The Hagstrom Report

Agriculture News As It Happens

Farm Bureau to present 'systemic risk reduction' policy

Bob Stallman
Delegates to the American Farm Bureau Federation convention in Honolulu early next month will consider a policy very similar to the one presented to the agriculture committees this fall when they were writing a bill to be presented to the supercommittee on deficit reduction, Farm Bureau President Bob Stallman said in an interview today.

The Farm Bureau board met in Washington last week and decided to present what leaders call their “systemic risk reduction program” to the delegates in January. The policy represents a shift away from long-time Farm Bureau policy because it includes elimination of the direct payments program, but continues crop insurance along with the systemic risk program, which would function as a catastrophic revenue loss program.

“This is really a major change in the way government approaches supporting agriculture,” Stallman said.

Farm Bureau’s decision to support elimination of the direct payments program means that all major farm groups have now come to the realization that there is no way to continue political support for a program that makes payments to crop farmers whether prices are high or low.

The federation initially told the agriculture committees that they wanted to continue the direct payments and make percentage cuts in other farm programs, but Stallman said today that Farm Bureau leaders concluded it was not going to get serious consideration, even though that proposal was in line with the policy that delegates had approved,

Farm Bureau “had to come to grips” with the fact that members liked the program in existence but that the budget numbers would not support its continuation, Stallman said.

“We have been doing a lot of internal discussing about the future of farm policy,” Stallman added.

Farm Bureau is the only farm group that has come up with the systemic risk plan, and it puts the nation’s largest farm organization at odds with the commodity groups that have developed three separate programs to make up a new farm bill.

The commodity groups have developed those different plans because growers of northern crops like corn, soybeans and wheat and southern growers of cotton, rice, peanuts and sorghum could not figure out a single program that would work for all of them.

Stallman also said Farm Bureau is concerned that a proposal for higher target prices could result in farmers planting to get program payments, rather than following the markets.

The Farm Bureau proposal would result in a re-rating of crop insurance policies and a reduction in the cost of crop insurance to farmers, Stallman said. He acknowledged that the crop insurance industry has concerns about a reduction in their incomes, but he noted that the premium reduction would be in line with reduced risk for the crop insurance companies.

He also pointed out that Farm Bureau owns a crop insurance company, and is still supporting the change.

Farm Bureau’s decision to consider a catastrophic loss program is a bit ironic, since last year’s convention delegates said they did not care whether the permanent disaster program was continued or not.

Stallman said the systemic loss program would cover all the elements in the now-expired permanent disaster program, but would not have that program’s budgetary problems or delayed application and payment process. He also noted that it could be extended to fruits and vegetables.

“Our program is scalable,” Stallman said, depending on the budget and the number of crops covered by it. He said the new policy was developed by Farm Bureau’s economics and policy staff.

Delegates would debate the policy, he said, noting there are usually “surprises” in their final policies. Members are “would up about regulations,” he said, but there is not a lot of conflict over that issue.

Stallman said he could not predict whether Congress will pass a new farm bill. Noting that the 2008 bill is set to expire on Sept. 30, 2012, he said it might be difficult to pass a one-year extension. He said the bill should be done as early as possible next year in advance of the presidential election, and so farmers will have certainty about it going into the 2013 crop year.