Posted December 12, 2013
While conferees are still negotiating and some parts of
the farm bill are unknown, one certainty is that crop insurance will be
prominent part of the legislation.
Daryll E. Ray and Harwood D. Schaffer, of the
Agricultural Policy Analysis Center at the University of Tennessee, discuss
crop insurance considerations and suggest a market-driven inventory system
(MDIS) in an article available here. An MDIS would protect farmers from “random
disasters that reduce yield” and would deal with systemic price risk by taking
“a fraction of production off the market when prices are low, thus raising
prices and stabilizing farm income.” Ray
and Schaffer conclude that “it makes more sense” to “use crop insurance where
it works best, insuring crops against random events, and using an inventory
management program like MDIS to handle the systemic risk.”
An article published in Choices Magazine, available here,
considers the role of crop insurance as a part of agriculture’s safety net. Thomas P. Zacharias and Keith J. Collins
analyze concerns and issues arising out of crop insurance and program
regulation. A few of the questions
considered include: Is there a public interest in a financially stable industry
that produces the nation’s food; Should there be taxpayer or government support
for a farm safety net; and Is the safety net income support or risk management.
Nonetheless, the new the crop insurance is changing in
the new farm bill and crop insurance education will be necessary, according to
an article by AgWeb available here.
“The big challenge will be understanding how the
shallow-loss program works independently and then in conjunction with the crop
insurance portion,” says Barry Barnett, agricultural economics professor at
Mississippi State University.
For more information on crop insurance, please visit the
National Agricultural Law Center’s website here.
