What is in this article?:
- Certain aspects of new farm bill can already be assumed
- Should be a choice
- Biggest change in recent years
• Regardless of when the farm bill is finished, there will be a big shift from commodity program tools for managing risks to insurance tools.
• Insurance tools do not have a floor. It’s not a huge problem, but it’s different from what producers and lenders are accustomed to. There will be a huge role for educators.
Biggest change in recent years
The biggest farm policy change in recent years, he says, has been the Renewable Fuels Standard (RFS), and it’s not even in the farm bill. “If it didn’t exist, the dynamics of this debate would be changed. It’s genius, in some respect, that the corn industry got support that doesn’t cost the budget anything,” says Coble.
Farm bill discussions are centering only on so-called “shallow-loss” programs as a substitute for the direct payment, he says. A decade ago, everyone was concerned about the WTO, but now no one cares because we’re spending less, he adds.
“The cynical side of me says we can’t defend direct payments that are not risk-related to the general public. So we’ll try to develop a program that pays every other year rather than every year. The idea was to find a way to pay out the direct payments, with a reduction, two and a half times over a five-year farm bill. It’ll work out something like that.
“People should recognize that with most of these shallow-loss programs, the best guess is that you’ll get a payment two years out of five, but it could be one year out of five over the course of the farm bill,” he says.
The process involves layering programs on top of crop insurance, says Coble.
“We’ve got shallow-loss programs that are FSA-delivered and shallow-loss programs that are crop insurance-delivered. We used to have a situation where commodity programs were price-triggered, commodity programs were yield-triggered, and we’d add on disaster payments. We kept those separate. Now, we’ve got revenue programs that look almost identical except one is delivered by FSA and one is delivered by the crop insurance industry. One is free while one has a rate, though it may be highly subsidized.”
Crop insurance programs currently don’t have payment limitations, he says, and FSA programs do have payment limitations, along with conservation compliance. That will bear watching as the debate continues, says Coble.
Southern participation in crop insurance traditionally has been low, he says. “It has been somewhat of a teachable moment in our state in the last couple of years. Producers in Mississippi have started paying attention to this program. A decade ago, there was a lot of misinformation and ambivalence, but now there’s a renewed interest.”
Producers need to remember that there is a range and premium associated with crop insurance, says Coble.
“They took the program from the Midwest, brought it to the South, and the parameters weren’t right. They’ve spent a lot of time in the past several years trying to fix some of these things, and I think they’ve gotten better, but how much better is still a question,” he says.
Coble agrees with Outlaw that educators will have a key role in a new farm bill.
“We’ve talked to people about programs and decision aids — we did it with ACRE and SURE. Those programs were just too complicated to understand, and some of the programs in these farm bill proposals are too complicated.
“Most of these shallow-loss programs are county-triggered, and farmers don’t have a good grasp of the probability of the county triggering at the time they need to trigger and at the amount they need to trigger. We need to start talking to people about the fundamentals of risk.”