November 2, 2011
www.gfb.org
Vol. 29 No. 44
FARM BUREAU PROPOSES SAFETY NET PROGRAM FOR 2012 FARM BILL Stating that government agricultural support programs traditionally were intended to provide a safety net to help farmers deal with large systemic risk issues rather than smaller fluctuations in income that can result from “average weather and market events, the American Farm Bureau Federation sent a proposal to Congress to establish a “systemic risk reduction program” (SRRP). The proposal was offered as an alternative to “shallow loss” proposals that would provide government support after a region, or in some cases an individual farmer, experiences an initial loss of as little as 5 to 10 percent of expected revenue. Shallow-loss programs were structured to support “only a relatively small portion of a producer’s potential loss, should a major problem occur,” according to AFBF President Bob Stallman. “Our systemic risk reduction program would help protect America’s farmers from catastrophic type losses that truly would endanger the economic viability and the core of their farms,” Stallman said. “The business of farming has always been risky and it always will be, but we firmly believe that farmers possess the business skills and have tools at their disposal to manage the shallow ups and downs associated with typical weather and market events. That is especially true as our nation wrestles with deficit and debt issues. Helping protect farmers from large systemic type losses, however, is entirely a different situation that warrants government support and is in the best interest of our nation.” The SRRP is similar to the current ACRE approach but would result in a restructuring of government support. This approach to the safety net gives farmers more down-side protection and let them deal with the upside of the risk profile on their own, according to Stallman. AFBF’s proposed program would provide farmers “area-based coverage” that would be similar but not identical to core-type policies offered today at a minimal charge to the farmer. Countylevel yield data would be used for the area trigger, but where data is limited, a crop reporting district or other geographical region would be used. One of the major differences between current core-type policies and the SRRP is that the price used to determine trigger levels would be based on a three-year average or a five-year Olympic average, depending on budget considerations. Proposed systemic risk reduction program coverage levels would likely be in the 70-80 percent range, with the exact level of coverage determined by budgetary guidelines. A detailed description of the SRRP can be seen online at http://bit.ly/pGXGZT.