Ag Blogs -
Tuesday, 15 November 2011 19:08
Imagine an insurance policy that wouldn't cost you anything yet would insure that your income remains stable and at its current level, regardless of economic conditions or market forces.
That is exactly what Congress is working to create for corn and soybean farmers as part of a new subsidy plan that would replace direct farm payments with a "shallow loss" payment that would protect against weather-related losses or market movements.
Farm subsidies, which are part of the farm bill, likely will face substantial changes this year. The focus in Washington, D.C., is to cut spending, and the farm bill is a big target.
Few would support a plan that completely eliminates help to stabilize the farm economy, food prices and the individual farmer. Crop insurance to protect farmers against a catastrophic loss because of drought, flooding, hail or wind, is an essential tool to keep the bottom from falling out of America's food supply.
Protecting the family farm, however, is not what this shallow loss program would do. Instead, this plan's aim seems to be to keep farm incomes at their current record high levels, especially for the growers of water-hungry crops of soybeans and corn.
Such a program could encourage farm operators to plant more corn or soybeans than normal in areas where they don't traditionally thrive, all while recognizing no risk to their incomes. In the end, such a practice could end up being abused, costing taxpayers more than the basic protections and direct payments in the current subsidies.
Overall, the shallow loss program likely would push more operators toward the guaranteed incomes offered by corn and soybeans. It removes the market incentives, and risks, from farming and unnecessarily provides guaranteed income levels for a select group of people.
While direct payments have far outlived their usefulness, a new government-financed insurance program to keep incomes at peak levels isn't the best way to save money.
Jason Probst is the News Editor at The Hutchinson News. Contact him at