"Amidst the Super Committee's work in Congress to create a deficit reduction plan and try to get federal spending under control, many organizations have proposed alternatives to the current Title I farm financial safety net programs," says Jon Scholl, president of the American Farmland Trust (AFT). "The result has been an alphabet soup of 10 proposals. The details of any one program can create confusion even for those persons who are most versed in farm policy, so we commissioned a side-by-side analysis to help inform people about the farm bill debate."
To help people understand the proposals, AFT has had noted Ohio State University ag economist Dr. Carl Zulauf to analyze the features of these leading safety net proposals.
Here are 10 farm safety net proposals compared side-by-side
"Since the 1930s, the federal government has been involved in farm, food and conservation policy," notes Scholl. "With today's federal budget conditions, it's important to consider what is the right role for the government to play in helping farmers manage risk, and what characteristics set the standard for good public policy."
Zulauf's assessment found some positives including:
90% of the proposals would require the farms to experience a loss in order to receive government assistance, making the farm financial safety net a risk management partnership between farms and the public.
90% of the proposals address both an existing hole in today's crop insurance program: multiple-year revenue declines that are not the fault of the farm, and, the current imbalance in the farm safety net, shallow revenue losses. These nine proposals would in effect make the risk management safety net more equitable across crops and regions.
Eight of the programs would end fixed-prices or a revenue-benchmark, removing the incentive to adjust (production) to risk events.
Similarly, there are concerns raised in the assessment:
The proper economic justification for a farm safety net is to address systemic risks that occur across many farms, not losses unique to an individual farm or a small number of farms.
The majority of the 10 proposals would address risk at the farm level, if for no other reason than such a program delivers the most risk assistance to individual farms.
Providing more assistance to individual farms than their share of systemic risk leads to inefficient use of public and private resources by encouraging more production in areas with the greatest risk, creating detrimental environmental consequences since risky production areas are often environmentally-sensitive areas, encouraging the use of more risky production practices, and, increasing the cost of the program to the public.
"We must remember as various farm policies are being debated that the decisions that are made on the farm safety net have numerous implications," says Scholl. "Not only do these programs have the ability to support farms from risks they can't control, they can influence farmers' economic and environmental behavior. At the end of the debate, we must end up with a farm financial safety net that meets the needs of modern agriculture, is accountable to the public and eliminates any detrimental effects."
You can view a copy of "Assessment and Comparison of Farm Safety Net Proposals" by Carl Zulauf at www.farmland.org.
For farm management information and analysis, go to ISU's Ag Decision Maker site www.extension.iastate.edu/agdm and ISU Extension farm management specialist Steve Johnson's site www.extension.iastate.edu/polk/farmmanagement.htm.