Shutdown hits some producers harder than others
The government shutdown has taken an immediate toll on ranchers hit by last week’s intense blizzard in the Great Plains and farmers and ranchers who have borrowed operating money from USDA’s Farm Service Agency.
The early blizzard in North Dakota, South Dakota, Wyoming and Nebraska has had a devastating impact on ranchers, with cattle losses in the tens of thousands, said Roger Johnson, president of National Farmers Union.
With USDA’s Farm Service Agency closed, there’s no where for them to go to report losses for possible financial relief or get advice, he said
“For those cattle guys, it’s a pretty isolating feeling,” he said.
It’s unclear if they’ll get any financial help. Livestock disaster programs in the 2008 Farm Bill weren’t funded when Congress extended the bill last year, and that extension is now expired.
Both the Senate and House versions of a new farm bill contain those programs and provide assistance retroactively, but the farm bill remains stalled as Congress deals with the shutdown and the upcoming debt ceiling, he said.
In addition, producers who borrowed from FSA aren’t able to cash checks from recent and current sales due to the FSA closure.
FSA loans require that payment checks to producers bear both the name of the producer and USDA, and there’s no way to get the checks endorsed, he said.
As a result, he said, they have no way to get those checks endorsed, pay back the FSA loan or pay other bills.
It won’t affect producers’ FSA loan but it could affect other loans and add finance costs to the operation, he said.
That impact of the shutdown is hitting young farmers the hardest. With little if any equity, they are operating primarily on loaned money and with the narrowest of margins and not much room for error, he said.
Many of those beginning farmers “are living month to month, scraping to get by,” he said.
The shutdown is also affecting markets due to the lack of USDA data. The impact on producers varies, but it’s hurting some producers badly as a lot of them depend on open and transparent trade numbers and prices, he said.
Trade volumes have been lower, he said.
“How do you market if you don’t know the value? Everyone is feeling this in one way or another,” he said.
In general, farmers and ranchers are not yet seeing a huge impact on their operations, but each passing day will make things more difficult, said Dale Moore, director of public policy for American Farm Bureau Federation
A number of producers are paid on a formula or contractual basis or sell on a cash price, all of which are based on USDA data. Domestic and foreign buyers also use that information for price discovery, he said.
USDA’s closure causing a dearth of independent information on which all sides of transactions rely, he said.
If the shutdown continues, it will become a much larger issue for more producers, Johnson said.
FSA isn’t open to take loan applications, he said, and producers might also see their long-term conservation contracts expire and no one will be able to sign up for new contracts.