When the 2012 Farm Bill is written Ohio State University Ag Economist Carl Zulauf believes change is a certainty. That's not just because of the current budget climate, but also because agriculture itself is changing, and Zulauf says there's a growing belief that farm programs need to be more responsive to modern U.S. agriculture.
To meet the current needs of agriculture while still developing farm policy that is in the long-term interest of the ag sector Zulauf says the next farm bill should include four key elements. It should be oriented to the market, transparent, accountable to taxpayers and simple. He says market orientation is the most important of these elements. According to Zulauf the 2008 Farm Bill took a step in that direction with the addition of the Average Crop Revenue Election. He says it was the first step toward a farm safety net that meets the contemporary needs of U.S. agriculture.
"What ACRE tries to recognize is that we are in a much more dynamic environment today than we have been historically," Zulauf said. "We have new sources of demand, be they biofuels, be they international demands, and therefore some notion of orientation to the market is more reflective to 21st Century agriculture. ACRE proposes to use that market orientation to help in setting the parameters of the program and therefore making the program market driven."
While ACRE was a new program and has some kinks to work out, Zulauf says it added several pieces to the farm safety net that better meet the needs of the ag sector. In addition to being market oriented he says the program strives to provide farmers with a multiple-year risk management tool that's based on revenue instead of price.
"Making it focus on revenue makes it more contemporary with the needs of risk management in farmers," Zulauf said. "Doing multiple years addresses a hole that exists in the current farm safety net because crop insurance is a one-year risk management program."
The old farm program system, according to Zulauf just doesn't work for agriculture today.
"The programs were very effective when they were conceived and when they were implemented," Zulauf said. "But I think the structure of agriculture has changed sufficiently in the last 25 years that the traditional farm support program have lost their relevancy of helping agriculture deal with risk management."
With all of this in mind, Zulauf says it's in the best interest of American agriculture to think about the changes taking place and how to enhance programs to make them more responsive to the needs of 21st century agriculture.
Zulauf says the bottom line is that agriculture must get engaged to choose its own destiny and come away with new farm policy that works, including an improved ACRE program.