John Blanchfield, senior vice president, American Banker Association and Center for Agriculture and Rural Banking in Washington, D.C., says gridlock isn’t the only thing standing in the way of a new Farm Bill.
“We have been trying now for two years now to get a farm bill passed,” Blanchfield notes. “The fact of the matter is the farm bill is losing relevance to a lot of policymakers because there isn’t the big farm bloc vote that we had for many years when we passed farm bills.”
Of course, the current gridlock in Washington is having its own effect, slowing down or stopping legislation important to dairy and other commodities. What’s more, he doesn’t believe the upcoming 2014 and 2016 elections will bring about the kind of change needed for swift action on ag issues.
“So for Farm Bills and other farm policy issues, that becomes more and more of a challenge to try to pass legislation with such a divided Congress,” he adds.
Blanchfield, who grew up on a dairy farm and is a former dairy banker, addressed attendees at a recent meeting of the American Society of Agricultural Consultants on the current state of affairs in Washington, saying that in addition to the policy risks of operating without a Farm Bill, producers should have their fingers on the pulses of risks related to rising interest rates and increased category consolidation.
He is telling anyone who will listen to hedge their interest rate risk.
“There’s a lot of interest rate risk out there right now — and the fact is, interest rates are not going to stay as low as they’ve been over the last 15 years,” he adds. It may be next month or next year, but “at some point interest rates are going to go up.”
He’s also encouraging members of the greater agriculture community to keep an eye on consolidation, as it results in more than just economies of scale.
“We’re seeing more and more consolidation in agriculture,” he says. “And as these operations get larger, they become more politically vulnerable.”