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Alphabet soup: New farm legislation will offer an expanded roster of programs

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• “Everyone pretty much accepts that direct payments are gone," says Keith Coble, professor of agricultural economics at Mississippi State University. "You need to discuss this with your banker. Bankers like direct payments — they’re easy to plug into their bottom line. But if this legislation passes, everyone — producers, bankers, crop insurance agents, marketing personnel — will have to become more sophisticated about the way they utilize these new financial products."

No matter which farm bill eventually emerges — House, Senate, or some combination thereof — producers will be coping with an alphabet soup of new government program acronyms, and more choices than ever before for risk management.

And, says Keith Coble, professor of agricultural economics at Mississippi State University, “We’re going to have to educate some folks in the banking industry and financial sector on what these programs will and won’t do.”

For example, he said at the Mississippi Farm Bureau Federation and Mississippi Soybean Association joint soybean advisory committee meeting, “Everyone pretty much accepts that direct payments are gone. You need to discuss this with your banker. Bankers like direct payments — they’re easy to plug into their bottom line.

“But if this legislation passes, everyone — producers, bankers, crop insurance agents, marketing personnel — will have to become more sophisticated about the way they utilize these new financial products. And there’s new terminology we’ve got to learn: deep loss programs, shallow loss programs, and layered loss programs.”

While there are significant differences in the House and Senate bills (the Mississippi Farm Bureau is favoring the House version), Coble notes that both are centered on crop insurance and other risk management tools as opposed to direct payments. The Senate bill uses revenue-triggered shallow loss programs, he says, while the House bill has revenue-triggered programs and price-triggered programs.

“With either bill, you’re going to have some interesting choices about what you’re going to do in terms of participation in these programs. It’s not going to be the old way, where you had price protection in this program, yield protection in that program.

“In the Senate bill, for example, you potentially could be stacking three programs together on the same acre of soybeans. You’re really going to have to get educated so you can go and talk to your banker about stacking programs and figuring out how much risk you’re incurring.”

With all of the shallow loss programs, Coble says, “Don’t let your landlord or your banker think these programs are going to pay every year. Our analyses indicate they will pay about two years out of five. You’ve got to explain this to them, and you’ve got decide whether these programs will pay when you need them to pay.”

In both the House and Senate bills, he says, not much has been done to change crop insurance. “The national crop insurance people have said, ‘We just want to be left alone,’ and that’s pretty much what has happened. Five years ago, if you mentioned crop insurance everybody got angry and frustrated— but we’ve been seeing some positive discussions on this.”

hbrandon@farmpress.com

 

Discuss this Blog Entry 1

PowerOfChoice (not verified)
on Aug 11, 2012

NO EXTENSIONS for items except for our soldier armed forces. Everything else as it comes up for renewal needs to be recycled, separated out, and the trash eliminated. The Farm Bill should not contain items for welfare, energy, broadband, housing, etc. and everything should stand on its own in any future bills to better control costs and eliminate the special interests and self-serving items being added. Farmers should not have their needs controlled by Food Stamps or other items and battles regarding help for a separate entity.

Both Senate and Congressional Farm Bills need to have trash removed. The Senate Bill in this section: SEC. 12211. DEFINITION OF RURAL AREA FOR PURPOSES OF THE HOUSING ACT OF 1949 would increase the pool of recipients and also increased rural community population requirement to 35,000. This population level would be a small City not a true rural community. Also, changing the Census date to 2020 insures those who have already received fair share of benefits over past years and now self-sufficient to continue receiving such benefits. This means less money available to true rural area communities, because others would continue receiving more after they are now self-sufficient and no longer rural. The purpose of rural programs is to help very small struggling communities grow and become self-sufficient, not to become a welfare system for self-sufficient communities who have already received past benefits wanting more.

It is Federal Government position to which our legislators ran for and were elected. Participation on the “Federal” level means you are to review and enact legislation based on whether it is best for our OVERALL country and should not matter whether it is “rural” or “urban”. Self-serving considerations as to whether you are from a rural area or urban area is biased and why our country has problems. If legislators cannot stop being biased or self-serving and start making the hard decisions, then they need to resign and let someone who is willing to step up to the plate take their place and make the hard decisions. Our country can no longer afford anything less!!!

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