Agricultural News
Witnesses Testify on Price Protection, Crop Insurance Issues in Risk Management Hearing
Wed, 16 May 2012 17:34:32 CDT
In early opening remarks and testimony before the House Agriculture Subcommittee on General Farm Commodities and Risk Management, Congressman Frank Lucas reiterated his concern that the 2012 Farm Bill must work for "all regions and all commodities."
In examining revenue protection, the committee heard from Dr. Joe Outlaw of Texas A&M. Outlaw testified that he believe reference prices developed last fall from historical data would not drive producers' planting decisions as some opponents fear.
"They're not going to get that level of protection, they're going to get something less. So you're already talking about setting it below the cost of production and then they're going to get less than that. All it is is the deep loss coverage that I think most of you are talking about. All it would provide is when things really go bad there's going to be a payment to help them stay in business. I don't think there's anything wrong with that," Outlaw said.
Lucas said some had expressed concerns that the Senate bill would shift the baseline from one commodity to another and, in effect, picks winners and losers.
Outlaw said his analysis of the Senate bill indicated that paying on planted acres could shift dollars towards corn and soybean producers. "Each commodity ought to have the opportunity to stay in business if there is a loss. And the way that the Senate plan is crafted right now, I can't say that they can." (You can read Outlaw's written testimony by clicking here.)
On the issue of crop insurance, the sub-committee heard from Dr. Keith Collins, former chief economist for the USDA. Collins addressed complaints that the current crop insurance system is not working. He said that insurance participation rates across different crops and in different regions is not an accurate measure of whether the program is working.
He said farmers in some areas face risks not face in other areas, therefore participation would be higher. Yield protection on irrigated acres, for example, is not as pressing for producers there as it is in dry land regions.
"And if you've got protection such as we've just been discussing, with target price protection, direct payment protection, you've got some price protection already and, therefore, you don't necessarily need to buy high levels of crop insurance. So there's not necessarily a failure of crop insurance in those instances," Collins said. (Click here for his written testimony.)
He also said that new products are under development for rice, peanuts and specialty crops. He said there is lots of work left to do in those areas, but it is proceeding. He said the process "to produce products is the right way to go. We have a good product-development program right now. And now, for example, we have seven new products coming on line in 2012. And so I don't think that Congress needs to specify lots of new products that need to be developed by the Risk Management Agency.
"I think the existing process for product development is working and can continue to work, but it's a slow process."
You can hear excerpts of testimony from Outlaw and Collins by clicking on the LISTEN BAR below.
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