Texas Farmers, Ranchers Hit Hard by Shutdown

Despite Congress reaching an agreement Wednesday night to end the federal shutdown, the agricultural industry in Texas is feeling the effects of 16 days of “nonessential services” being unavailable.

Some of the most essential services for farmers and ranchers — like crop insurance payments and federal inspections needed to get products onto the market — stayed intact. But the data that the U.S. Department of Agriculture regularly releases on commodity prices, supplies and demand was not available during the shutdown. That has left producers flying blind when trying to come up with appropriate prices.

“Any lack of information in a marketplace creates a situation that’s not very stable,” said Jeff Geider, director of the Institute of Ranch Management at Texas Christian University. Cattle prices fluctuate significantly from day to day, so the USDA data is crucial for ranchers. Without it, sellers are at a disadvantage.

“They lose some leverage. In the absence of that data, there is nothing for them to turn to,” Geider said. Consumers were unlikely to have seen an impact at the grocery store, he said, because retail prices are relatively stable. But producers could have seen a drop in profits over the long term, if the shutdown had continued.

In addition, payments that some producers were expecting in the beginning of October were delayed until the end of the shutdown, including direct cash payments for commodities like cotton.

Steve Verett, executive vice president of Plains Cotton Growers, which grows cotton east of Lubbock, said his firm’s direct cash payments amount to around $20 per acre. Although that’s a relatively small amount, farmers count on the payments as a part of their cash flow in the wake of harvesting season.

A delay in payments that help landowners convert deteriorated cropland into grassland also had an impact, said cotton grower Brad Heffington. “Probably the ones that are hurting the worst are the widowed landowners,” who often rely on those annual payments as a key source of income, he said.

Commodity farmers also have not not had access to low-cost loan programs offered by the federal Farm Service Agency, which had been completely shut down. That can be especially serious for cotton growers in the High Plains, Verett and Heffington said, because this is the prime time for their cotton harvest. The loans help farmers hold on to their cotton after harvesting to wait for the price to improve.

Perhaps the bigger issue for the agriculture industry is that the shutdown had stalled negotiations on a new farm bill, which was already overdue. An extension on the previous bill expired Sept. 30, leaving agricultural producers in the lurch for assistance that had been promised to them under the old farm bill, which was passed in 2008.

Chief among those is disaster relief. In August, the USDA designated eight Texas counties as federal disaster areas, making those counties and their neighbors eligible for extra federal assistance — but without new funding authorized by Congress, there’s no money behind the designations.

Crop growers are somewhat protected with subsidized crop insurance policies, which will continue. But Congress has not renewed funding for disaster relief for livestock producers. In August 2011, Agriculture Secretary Tom Vilsack said U.S. livestock producers had received more than $100 million in federal assistance for disasters, but they can’t get help for disasters that occurred after Sept. 30, 2011, until Congress takes action. Most have been forced to slaughter significant portions of their herds in the wake of record drought conditions.

A historic blizzard in South Dakota that wiped out a large part of the cattle herd this month was a stark reminder of the importance of federal disaster programs. Ranchers couldn’t reach anyone at the USDA about getting disaster assistance, and even if they could, no money had been authorized by Congress for such a purpose.

“If Texas had something like that happen, which is possible with hurricane season, then we’d be in a terrible situation just like they are up north,” said Tracy Tomascik, associate director of commodity and regulatory activities at the Texas Farm Bureau.

The farm bill has been held up for years over the contentious nutritional assistance programs, including food stamps. But if the shutdown hadn’t happened, it’s likely that Congress would have either passed a new farm bill or extended the old one, said DeDe Jones, a risk management specialist with Texas A&M University’s AgriLife Extension Service.

Instead, “basically, there is no farm policy whatsoever,” she said.