Support for Arkansas Week provided by the Arkansas Democrat Gazette, The Arkansas Times and KUARFM 89 Welcome to Arkansas Week.

I'm Dawn Scott.

Thanks for being here.

A federal government shutdown appears to be imminent as we record this program on Thursday afternoon.

It's looking unlikely that Congress will be able to reach a budget agreement by the end of Saturday, with a shutdown taking effect Sunday.

Joining us to share what's happening on Capitol Hill, as well as efforts to pass a farm bill, is Representative Rick Crawford, a Republican for Arkansas's First Congressional District, also a member of the House Agriculture Committee.

Thanks so much for joining us, a handful of members of your party.

They're pushing for a major spending cuts that are not likely to get widespread support or even pass the Senate.

The hard right members are also threatening to replace the House Speaker, Kevin McCarthy, if he works with Democrats to pass a shortterm stopgap measure to keep the government open.

I want to ask first, is this still the case?

Has any progress been made toward reaching a spending agreement that could pass in both chambers?

Yeah, I would say we've made a little bit of progress.

Yesterday we passed a rule that helped us tee up some appropriations bills.

I think we are in the process of trying to sort of foster goodwill among the conference members so that we can move forward with, you know, some provision that will keep the government open.

The reality is that nobody wins in a government shutdown.

And so I I don't think that's really what anybody truly wants.

There may be, you know, individuals here and there that might engage in some rhetoric about shutting the government down.

I think that's born out of frustration more than anything.

But the reality as we've been through this before I think about the 2013 shutdown and and the pain that was associated with that and you know we we we basically as members of Congress if we shut the government down, we're turning this over to the administration and saying here you deal with it and they they get the final authority on what constitutes essential workers.

For example, what services might be disrupted, discontinued, whatever while a a government shutdown is taking place.

And then in in reality, we actually probably cost ourselves more in real dollars by closing the government down.

Then we need to keep it open.

So last week, your colleague, Representative Steve Womack of Arkansas's Third District had some pretty harsh words for the handful of Republicans who are really calling for the deep spending cuts, including money that goes toward the war in Ukraine.

What are your thoughts on that?

Well, you know, everybody, I think's pretty frustrated and and the reality is that, you know, we do need to spend less.

That's that's a fact.

Look, we're $33 trillion in debt.

That's something that we're not talking about.

And so I think we can arrive at a reasonable funding level.

I think that those levels that were prescribed in the debt ceiling deal are what we're looking for as a as a a way to go forward.

But the reality is we have to have a willing partner in the Senate.

If if they're willing to vacate the deal that they agreed to, the spending levels that they agreed to in the debt limit deal, then we don't have a good faith partner.

And so I think that also sort of foments a large degree of mistrust between the House and Senate, between Democrats and Republicans.

And so I think we what we have to do is is look back at here's what we agreed to.

We can write to those numbers and and move a CR based on those numbers until such time as we get our approach bills done and then I think we can have some agreement.

The reality is we're making progress on the probes bills but you know we've waited too long and that has bumped us up against the the the fiscal end of the year, the year end of fiscal year.

You know, I read this morning Goldman Sachs estimated a 90% chance that there would be a shutdown.

Do you agree with that?

And if so, how long would this shutdown be in your estimation?

Yeah, I saw that article too.

I'm not sure I agree with that 90% assessment.

I'm a little more optimistic than that.

I think we can we can probably avert.

If we work pretty hard, we're going to be here all weekend, try to avert a shutdown and and then if we don't, how long will it go on?

You know, we like I said, we've been through this before and we don't want to see this drawn out any longer than it has to be.

But the reality is we need more time to get these approach bills done.

The CR allows us that time, and I think cooler heads will prevail.

You know, I want to talk about the farm bill for a minute.

You're a member of the House Agriculture Committee.

You've been working toward the passage of a new farm bill.

A lot of farmers in Arkansas, of course, our top industry here are watching this.

You know, we'll get to that in a moment.

Back to this shutdown, though.

It would impact agriculture, which, you know, again is the top industry in the state.

What concerns are you hearing from constituents?

Well, the overwhelming calls that we're getting right now is shut it down.

I think people are very, very frustrated and I and what I've been trying to do is in part you know some degree some measure of concern about what happens if we do.

Look, I understand the concerns that people have, but the the the federal government does have a footprint in our district and certainly throughout the state of Arkansas, although it may not be as big as in some states.

But it does have an impact particularly on our ag sector.

When we talk about the potential for shutting down inspections for example and how that might disrupt, you know, processing for example in the poultry industry we're we're at harvest right now and we've got farmers in the field harvesting crops.

We don't want to see disruptions there with regard to, you know, FSA offices and services that are provided from USDAI mean there's a variety of federal agencies that impact our lives day-to-day that we don't see.

And so for the folks that are saying shut it down, I get it.

I understand it.

The frustration is really building.

I feel it too.

I'm, I'm very frustrated that we're $33 trillion in debt.

I'm very frustrated that you know that the the administration has not done a thing in the world to address rampant inflation.

Interest rates are through the roof, all those things and I understand completely, but I think we we probably make things a little worse if we go through a shutdown, particularly if that's drawn out for an extended.

You know that deadline again is Saturday for the, the passage of the, the approval I should say of a new farm bill.

It's reauthorized every five years.

It funds so many programs and Congress though is consumed with budget talks.

So how likely is it that the farm Bill will even get consideration?

Well, that's a good question and we've, you know it's when we've been asking as members of the Ag committee and certainly somebody that wants to you know get that work done.

I've been through three farm bill markups before.

We've actually passed two.

I've been on conference committees both times.

I'm I'm very well versed in them and what it takes to get a farm bill passed.

And you know I don't think we're there right now.

I think that that if I can be quite candid, I think probably our best case scenario at this point is probably looking toward potentially an extension.

A farm bill is difficult.

It's why we only do it every five years.

It's it's a hard piece of legislation to move.

There's a lot of political and geographic fissures that that make it difficult, but it's essential and particularly in in areas of the country like ours that that rely heavily on on agriculture and and rural communities in the services provided by and authorized by a farm bill.

So we absolutely need to get it done, but I think that that certainly the clock is working against us at this point.

A lot has changed since last time Congress passed a farm bill.

What items would you like to see included, specifically new items?

Well, one of the things that I think is going to be the most heavy and difficult to deal with is the PLC index prices that are based on 2012 production cost models.

And so we went through a period of two farm bills were we were okay with that because interest rates were very, very low.

And so even as production costs started to increase, it wasn't taking a major impact of making a major impact on on production costs.

So but what we've failed to do in those previous farm bills was to index those reference prices and so they haven't kept pace with interest rates and production costs.

So here we are now in 2023 dealing with 11 year old data that has is not a good reflection of the economic pressure that's facing farmers.

And as a result the budget is going to be, it's going to be that much more difficult because the CBO score on that makes it extremely heavy lift.

And and what's worse is that we have a nutrition title that accounts for about almost 86% of the total authorization.

I'm all for nutrition, but we have to recognize that that nutrition has to come from somewhere and the production in the commodity title is down to almost 4% in the total authorization.

So we've got a little bit of sort of inflation built into a farm bill if you want to look at it like that.

I mean the reality is we need more support on the production side and I recognize the need to maintain that the, the continuity with nutrition.

But 86% is a large portion of the total authorization and that's coming at the expense of important programs and and really foundational to Feeding America and and the rest of the world and that is the commodity title.

What will you then prioritize for, for this new farm bill?

Well, I think what we're going to have to prioritize is what are we going to have to do to address those reference prices in in price loss coverage program That has to happen.

We're we're going to need maybe CBO to take another look at those numbers, whatever it takes, that's going to be relatively expensive.

But look, food security is national security, and our farmers need to be able to maintain food production as a national security imperative.

And so it might be a little bit painful and it might mean that we have to sort of look at some other programs where we might be able to achieve some savings.

But the reality is we have to make sure that we maintain continuity with food production.

If you can't get to the farm bill by this weekend, by the end of the year, do you think it's possible.

So just to be put a little bit finer point on it, the authorizations expire on September 30th, but the money doesn't run out until December 31st.

So we do have a little bit of a window in there in the in that last quarter of the calendar year where we might be able to move a farm bill.

It's going to be difficult.

I think there's a, there's it's possible and again, what we have to do is really work hard with our Senate counterparts as well.

And you know, fortunately Senator John Bozeman is the ranking member on the Senate side.

So that bodes well for us in terms of trying to cooperate and get this thing done before the end of the calendar year.

Because the last thing we want to do if we can avoid it is to punt this into a presidential campaign.

That's just not a topic of of conversation.

I think that makes for a good campaign fodder.

You know, back to the the shutdown, just your final thoughts.

We have a couple of minutes left.

I know publicly you've talked about, you know, happenings at the border and then you've also talked about inflation and your frustrations there.

What has to happen in your opinion to avoid a shutdown and any final thoughts you may have?

Well, I would love it if President Biden would come to the table and we could actually have a conversation about things like border security and things like inflation and interest rates and things like that that are impacting people every day and really hitting them where they live.

And and so far, this president has shown no interest at all in in engaging with the House representatives.

And quite frankly, you know, we didn't have this problem.

Even even President Obama would talk to our House leadership.

But President Biden refuses to.

And so, you know, look, I I think that's sort of one of the the occupational hazards that the resident of the White House has to face is that you're going to have to go and deal with legislators.

And so I don't think that's too much to ask.

And I think it would be a difference maker in moving forward.

All right.

Congressman Rick Crawford of the First Congressional District here in Arkansas, also a member of the House Agriculture Committee, will be working very hard through the weekend hoping that we can get this done to avoid a government shutdown.

Thank you so much for your thoughts and for joining us on Arkansas Week today.

You bet.

Thanks for having me.

Thanks so much.

And more of Arkansas week and more on this topic coming up after a short break.

Welcome back to continue our discussion on the impacts that a federal government shutdown would have On this date and its agriculture industry.

I am joined by Doctor Michael Paco, the state Economic Forecaster with the Arkansas Economic Development Institute and Mark Isabel who is Ag Heritage Farm Credit Services, Central Region of Arkansas Director and we sure appreciate both of you being here.

This is a a topic that is necessary to discuss and one that's on the minds of a lot of people.

I want to start with you, Michael Paco.

We've had other federal government shutdowns in recent years.

We're looking to avert one.

It's not looking likely at this point.

What kind of an impact would a shutdown have specifically on Arkansas in your opinion?

Oh, well, it certainly is looking like a shutdown is imminent.

I think federal agencies are all already implementing their plans, but it's nothing that they haven't encountered before.

There have been 21 government shutdowns in the past.

There are contingency plans for those workers who will be furloughed and those who are essential workers who have some role in protecting life and property.

They will continue to work even though they won't get paid.

But you know, the the United States Office of Personnel Management even has a directory or a volume of instructions on how to go through this kind of a procedure.

So really the only cost of the US economy is the time that those furloughed workers are not going to be providing the government services that they otherwise would have.

There used to be some uncertainty about whether they would get paid in the end, but Congress resolved that in 2019 after the last shutdown.

So there's now a guarantee that furloughed workers will be paid as soon as possible after the resolution.

So it's really just the inconvenience to citizens who will not be able to visit national parks or museums.

There will be some services that are unavailable and a lot of federal workers at home.

And that affects in Arkansas, about 21,000 federal workers.

That's about a 1.6% of nonfarm payroll employment.

But a lot more people are going to be affected indirectly if they have, say, research grants or contracts with government agencies that may have to go on hold.

You know, back in 2019, even some of my colleagues had to go on furlough because their research was funded by federal grants.

You know, I want to talk about also the unique time that we're in.

There are fears of a possible recession economically nationwide.

There's talk of it here in Arkansas, but this isn't necessarily what you're seeing.

Well, yes, since the last time that we spoke about this, I'm saying a much improved economic situation.

Well, most economists were expecting to see a true recession emerge sometime this year.

And all we've really seen is some slowdown in labor markets nationwide.

But I'm not seeing that in the data for Arkansas.

We're still adding jobs.

The unemployment rate is still extremely low and so we're very well poised to weather any further slowdowns that we might see at the national level.

Well, it begs the question, if we are in a vulnerable time, what is then a government shutdown look like in that situation?

Yeah.

The the government shutdown is not going to have any real immediate effects other than perhaps constraining some of the federal employees spending since they won't be getting paid as long as the furlough goes on, but they are guaranteed to be paid eventually.

So the economy should pretty much just go along as normal.

This is really all just become political theater and not a not a whole lot of impact.

Well Speaking of impact, I want to talk with you Mark is Bell, you know agriculture is the top industry here in Arkansas.

How would a shutdown affect your your industry.

Yeah absolutely.

Well as you mentioned I sit on the board of a heritage farm credit as a central director so but my day job want to do daytoday as a rice farmer.

So regardless of what had I'm wearing, the lens I'm looking through is how does this impact farmers?

Because that's what I experienced on a daytoday basis.

And as we look at a looming potential, almost certain shutdown because of the way the farm bill works and because of the way farmers have to engage with different government agencies like Farm Farm Service Agency and the National Resources Conservation Service, a lot of those organizations provide a lot of very needed, very important support to farmers across the United States and here in Arkansas.

And if we see those offices, those furloughed workers, great to hear that they're going to get paid in the end, that's great.

But them not being there on those days is going to be very meaningful to us.

So that's the shortterm implications.

But if we look further out at the longerterm implications of a shutdown, research is another thing that is incredibly important for agriculture.

And this isn't research that you can necessarily just close the book on and set to the side for a number of days or number of weeks.

This is research that may be happening in the field or in a laboratory.

And if researchers are shut out of taking care of those sorts of things, the implications of that could be generational.

You know, we could potentially see research that doesn't take place because of a government shutdown that has implications that go on for a long period of time.

You and your growers have to be particularly concerned.

Absolutely.

So you know we've got to our main concern is, you know, making sure we get this year's crop in which we're working on now, making sure we have a strong farm bill to support agriculture and rural communities and you know, people who who need the food support from that.

But you know at the same time as the upcoming farm bill, the previous farm bill expiring this Saturday midnight, we have the government shutting down at the same time.

So it's like a perfect storm of of potential concerns.

Well, let's talk about that Saturday again, the deadline for Congress to approve the new multiyear farm bill.

You and other Farm Credit officials met with congressional leaders back in.

Was it in July?

Correct.

And you brought some concerns to them.

You know, we had Congressman Crawford in the first segment.

What were the concerns that you brought?

Yeah, absolutely.

So, you know, Farm Credit has been around 106 years.

So it's it's been doing the work of making sure that we get funding and we get credit to rural America and to farmers for over a century.

And it does a fantastic job of doing that throughout the US What's important though for Farm Credit is to make sure that we have thriving rural communities.

What's good for rural communities is good for farm credit.

What's good for farm credit is good for rural communities.

And as we look at the Farm Bill, what we have to make sure of is that we have a robust system of support that make sure that farmers are able to make it through some of the down, downward cycles.

And though Michael mentioned that we're not necessarily in a recession more broadly.

We have definitely seen some very challenging times in agriculture here in Arkansas and and more broadly with regard to input cost price inflation which has been substantial over the last couple years and in more recent months you know diminishing prices for commodities.

And we have the challenge of not being able to pass those cost and those change those prices because it's a commodity market and we have to to take the price that we're given.

The farm Bill is an incredibly important tool for making sure that because of those cycles and those down economic times in agriculture that we can remain A viable industry so that we can continue to provide safe available food to the American public.

Well, what specifically would that look like to you in a Farm bill?

What specifically would you need to have happen?

And I didn't.

I'd be curious your thoughts on this as well.

Yeah, absolutely.

So again, wearing my farmer lens here, what the main thing that we grow on our farm is rice, but the the programs work for a number of commodities as well.

What we're looking for in this particular farm bill from my perspective is an increase in reference prices for some of the cost support structures that are built into the farm bill.

The current reference prices are based on over decades old information, right?

So 2 farm bills ago, these were updated based on the types of things that were happening in the industry for several years prior to that.

So at this point, we're basing these reference prices, which are what kicks in certain price supports on information and data that is, you know, over a decade old.

And as we all know, when we go to the grocery store, when we go anywhere, things are considerably different than they were ten years ago with regard to the prices of things.

That's true of farmers as well.

And so if we're able to not able to sell our goods at a price that has increased and yet we're purchasing all of our inputs and living our lives in an economy that has changed substantially, then there's there's a challenge in there.

So we're working to make sure we see those increases and we're grateful for the work that you know that those in our delegation are doing to try to make sure that the Farm Bill is, is a good tool for Arkansas farmers and farmers across the USI mean it seems a reasonable ask in theory.

In practice, what does it look like economically?

Yeah, the farm bills are very complex set of basically crop insurance is what is evolved into these days.

And so the reference prices need to be adjusted from time to time, hence the five year renewal.

But, you know, it's also important to recognize that the Farm bill is also about Nutrition Assistance.

The Supplemental New System Assistance Program, SNAP food stamps, that's become about 3/4 of the entire program and expected to be about 84% on the new farm bill if it goes through.

So, you know, that's another aspect of the importance of the Farm bill to our communities, not just in the farming communities but also among people who require Nutrition Assistance.

Well, it brings me to my next question.

If Congress does not pass a new farm bill, we'll start with you.

Consumers are impacted in, in terms of nutrition, yes, those programs would be impacted, not initially on the Nutrition Assistance program.

Some of the supplemental programs like WIC, women, fits and children might be affected in the way that it's delivered.

But yeah, the I guess the interesting thing is that a continuing resolution, if one was adopted would actually keep the Farm Bill going for a little while.

But if it's not renewed by the end of this year, December 31st, we revert back to the original program from 80 years ago, which included all sorts of price supports and subsidies and obligations of the government to purchase surplus crops and things like that, that really have not been a part of the Farm Bill for decades.

But so, so it there is that deadline at the end of this year.

I don't anticipate that happening.

But that'll be an additional motivation for legislators to actually do something about the situation.

Sure.

Because what does that look like for you if it's not past?

I mean, it's.

Yeah, well, I mean farmers are used to dealing with a lot of uncertainty, the weather being first and foremost, but having government policy also be a part of that uncertainty just adds another level of challenges and concerns.

And you know we found that to be concerning.

One thing I would mentioned about what Michael said though as far as the framing of the Farm bill overall not to push back too much, but as the farm bill as an insurance program.

There are insurance, crop insurance programs within the farm bill.

But I would say as a whole, you know it does serve to help mitigate some of the challenges.

But crop insurance itself is not the primary tool that we go to.

It's one of the tools.

And if you think of it as like the safety mechanisms in a car, I would say crop insurance might be like a seatbelt.

But these other price support programs are like your airbag, right.

So we're, we're driving down a much more precarious Rd.

than we were 15 years ago.

And yet if we don't update our safety programs, you know, we maybe we survive.

But we're going to take a lot of damage through that process.

All right, Michael Paco, thank you so much.

The state's economist along with Mark Isabel, a farmer and also serving on the Ag Heritage Farm Credit Services Board of Directors.

We appreciate both of you being here.

We appreciate your perspective.

Thank you so much.

And that closes out our program today for Arkansas week.

We thank you so much for being here.

I'm Dawn.

Scott.

We'll see you next time.

Support for Arkansas Week provided by the Arkansas Democrat Gazette, The Arkansas Times and KUARFM 89.