AFBF: Best to Enact New Farm Bill This Year

January 10, 2012 12:16 AM
 

American Farm Bureau Federation (AFBF) farm policy specialist Mary Kay Thatcher, speaking at the group's annual meeting, said farmers are better off if members of Congress can agree on a new farm bill this year. However, given the discourse in Washington, D.C., she says its unlikely to happen.

"There is no upside to that," Thatcher said. "There will be even more budget cuts if that happens. There’s every reason to push it through this year if we can."

Thatcher outlined the political situation surrounding the farm bill, including growing support in Congress for limiting eligibility by capping farmers’ income and increasing use of food stamps and other nutrition programs as the U.S. economy remains sluggish. "The economy will be a tremendous issue going forward," she said, "and one of the reasons it will be difficult to finish a farm bill in 2012."

Nutrition programs already account for about $700 billion, or 76%, of the farm bill’s total $911 billion in spending over 10 years. In addition, the growing cost of crop insurance premium subsidies, which grew from $4.7 billion in 2010 to $7 billion in 2011, could make them more of a target for cuts.

Thatcher also provided an analysis of how other farm groups’ "shallow-loss" proposals could leave a lot of farmers in dire straits in years of catastrophic farm revenue losses. Most of those proposals would provide support more often but only cover 5 percent to 10 percent of a farmer’s losses.

AFBF economist John Anderson provided an explanation of Farm Bureau’s Systemic Risk Reduction Program farm bill proposal, which is designed to protect farmers from catastrophic revenue losses. Proposed SRRP coverage levels would be in the 70 percent to 80 percent range. It would be administered by the Agriculture Department’s Risk Management Agency and operate as a core program with farmers buying crop insurance as "wrap-around" revenue risk protection.

One of the most attractive features of the SRRP proposal, according to Anderson, is the impact it would have on lowering farmers’ crop insurance premiums. "As a program that’s integrated with crop insurance, crop insurance premiums could be re-rated to account for the fact that much of the risk is covered elsewhere," he explained. "That would lower premiums and make buy-up coverage more affordable."


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