DuPont Investments Hindered as Congress Delays Farm Bill
DuPont Co. (DD)’s long-term investment decisions are being hindered as Congress puts off for a year adopting legislation to set U.S. agricultural policy, said Paul Schickler, the president of the company’s seed unit.
“We’re highly concerned about the farm bill because you can’t operate an industry that is so long-term focused on a month-to-month basis with no idea of what the next year or two might look like,” Schickler, who heads DuPont Pioneer seed, said today at a Bloomberg Government breakfast in Washington. “This is creating real uncertainty.”
Farm policies that were adopted in 2008, and were to end last year, have been extended until Sept. 30. Neither the House nor Senate agriculture committees have announced dates to draft new legislation. Last week Representative Frank Lucas, the Oklahoma Republican who leads the House farm panel, said disputes over the federal budget are slowing work on any bill.
While farmers are uncertain of the federal support they may get for corn, soybeans, cotton and other crops, businesses including DuPont, the world’s second-biggest seed-seller after Monsanto Co. (MON), need to know how much the U.S. will back research into issues such as plant genetics and pest control that play a role in decisions about products that take decades to develop, he said.
“It’s very difficult to be anticipating how to plan for the future, whether it’s where to invest, how to invest, what money to invest, or what hiring practices to follow,” he said.
U.S. agricultural law sets the rules for food aid to poor families, boosting sales by grocers including Kroger Co. (KR), as well as crop subsidies to farmers that help lower raw-materials costs for buyers including Archer-Daniels-Midland Co. (ADM) They are typically passed every five years. Proposals approved last year by the U.S. Senate and the House Agriculture Committee stalled amid disputes over cuts to the food-stamp program and subsidies to dairy farmers.
Farmers will start planting corn, the most-valuable U.S. crop, later this month, completing the work by mid-May in most areas so that the crop can enter its reproductive stage before the heat sears the cropland. Soybeans is the second-biggest crop. Futures sold in Chicago for both commodities soared to records last year as the drought devastated harvests in growing states including Indiana and Illinois.
“How does a grower plan what to do this year or next year when they don’t know what the farm bill is?” Schickler said.
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