Historically, farmers have relied on ad hoc disaster assistance to offset circumstances, like natural disasters. Rep Rick Crawford-R Ark., sees this a lot with heavy rain in his state damaging crops. He is heading a bill, HR 6167, the Farm Risk Abatement and Mitigation Election Act (FRAME).
The FRAME Act would establish a tax-deferred farm savings account, similar to an HAS or an IRA. Farmers would be able to contribute up to $50,000 a year, and the account would have a cap of $200,000.
Farmers would receive a benefit in a tax deduction by contributing to the account.
“[It would] make the difference in making payments and staying in business or going out of business with the constraints that are on farmers now,” said Crawford to AgriTalk’s Mike Adams on Tuesday’s show.
A USDA-recognized farmer would have to open an account with the Farm Service Agency, and the account would be administered by any bank. Farmers would be in charge of managing their own contributions.
"It's another tool in the toolbox for risk management," said Crawford.
According to Crawford, the funds could be used for both small- and large-scale disasters. He says funds can sometimes take a while to get to the farmer, and it would be an instant relief.
“You get to determine what is a disaster on your farm,” said Crawford.
Funds could be used for a widespread disaster such as drought or flooding, or for a county or localized disaster, such as straight-line winds or a tornado.
Farmers are in control.
Bankers are in favor of this plan because it can help collateralize an operation. The only safeguard on the program is only qualified, eligible farmers can participate.
As for reaction, Crawford has received support in Arkansas, saying it has a good chance to move during the lame duck session. As for farmers, they have said it’s a good idea from the get-go.
Listen to Crawford on AgriTalk above.