Farmers alerted on New Farm Bill problems

Farmers Have Big Concerns About New Farm Bill
By American Farm Bureau Federation


Hearings for the new farm bill start in just a few weeks. American Farm Bureau Farm Policy Specialist Mary Kay Thatcher says a big debate will be about the farm safety net. AFBF’s Johnna Miller reports.

Miller: When it comes to a new farm bill, farmers say three different safety net programs are not better than one.

Thatcher: We have great concerns about the idea that there are really three separate types of programs. There’s a shallow loss program, there’s a higher target price program and then there’s STAX (Stacked Income Protection Plan) for cotton. I just don’t think there’s an economist in the country that is good enough at this that they can make sure that we’re getting equity between three types of programs and if we don’t then we’ll have farmers out there producing for the government again and the signals that the government sends rather than producing for the marketplace.

Miller: One problem is that the target prices for the farm commodity safety net are set too high. That’s a big deal, because when commodity prices fall below the assigned level the government steps in with financial help.

Thatcher: If you set a target price too high then you send a signal to a farmer that the safety net is so great that they ought to rush to producing that commodity instead of stay with what market signals say. And that’s a problem because you really don’t want the government setting those prices. We believe the target prices were set too high. For the most part if they’d been in existence the last 10 years they would’ve triggered six or seven or sometimes nine years out of 10. That’s just way too high to have government interference.

Miller: That would’ve triggered the government to pay out more money. Thatcher says a one-size-fits-all program would work better.

Thatcher: We also believe that if they would target toward some kind of a deep revenue loss, rather than a shallow loss, that makes a lot more sense and it’s a program that can be provided not just to corn, wheat, soybeans, cotton and rice, but also to producers of fruits and vegetables. So it sort of levels the playing field amongst different products.

Miller: We have two extra actualities with AFBF Farm Policy Specialist Mary Kay Thatcher. In the first extra actuality she talks about the proposed ‘shallow loss’ program. The cut runs 27 seconds, in 3-2-1.

Thatcher: The ‘shallow loss’ program is something that’s very popular but what that is for the government to step in above where a farmer buys crop insurance. So if a farmer buys crop insurance up to 85 percent of his average revenue, the ‘shallow loss’ program would kick in at 75, go on up to 87 percent. We think that instead the government ought to be there for deep, catastrophic losses, when there’s really some huge issues that farmers can’t deal with on their own, rather than frequent shallow losses.

Miller: In the second extra actuality Thatcher talks more about the downside of having three different safety net programs. The cut runs 32 seconds, in 3-2-1.

Thatcher: The STAX program is problematic in that it’s just different than everything else and so you’ve got a lot of confusion for farmers. Conceivably you could have a farmer that would put some of his acreage under a target price program, some under a cotton STAX program and some under a ‘shallow loss’ program and beyond that you also have a lot of confusion for the USDA that’s trying to administer this. But our major concern is when you have three programs vying against each other, you’re going to have one of those programs that provides better benefits to farmers and will drive farmers’ decision-making toward whatever the government program says rather than the market.

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