Editor’s note: Representatives of many farm and ag lending organizations testified on risk management July 25 before the Senate Agriculture Committee. These are excerpts from prepared testimonies. Full prepared tatements to the committee are available at http://bit.ly/2uJl5WC.
National Corn Growers Association
Bruce Rohwer, Paullina, Iowa
Corn farmers seem very satisfied with the overall performance of federal crop insurance. However, concerns have been raised over the following provisions:
- Price discounts are sometimes difficult to account for in insurance. For example, crop damage due to aflatoxins can result in difficulties in determining indemnity payments. More advanced and consistent testing procedures in some states have helped to mitigate this problem.
- Prevented planting payments and related provisions seem to cause concerns in some areas, particularly in areas where flooding is common.
- Producers in areas that are frequently struck by very low yields have expressed concerns with the approved yield-setting mechanism. The yield exclusion provision and higher t-yields implemented in past farm bills may have eliminated some of these concerns.
As previously stated, the marked increases in the corn industry’s productivity have been achieved in large part by farmers’ investments in new technologies and more modern production practices. NCGA believes that for the corn farmer who faces a high level of financial and production risks every year, these investments were made possible by sound risk management tools. …
As farm income has declined for several years now, the financial positon of farms has deteriorated. However, few farms have faced the need to restructure by liquidating assets or have faced bankruptcy, although the incidence of farm bankruptcy has increased in recent years. Much of this can be attributed to crop insurance payments, particularly those occurring in 2012, and recent ARC-CO payments. Without these payments, the financial positon of many corn farmers would be more seriously challenged.
American Soybean Association
Kevin Scott, Valley Springs, S.D.
ASA believes that Title 1 programs have worked as intended, and supports reauthorizing ARC (Agriculture Risk Coverage) and PLC (Price Loss Coverage) as choices on a farm-by-farm and crop-by-crop basis. We also support offering an option to reallocate crop acreage bases or to update bases to reflect recent planting history, and to update program payment yields, if funding is available to do so.
Payments under these programs should continue to be based on average planting of covered commodities in recent years, rather than on current-year plantings. Decoupling encourages farmers to follow market signals rather than prospects for receiving government payments.
With regard to the county ARC program, yield data from RMA (USDA Risk Management Agency) should be used, where available, rather than the current policy of using NASS data. For counties that lack RMA data, RMA yields from similar or adjacent counties should be used or averaged to reduce discrepancies in yields and payments in neighboring counties. …
Regarding crop insurance, ASA strongly supports the current program as an essential tool for managing risk. Crop insurance is now widely acknowledged as the most valuable part of the farm safety net. However, farmers in some regions choose not to purchase policies, showing us all that there is still work to be done.
The cost of crop insurance is paramount for Congress; it is also top of mind for farmers. For most of us, the cost of crop insurance is among the top expenses in growing a crop, along with land, seed and fertilizer.