adjourn, i would like to invite the ranking, mr. thompson, to make any closing remarks he might have. >> chairman, first of all, thanks to you. thank you for this -- for your leadership of this hearing. you know, looking at our farm operations, our commodities, how
we mitigate and manage risk. there's -- all parts of life have risks, but there's very, you know, agricultural's one of the more difficult places to manage risk because of what we deal with. and -- and i thought the issues that were touched on, the gentleman, thank you for bringing your life experiences, your expertise to the table. i mean, you know, the trade issues we know -- every day that the chinese are at the trade table and i see that in the morning, that's a good day for me because i know conversations are going forward. you know, i certainly support the tariffs were a toll, but we -- it has gone on long enough. it's time to -- time to get this done. disaster relief which is long overdue, i thought that was -- i think there was a solid message here about we -- we need -- there's people waiting for disaster relief. they've been waiting way too long. and we need everybody on board. this is -- agricultural needs a
lot of farm hands. house, senate, and the white house. it's time for everybody to come together. some great insights on crop insurance. some pearls of wisdom as we go forward. the labor issues touched on. and i just appreciate your hosting this hearing. there's things that, you know, i think hopefully we can in the future continue to talk about. i notice there's stuff that's impacting our soybeans. we look at the african swine virus that the chinese aren't forthcoming on how many hogs they've lost, 10, 20, some people think it may be up to 60% by the end of the year, well that has implications for obviously hog production here but also for markets for soybeans. and the sooner we have -- can figure that out probably the better. we figure out where the hogs -- replace that market, will need to be fed by soybeans. so just a lot of moving parts here, and i appreciate your
leadership on this. >> well, thank you. last weekend we were in kansas city and had the privilege of talking to farmers from iowa, missouri, and nebraska, heard what they're going through with respect to the flooding. so mr. davis, rest assured hopefully by the time we have our next hearing on disaster relief, we will have fixed it. but we are -- this subcommittee will certainly take a very close look at that. in june, we conclude this hearing.
>> this holiday weekend on american history tv. saturday at 10:00 p.m. on real america, the 1970 film "on america day." the celebration at the national mall featured comedian bob hope and bob graham. >> she has never hidden our problems and faults. with our freedom of the press and open communication system, we don't sweep our sins under the stalingrad.