Good morning and welcome to the Commodity Futures Trading Commission (CFTC). Thank you to Chairman Behnam for organizing today’s Agricultural Advisory Committee (AAC) meeting, as well as the voluntary carbon markets discussion that will occur later this afternoon.

July for my family is a time of summer break, weekends by the pool and fireworks commemorating our nation’s independence. It is a time of celebration and relaxation, occasionally disrupted by an afternoon thunderstorm or the inescapable yardwork that comes with the season. In my household, we have just finished baseball and softball seasons and we have a short reprieve from schedules packed with school activities and sports.

However, all I have to do is pick up the phone and call home to the farm in South Dakota to see my summertime bubble burst, and I am quickly reminded that the month of July was not always so fun and relaxing when I was growing up.

During one of my recent calls home, I asked my Dad how things are going. In a conversation that felt like déjà vu, Dad said they are in the middle of a drought and desperately in need of rain. He was worried about shortened growth cycles and crops drying out from the heat and wind before they reach maturity, threatening lower yields as the best-case scenario, and leaving nothing to harvest as the worst.

I gave him one of my typical responses to our conversation, “Well Dad, it’s either a drought or a flood, right?” And usually my Dad would respond with more grumbling about his fields and crops and that maybe next year will be better. However, he said something a little different this time that really surprised me – “No, it’s bad this year, really bad.”

His conclusion was not based on science or data, just on what he knows from farming for over 60 years. After so many years working in Washington, I rarely just take what someone tells me as fact without doing more research, so I found myself on the National Oceanic and Atmospheric Administration’s drought monitor website to see just how this drought compares to previous years when the summer days were hot and dry and rain was never in the forecast.

According to the website, January through May of 2023 were recorded as the driest in the state of South Dakota in 129 years.[1] So, based on my quick research, Dad was right, it is really bad.

But the impact of dry conditions goes far beyond crop health and yields. As we have heard in previous AAC meetings, the effects are felt up and down the supply chain, with low water levels complicating barge traffic and the movement of grains to various ports for exporting, and decreasing available grazing land for livestock placing higher demands on feedstock like corn. The overall agriculture economy feels these impacts, and we see the effects on the broader economy.

The derivatives markets we regulate at the CFTC are critical during times of economic hardship, and our job as regulators is to ensure those markets function well in their role of providing sound price discovery and hedging tools. We cannot do that job without understanding what is happening in the fields, pastures and waterways. The updates and information offered by the experts before us today will help us fulfill our responsibility.

Again, thank you to the Chairman, the panelists, participants, committee members and all of the CFTC staff for your hard work in organizing today’s meeting.

[1] National Oceanic and Atmospheric Administration, National Integrated Drought Information System (NIDIS), South Dakota, available at https://www.drought.gov/states/south-dakota