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.
Share: