Lawmakers and agriculture industry groups met face-to-face on Capitol Hill this week to discuss the serious labor shortage facing American farmers. They discussed the possibility of a comprehensive legislative package that would ease the chronic problem by legalizing undocumented workers and supporting a steady influx of laborers from other countries.

Washington state Representative Dan Newhouse took part in a panel discussion, saying, “This isn’t something we have the luxury of time to take to solve. This is hurting our industry as we speak.” There are two ag labor bills that have been introduced so far this session. They would take care of parts of the broader issue. However, a comprehensive fix has yet to appear. Senate Ag Chair Pat Roberts still thinks a bipartisan solution to the problem is possible. “If we can figure out a combination here that makes sense, I think we can sell this,” Roberts says.

Politico says the effort to solve the problem could get a boost from President Trump. At the American Farm Bureau national convention last month, the president said he would be pushing for legislation to make the process of hiring more guest workers easier for farmers to accomplish.

Ag Secretary Sonny Perdue used a football analogy to describe the process of passing the U.S.-Mexico-Canada Agreement. He calls passage more of a “field goal” than a touchdown. Perdue says the reason for the difficulty is the administration hasn’t yet removed the Section 232 tariffs on steel and aluminum imports from two key North American trading partners.

Perdue told reporters this week that he’ll consider it a “touchdown, a more certain success when we get those tariffs removed.” When the trade pact negotiations were moving along smoothly, Canada and Mexico were exempt from the tariffs. However, when things stalled, that exemption came to an end. As was expected, Mexico and Canada both hit back with retaliatory tariffs. Mexican tariffs have hit American agriculture hard on cheese, pork, apples, and potatoes.

Perdue also says the tariffs need to go as they accomplished the goal of getting Mexico and Canada to the negotiating table. “Once you’ve achieved your goals with the tariffs, then it’s probably time to look at other ways,” Perdue says. He realizes that the tariffs remain a thorn in the process of getting the deal ratified in all three countries.

By ROXANA HEGEMAN

WICHITA, Kan. (AP) — The nation’s farmers are struggling to pay back loans after years of low crop prices and export markets hit by President Donald Trump’s tariffs, with a key government program showing the highest default rate in at least nine years.

Many agricultural loans come due around Jan. 1, in part to give producers enough time to sell crops and livestock and to give them more flexibility in timing interest payments for tax filing purposes.

“It is beginning to become a serious situation nationwide at least in the grain crops — those that produce corn, soybeans, wheat,” said Allen Featherstone, head of the Department of Agricultural Economics at Kansas State University.

While the federal government shutdown delayed reporting, January figures show an overall rise in delinquencies for those producers with direct loans from the Agriculture Department’s Farm Service Agency.

Nationwide, 19.4 percent of FSA direct loans were delinquent in January, compared to 16.5 percent for the same month a year ago, said David Schemm, executive director of the Farm Service Agency in Kansas. During the past nine years, the agency’s January delinquency rate hit a high of 18.8 percent in 2011 and fell to a low of 16.1 percent when crop prices were significantly better in 2015.

While those FSA direct loan delinquencies are high, the agency is a lender of last resort for riskier agricultural borrowers who don’t qualify for commercial loans. Its delinquency rates typically drop in subsequent months as more farmers pay off overdue notes and refinance debt.

With today’s low crop prices, it takes high yields to mitigate some of the losses and even a normal harvest or a crop failure could devastate a farm’s bottom line. The high delinquency rates are caused by back-to-back years of low prices, with those producers who are in more financial trouble being ones who also had low yields, Featherstone said.

The situation now is not as bad as the farm credit crisis of the 1980s — a time of high interest rates and falling land prices that was marked by widespread farm foreclosures. At the height of that crisis in 1987, U.S. farmers filed 5,788 Chapter 12 bankruptcies. There were 498 in 2018.

Some fears are also surfacing in reports such as one this month from the Federal Reserve Bank of Minneapolis, which said the outlook is pessimisticfor the start of this year with respondents predicting a further decline in farm income. About 36 percent of farm lenders who responded said they had a lower rate of loan repayment from a year earlier.

Tom Giessel said he borrowed some operating money from his local bank last year and paid it off. Giessel, who raises wheat and corn on some 2,500 acres in western Kansas, said the only thing that kept the farm economy afloat in his area was that people had pretty good fall crop yields. Giessel, 66, said he had once gotten to the point where he didn’t have to borrow his working capital and had a relatively new set of equipment, but he has had to borrow money for the last three years just to put in a crop.

“A lot of people are in denial about what is going on, but reality is going to set in or has set in already,” Giessel said.

The February survey of rural bankers in parts of 10 Plains and Western states showed that nearly two-thirds of banks in the region raised loan collateral requirements on fears of a weakening farm income. The Rural Mainstreet survey showed nearly one-third of banks reported they rejected more farm loan applications for that reason.

Grain prices are down because farmers around the world have had above-average production for several years. But some nations’ economies are not doing as well, decreasing demand for those crops, Featherstone said. Grain prices peaked in 2012 and prices have roughly fallen 36 percent since then for soybeans, 50 percent for corn and 48 percent for wheat.

When Trump imposed tariffs, China retaliated by stopping soybean purchases, closing the biggest U.S. market. While trade negotiations with Chinacontinue, many farmers fear it will take years for markets to recover — as it did when President Jimmy Carter imposed a grain embargo on the then-Soviet Union in 1980.

“The tariffs Trump is messing around with are not helpful at all — I don’t think anybody knows the true effect,” said Steve Morris, who farms near Hugoton in southwest Kansas.

Morris, who has been cutting back acreage in an effort to avoid borrowing money, said drought conditions last year in his area devastated his wheat yields. Trump has offered farmers subsidies to compensate for the tariffs but they are based on harvested bushels. Morris, 73, received a subsidy payment last year for his wheat crop of only $268.

Many farmers are now scrambling to borrow money as spring planting nears.

Matt Ubel, a 36-year-old Kansas farmer who bought out his parents’ farm in December 2016, said they have not been delinquent on their FSA loans, but acknowledged the payment was “a challenge to make last year.”

“We have had trouble for several years getting operating loans,” he said. “This year doesn’t look any better.”

A key factor in whether farmers receive loans is the value of their land.

Farmland values in parts of the Midwest and Plains regionslargely held steady at the end of last year, according to the Federal Reserve Bank of Kansas City. But slightly higher interest rates and an uptick in the pace of farmland sales in states with higher concentrations of crop production could drive those land values down, it said.

“The big key in terms of whether or not we enter a financial crisis would be what would happen to land values,” Featherstone said. “So far land values have gradually declined, so that has kind of prevented us from maybe entering a situation like we did in the 1980s.”

A group of industry and agriculture companies and associations have launched the USMCA Coalition, an effort to see the U.S.-Mexico-Canada trade agreement through ratification. The USMCA Coalition is a collection of more than 200 organizations, including the U.S. Chamber of Commerce, the American Farm Bureau Federation, and the Association of Equipment Manufacturers, with an objective “to secure congressional approval” of the trade agreement.

AEM President Dennis Slater says completing the trade agreement will “guarantee North America’s manufacturing competitiveness” and support 1.5 million jobs across the U.S. and Canada. Equipment manufacturers contribute $188 billion combined to the U.S. and Canadian economies. Canada is the largest export market for U.S. manufacturers of heavy equipment and a more than $10 billion per year export market for U.S. equipment manufacturers.

Meanwhile, U.S. agricultural exports to Canada and Mexico quadrupled from $8.9 billion in 1993 to $39 billion in 2017, according to AFBF, and the two countries are top markets for U.S. grains, dairy products, meats fresh fruits, and vegetables.

A coalition of more than 50 farm groups is asking lawmakers to safeguard crop insurance. The organizations, including the American Farm Bureau Federation, warned in a letter to top-ranking House and Senate budget leaders this week that “An overreliance on budget savings from the agriculture community and from crop insurance will unquestionably undermine rural economies.”

2018 farm profitability is expected to hit a low not experienced in more than a decade. The groups also noted the public-private partnership of crop insurance has been a consistent and reliable risk management tool for farmers, particularly at a time of heightened uncertainty in agriculture caused by natural disasters, trade disputes and government shutdowns.

The letter says farmers and lawmakers “agree that crop insurance is a linchpin of the farm safety net” and is crucial to the economic and food security of rural America. The groups concluded the letter urging lawmakers to oppose cuts to crop insurance during this year’s budget process.

The Trump 2020 budget proposal will include “big cuts” to the Department of Agriculture, according to Agriculture Secretary Sonny Perdue. The budget request will propose cutting non-defense programs by five percent. However, Politico reports USDA is likely to face steeper budget cuts.

Perdue noted that Congress usually disregards the president’s budget request, which in recent years has unsuccessfully called for cuts to USDA. Perdue says he would like to see the process return to a negotiation between the president and Congress, saying: “It’s like buying and selling a piece of land. You’ve got to get within the realm of negotiation there for people to take you seriously in that regard.”

The Trump administration has previously proposed large cuts to crop insurance, agriculture research and rural development. Perdue says the budget will be conservative, but speaking of his team, says “we’ve done our best to advocate for farmers.”

The Environmental Protection Agency will conduct a long-delayed study to assess the impact ethanol-blended fuels have on air quality. Reuters reports the EPA agreed to conduct the study late last week, as the Sierra Club had filed a lawsuit against the EPA last year in an effort to compel the agency to conduct the study. The organization states the study was supposed to be done roughly eight years ago.

The Sierra Club and the EPA recently reached a partial agreement resulting in the EPA conducting the so-called anti-backsliding study by March of next year. The outcome of the study seems certain to influence future Renewable Fuel Standard regulations set by the EPA, including annual targets for ethanol and biodiesel use in the nations fuel supply.

The Sierra Club is a well-known critic of the RFS. An association fact sheet claims that since the standard’s adoption in 2007, “it has become clear that the RFS has had unintended and devastating consequences for wildlife and wildlife habitat, and may even be undermining its own stated goals.”

The recent announcement by China to purchase more U.S. soybeans fails to make up for trade war losses. The American Soybean Association welcomed the announcement made last week, but says the industry needs “structural reform that leads to China rescinding its tariff on U.S. soybeans and fully reopening the market,” according to ASA President Davie Stephens of Kentucky.

China announced the intention to purchase 10 million metric tons of U.S. soybeans. ASA says the industry’s greatest fear is long-term damage to the relationship it has built and sustained with China. The value of U.S. soybean exports to China has grown 26-fold in 20 years, from $414 million in 1996 to $14 billion in 2017, according to ASA.

Over the next ten years, Chinese demand for soybeans is expected to account for most of the growth in global soybean trade, making it a prime market for the U.S. and other countries. The organization is calling on the Trump administration to continue its talks with China in an effort to rescind the tariffs as part of the negotiated outcomes.