Early Outlook on Next Farm Bill
Whole farm revenue insurance will be key to 2012 Farm Bill success, say policy experts.
Mike Wilson
Published: Oct 8, 2010
Two leading ag policy experts say the next farm bill must focus on farm revenue insurance if the industry hopes to continue to justify government involvement in farming.
"Farmers must explain to the public that Ag is inherently risky, that revenue comes from price times yield, neither of which is under a farmer's control," says Bob Thompson, senior policy fellow at the Chicago Council on Global Affairs. "It's highly capital intensive – more than twice that of manufacturing. If there's a justification for public money going into Ag, it's for a revenue insurance program in light of all this high volatility.
"In my ideal world, I would take everything we spend on LDPs, direct payments, countercyclicals, subsidized crop insurance and disaster payments, put them in a pot, and use it for one, whole farm revenue insurance program," says Thompson.
Gary Blumenthal says that approach would make sense if Ag needs to 'circle the wagons' in a policy shootout. "The fall back position for Ag is, you have to take all the money that is available and make sure you at least have some form of revenue insurance," says Blumenthal, CEO and president of World Perspectives, a Washington, D.C.-based consulting firm.
Budget and trade
Both Blumenthal and Thompson believe early farm bill arguments will focus on budget, but there's debate on whether that talk is just political posturing.
"They always talk about budget, but they always find a way to come up with the money," says Blumenthal.
If budget constraints are real, Thompson worries money may be moved from direct payments into commodity programs, to preserve funding. That would put the U.S. in danger of going against WTO (World Trade Organization) agreements – moving subsidies from the trade-neutral green box to the amber box (representing trade distorting subsidies).
"That would be unfortunate because it would fly in the face of everything we've advocated in the WTO (World Trade Organization) for the past 20 years," says Thompson. "We decoupled a lot of payments from production of specific commodities because they are what distort trade. We convinced the Europeans to do the same thing. They have kept going, while we have reversed course.
"If we move money from the green box to the amber box in the 2012 farm bill it will send the wrong signal to the rest of the world, that we haven't been serious about what we've been saying in the Doha trade round."
Permalink: Click here
Tagged: farm, insurance, farm bill, SURE, farming
|