Ohio Farmer, OH
10-19-07
Senate Ag Committee Includes Average Crop Revenue Program
Compiled By Staff
U.S. Senator Sherrod Brown, D-Ohio, applauded the decision by Senate
Agriculture Committee Chairman Tom Harkin, D-Iowa, to include Brown's
Average Crop Revenue Program as an option for farmers in the 2007 Farm Bill.
This program represents a significant shift from traditional farm policy. By tying
the federal farm safety net to actual farm revenues rather than federally-set
target prices, the proposal will provide better protection for farmers while saving
taxpayers an estimated $3.5 billion over five years.
"A revenue protection program in the 2007 Farm Bill offers a much needed
choice to farmers. Farmers can either stick with the current programs that do little
to protect against drops in revenue, or switch to a forward-looking policy that
better protects against volatile crop prices, natural disasters, and rising
production costs. This is true reform for producers and the public," Brown says.
This year, Ohio farmers faced devastating weather, including frost and freeze
conditions in early April that damaged fruit and vegetable production, drought
and extreme heat that hurt crops and pasture from mid-April to mid-August, and
severe flooding in late August that ruined crops for many farmers.
Brown, the first Ohio Senator in 40 years to serve on the Agriculture Committee,
conducted a statewide farm tour earlier this year to hear directly from local
farmers. Brown visited Mark Schwiebert, a Henry County corn farmer, who
introduced the idea that Congress should be considering a broad reform of our
nation's farm safety-net and in particular considering a revenue protection
approach. In response, Brown and Senator Dick Durbin, D-Ill., introduced
legislation in July upon which ARC is based. The ACR has the support of the
National Corn Growers Association, which represents the interests of more than
30,000 farmers, and was developed by Carl Zulauf, a professor of agricultural
economics at Ohio State University.
The ACR program would provide a better safety net for farmers by replacing
price-support programs with a comprehensive, two-tier revenue protection
program. Under the ACR, farmers would rely on private revenue insurance at the
individual level, while the government handles widespread losses at the state
level where the private insurance market is ineffective. The benefits of this
approach are:
• Better protection for farmers by protecting overall farm revenue rather than
merely price without regard to yield as the current system does. Doing so will
provide better protection at a lower price. Iowa State University modeling
estimates that the cost will be about three quarters of today's insurance while
providing farmers with revenue protection of 90%.
• Less production distortions by using a revenue target that adjusts with the
market rather than federally-set target prices and loan rates. The current program
can encourage farmers to "plant for the program" and not for market demand.
The ACR program reduces the incentive to overproduce on marginal land and
helps reduce trade distortions. All commodities are treated equally based on
market risk.
• Private crop insurance works better by integrating private revenue insurance
with federal revenue protection into a comprehensive program – making private
revenue insurance more cost effective and allowing higher coverage levels at a
lower cost for farmers.
• Saves Money due to efficiencies by integrating crop insurance and commodity
support programs, and eliminating excessive and duplicative payments. No
longer will payments be made when prices momentarily fall, but a farmer's overall
revenue is up.