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Animal Feed Safety
on April 30, 2012

US farm groups discuss commodity, risk management programs

Crop insurance, marketing loan program viable tools

A group of eight prominent agricultural associations has voiced its support for the U.S. Senate’s approach to the 2012 Farm Bill, and raised several issues related to commodity and risk management programs, in a letter to the Senate Agriculture Committee.

Co-signed by the American Farm Bureau Federation, American Soybean Association, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Sunflower Association, U.S. Canola Association and USA Dry Pea & Lentil Council, the letter commended the committee for adhering to its original proposal of $23 billion in deficit reduction. Additionally, the groups applauded the committee’s decision not to restructure the federal crop insurance program or to reduce its funding for deficit reduction purposes.

“Even with the clear and real need to reduce our federal deficit, it remains in the best interest of our nation to help ensure a basic level of risk management for farmers and our food supply,” said American Farm Bureau Federation President Bob Stallman. “Farming is a risky business. There is no doubt about that, and crop insurance is a key principle in the goal to provide farmers a dependable safety net.”

In response to concerns from other commodity groups about a revenue-based approach, the groups advocate making changes in the crop insurance program to enhance its viability as a risk management tool, while maintaining the effectiveness of the existing program for other commodities. The groups do not, however, support program alternatives that tie current-year production to fixed price supports, which can distort planting decisions and production between commodities when market prices decline.

In the letter, the groups also advanced their concept for a new program to complement the risk protection provided under crop insurance. “Our organizations support an approach that partially compensates for current-year revenue losses on a crop-specific basis,” said the groups. “We believe this approach would have an insignificant impact on planting decisions because of the percentage of risk covered. Also, revenue benchmarks would be adjusted annually to reflect recent average commodity prices, and certification of revenue loss would be required.”

Finally, the groups advocated the continuation of the marketing loan program, urging the committee to oppose any changes in current law regarding payment limitations or eligibility for farm programs based on adjusted gross income.

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