February 21, 2020

Farm Bill; Ag Economy; Trade; and Senate Procedural Issue

Farm Bill Issues

University of Illinois Agricultural Economist Gary Schnitkey noted in an update posted on Friday at the FarmDocDaily blog (“Current Commodity Programs and Integrating with Crop Insurance”) that, “In an earlier post, integration of farm commodity programs with crop insurance was discussed. There it was noted that crop insurance does not protect against multi-year price declines like those experienced in the mid-1980s and 1998-2002 time periods, and that commodity programs can play a role in providing protection during these multi-year price decline periods. In this post, the ability of current farm programs to provide multi-year price protection is examined.

“These programs include Direct Payments [Since these payments are constant across years, direct payments play little role in providing protection against multi-year price declines], Counter-cyclical program [This program could provide multi-year protection if target prices are raised to reflect higher commodity prices], Marketing Loan program [Similar to Counter-cyclical programs, Market Loan programs would provide multi-year protection if loan rates are raised to reflect higher commodity price levels], Average Crop Revenue Election (ACRE) program [Because the ACRE guarantee includes historical prices and because the guarantee movement is limited between years, ACRE will provide multi-year protection], and Supplemental Revenue Assistance Payments (SURE) program [SURE does not provide multi-year price protection because current year’s prices are used in the guarantee and because of other requirements must be met to receive payments].”