U.S. grain groups lobby for strong crop insurance in new, upcoming farm bill

by Holly Demaree
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US winter wheat harvest
 
WASHINGTON, D.C., U.S. – The U.S. Senate committee on Agriculture, Nutrition and Forestry held a hearing concerning “Commodities, Credit, and Crop Insurance: Perspectives on Risk Management Tools and Trends for the 2018 Farm Bill.”

The hearing included many panelists, including growers, agriculture industry representatives, and crop insurance company representation that spoke about their concerns and hopes for the upcoming 2018 Farm Bill.

David Schemm NAWG President
David Schemm, president of NAWG.
“Between record low commodity prices, unfair trade practices in the global market, disease issues, and extreme weather, wheat farmers across the nation are experiencing the toughest economic conditions they have faced since the 1980s,” said David Schemm, president of NAWG, while testifying to the committee on July 25. “Fortunately, programs authorized in the 2014 Farm Bill, specifically crop insurance, have enabled farmers to be able to farm another year when prices collapse or disaster strikes.”

Schemm described the specific needs or wants that many U.S. farmers would prefer from crop insurance.

“The federal crop insurance program, which requires a farmer to pay a premium, is structured in a way that the producer has to suffer an indemnifiable loss before they get any sort of payment,” Schemm continued. “A farmer could go years paying premiums for a policy and rarely get an indemnity; and, in truth, a farmer would much rather get a return on their commodity than become eligible for an indemnity.”

Crop insurance and commodity title programs have been critical for helping farmers survive sustained low commodity prices, and they should be maintained in the next farm bill, National Corn Growers Association (NCGA) Board member Bruce Rohwer testified at the hearing on risk management tools and the 2018 Farm Bill.
 
ruce Rohwer NCGA board membe
Bruce Rohwer, NCGA board member.
“Crop insurance and commodity title programs are particularly important to family farmers who earn a majority of their household income from the farm,” Rohwer said. “Without crop insurance and commodity title payments, the financial wherewithal of these farms would likely face serious erosion in the current environment.” 
 
Rohwer noted that corn prices have averaged below $4 per bushel since 2013, and are projected to average $3.35 this marketing year. The annual crop value of corn fell from nearly $77 billion in 2011 to just over $51 billion in 2016, the effects of which have been felt throughout the agriculture industry. Restoring a strong farm economy is good not only for farmers, but also the businesses they support, Rohwer testified.
 
“The sharp drop in farm income increases the financial stress for farmers, as well as employees of agriculture-related businesses, such as equipment manufacturers,” Rohwer said. “Everyone tied to the ag economy is affected. That’s why it is more important than ever to strengthen our position in current markets and develop new uses to increase demand for our crop. A robust livestock industry, expanding exports, and a growing renewable fuels industry are central to corn farmers achieving more profitable and resilient farm operations.”
 
In the meantime, Rohwer testified, commodity title programs and the federal crop insurance program are essential risk management tools for farmers, and they must be maintained in the 2018 Farm Bill.
 
“Overall, the commodity program reforms authorized in the 2014 Farm Bill have performed as they were designed,” Rohwer said. “They are delivering assistance when it’s needed, and only when it’s needed.”

In addition to crop insurance, Title 1 programs like Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) have also served as key safety net programs that are limited and kick in for losses not covered by crop insurance. As such, NAWG urges Congress to continue to allow a producer choice between revenue protection and price protection.  With growing and marketing conditions that can vary across the country, maintaining a choice in programs is critical. Additionally, NAWG supports adjustments to ARC to enable it to continue to function as a safety net moving forward as well as an increase in the PLC wheat reference price to better reflect modern production expenses.
 
“As our discussions continue with what the next Farm Bill will look like, NAWG is looking forward to working with both the Senate and House Agriculture Committees to ensure a full reauthorization bill can be completed prior to the expiration of the current farm bill on Sept. 30, 2018,” Schemm said.
 
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