Farm Bureau Proposes 'Systemic Risk Reduction' Farm Program

Revenue plan would protect producers against both low prices and low yields.

Published on: Oct 25, 2011

The American Farm Bureau Federation has sent a farm program proposal to Congress that is an alternative to earlier shallow-loss proposals. This systemic risk reduction program is similar to the current ACRE approach, but represents a radical shift in the structure of government support. This approach would provide farmers with more down-side protection and allow them to deal with the upside end of the risk profile on their own.

"In the program, farmers would be partially paying for it, but would use most of the funds available for farm programs to give farmers a 70% to 80% revenue insurance plan," Missouri Farm Bureau President Blake Hurst said. "So this would be insurance, but would use a county average that would allow ease of administration and would give farmers some guarantee against the kind of year that will put you out of business."

Hurst says that since it is revenue farmers would be protected against both low prices and low yields.

"In our plan farmers would have the ability to purchase wrap-around insurance that would both provide individual coverage up to the 75% level that the Federal Government insures and would also allow coverage on top of that level," Hurst said. "So it is a bit of a new concept but we think it does the thing that farm programs should do, which is provide a safety net for years when farmers have difficulties with either the price front or weather."

Farm Bureau's Board of Directors approved the proposal on Friday and American Farm Bureau President Bob Stallman says the program would protect farmers from a catastrophic loss as opposed to shallow loss programs that would support at relatively small portion of a producer's loss.

"The business of farming has always been risky and it always will be, but we firmly believe that farmers possess the business skills and have tools at their disposal to manage the shallow ups and downs associated with typical weather and market events," Stallman said. "That is especially true as our nation wrestles with deficit and debt issues. Helping protect farmers from large systemic type losses, however, is entirely a different situation that warrants government support and is in the best interest of our nation."