New report makes case for House version of farm safety net
COLLEGE
STATION, TEXAS, July 9, 2012 – A new
report comparing the farm safety net provisions of the House and Senate farm
bills on 64 representative crop farms finds that, under prices projected in the
current farm bill baseline, those farms would prefer the House Agriculture
Committee’s Price Loss Coverage (PLC) option over any option provided in the
Senate bill.
The
results were very similar during periods of lower prices, except that more
farms would choose the individual yield based option under the Senate’s
Agricultural Risk Coverage (ARC) over county-based ARC. In a declining price
scenario, a large number of these farms would prefer to “opt out” of either ARC
program in favor of a Supplemental Coverage Option (SCO) crop insurance option
with a wider payment band. The
representative farms would prefer the House PLC option over the RLC option primarily
due to RLC not having the SCO option.
The
report, produced by Dr. Joe Outlaw, Dr. James Richardson and others at the
Agricultural and Food Policy Center at Texas A & M University, measured the
farm’s preference for one commodity policy alternative over another by looking
at the highest average net cash farm income (NCFI) over the five-year life of
the bill. The difference in NCFI between the most preferred House option (PLC)
and the most preferred Senate option is $44,200 per year.
Titled
“Economic Impacts of the Safety Net Provisions in the 2012 Senate and House
Farm bills on AFPC’s Representative Crop Farms,” the report is expected to add
further “fuel” to the growing debate over whether or not the farm safety net
should include a program that triggers payments when prices fall below a
certain “target price” level, as the House Ag Committee’s farm bill draft
proposes and as some U.S. Senators adamantly oppose.
The
report considers the combined government support of Title I programs
(Agriculture Risk Coverage (ARC) in the Senate, Price Loss Coverage (PLC), and
Revenue Loss Coverage (RLC) in the House version, along with the Supplemental
Coverage Option (SCO) and Stacked Income Protection program (STAX) for cotton
in Title XI. In addition, both Adjusted Gross Income (AGI) and individual
payment limits were taken into consideration.
The
report notes that the farm program payment limits, set at $50,000 per person
for the Senate’s ARC program, and the Adjusted Gross Income limits, set at $750,000
in the Senate’s version, could encourage more growers to “opt out” of ARC. The
House farm bill package sets a $125,000 per person limit on farm program
payments and AGI cap of $950,000.
House
Agriculture Committee Chairman Frank Lucas, R-Okla., issued the following statement
regarding the release of the new study:
"The House farm bill saves taxpayers $35
billion, with more than $14 billion in these savings achieved by reforming U.S.
farm policy. What the AFPC study says is that the House managed to save
taxpayers money and reduce the deficit while still providing a safety net that
farmers can truly depend on in hard times. The biggest take-away from the
study is the absolute importance of real price protection in a farm bill.
When presented with the various choices, the study reveals that, wherever they
farm and whatever they grow, farmers are better off under the risk management
option that marries a strong crop insurance policy with a farm bill that
focuses on providing real price protection against multiple year price
declines. I hope producers and my colleagues in Congress will give a
close look at the study’s findings."
To read the full report, click:
http://www.agri-pulse.com/uploaded/AFPF_Study_Safety_Net.pdf
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