SPEECHES & TESTIMONY

Statement of Commissioner Rostin Behnam before the Agricultural Advisory Committee Meeting

April 5, 2018

Good morning and welcome to the first CFTC Agricultural Advisory Committee (AAC) meeting of 2018.  I am pleased to sponsor this Committee, and thrilled to be able to host this meeting in Kansas.  In addition to being home to a CFTC Regional Office, Kansas is home to America’s heartland, where many of our nation’s farmers and ranchers proudly produce the food and fiber that feeds our world’s growing population.

Before we move into the substance of today’s meeting, I want to thank Commissioner Quintenz and Chairman Giancarlo for being here this morning and for their contributions to the discussion. 
 
I want to thank each of the panelists.  We have gathered a distinguished group of speakers, and their willingness to participate is greatly appreciated and critical to today’s discussion.
 
I would also like to thank Christa Lachenmayr.  As a member of the CFTC’s Division of Market Oversight, Christa’s hard work, dedication, and knowledge of agricultural markets have proven, for many years, to be an invaluable resource for the CFTC, market participants, and stakeholders.  Christa played an integral role in setting today’s advisory agenda, and her skills will certainly be on display throughout the morning.

Finally, I want to thank Charlie Thornton, CFTC’s Director of Legislative Affairs and this Committee's Designated Federal Officer (DFO).  Charlie and I worked together as staff on the Senate Agriculture Committee for several years.  In selecting Charlie as the Committee’s DFO, I considered his knowledge of agricultural policy and our strong working relationship.  As sponsor of the AAC, it’s important that I engage thoughtfully with the Committee’s members and outside stakeholders.  My goal is to lead discussions that will drive better policy and ultimately strong, transparent, and safe derivatives markets.  Charlie certainly will play a leading role in helping me—and all of us—to reach that goal.

In November, 2017, shortly after being sworn in as Commissioner, I announced a listening tour for the first year of my term.  Since then, I have been fortunate to visit many businesses across the country, including several here in Kansas City.  Throughout my visits, I’ve been able to hear directly from members of industry, market participants, end-users, and the public. And, I’ve shared some of my own views.  The meetings and conversations have allowed me to inform and formulate goals and ideals for my term that are grounded in real-world concerns and challenges.  Today’s panels reflect some of the more pressing concerns brought to my attention.

Today we will dive into two timely topic areas: crop insurance and agricultural block trading.  First, crop insurance is a critical risk management tool for growers; its importance cannot be understated.  Having worked on the 2014 Farm Bill, I intimately understand the important role crop insurance plays in a producer’s risk management tool box.  However, the fundamental role futures markets play to crop insurance is often overlooked.  I am hopeful this morning’s discussion will educate and inform the Commission regarding the intersection of the two, and further the CFTC’s active engagement with registrants, market participants, the USDA, and agricultural stakeholders to ensure confidence in the crop insurance program.

Later this morning, we will discuss price discovery and the recent implementation of block trading in agricultural futures contracts.   I am looking forward to hearing from both the panelists and the Committee membership on this important issue.  Price discovery and liquidity are integral to well-functioning futures markets, and the CFTC must ensure that market structure does not adversely affect either.

Finally, we are very fortunate to have staff from the Farm Credit Administration (FCA) in attendance to share their insights on the state of farm credit, and the role risk management plays in a producer’s ability to borrow capital.  Farmers and ranchers place everything on the line at the beginning of the season, often needing to borrow significant capital to purchase machinery, seed, fertilizer, crop protection materials, and feed.  That said, a well-hedged producer is a stronger borrower, and hopefully this will be the first of many discussions between the CFTC, FCA, and stakeholders to better educate borrowers and creditors about the futures market and the role it plays in risk management.

The agricultural economy has faced stiff headwinds for many years.  Persistently low commodity prices, extreme weather events resulting from climate change, and trade policy are a few of the significant hurdles that make production agriculture more challenging every year.  The CFTC has historically played a key role in helping producers discover prices and manage risk.  As the Congress considers the 2018 Farm Bill, I am committed to ensuring that the CFTC plays a leading role in ensuring that derivatives markets remain a desirable, cost-effective, and transparent risk management tool for all agricultural producers, including our new and beginning farmers. A healthy farm economy is a big part of a strong and vibrant rural economy, which is integral to our nation’s prosperity.

This morning’s AAC meeting, and the first of its kind Ag Conference hosted by Kansas State University are steps to fulfill that commitment, and I look forward to the many important discussions today and tomorrow.