WASHINGTON, D.C. — A U.S. House subcommittee on April 14 held the last in a series of hearings to evaluate funding needs for the federal Commodity Futures Trading Commission (CFTC).

The CFTC plays an important role in agriculture as the government regulator of futures markets. Though its regulatory work mainly occurs behind-the-scenes of agricultural commodities markets, the CFTC also takes actions receiving closer attention from the farm community – such as CFTC activity around the bankruptcy of futures broker MF Global, Inc., in 2011.

More recently, the CFTC filed a complaint this month against Kraft for alleged wheat price manipulation through futures trading.

David Scott (D-Ga.), ranking member of the House Agriculture Subcommittee on Commodity Exchanges, Energy and Credit, said funding for the CFTC is imperative. "Let us not forget, the CFTC’s primary mission is to foster open, transparent, competitive and financially sound markets, to avoid systemic risk and to protect the market users and their funds, consumers and the public from fraud, manipulation, and abusive practices related to derivatives," he said.

The Dodd-Frank Act, passed in 2011 in the wake of the housing and financial market crisis, expanded the scope of CFTC oversight to the swaps market, the trading of derivatives involving cash flows from various financial instruments. The $400 billion swaps market is about 12 times the size of the total futures market for all U.S. commodities, according to the CFTC.

House Republicans acknowledge the necessity of the CFTC’s oversight, but expressed concern the agency should not create burdensome regulation for farms and agribusinesses using the commodities markets to manage production risk.

"Our overarching goal is to ensure that derivatives markets can meet the needs of hedgers and do not become overly or needlessly regulated to the detriment of all market participants," said Rep. Michael Conaway (R-Texas). "Our economy, both here and around the world, depends on these robust financial markets to allow participants to effectively manage risk."

Farm state legislators watch CFTC closely for regulatory proposals that could inhibit the ability of farms and agribusinesses to use hedging tools common to risk protection. The pending CFTC action over wheat trading for Kraft’s flour mill in Toledo, Ohio, is seen as an important test of the extent of expanded CFTC oversight under Dodd-Frank. Bipartisan legislation funding the CFTC is likely to be introduced in Congress later this session.