ASA pitches its farm program proposal into the ring
In recent weeks we have reviewed farm bill proposals from the National Farmers Union, the American Farm Bureau Federation, the National Corn Growers, and a congressional initiative led by Senator Richard Lugar and Rep. Marlin Stutzman. This week we focus our policy examination on a proposal by the American Soybean Association (ASA) http://www.soygrowers.com/policy/ASA-RMAF.pdf.
In making its proposal, the ASA makes the point that “soybeans are grown by farmers over a broad area in the U.S. and in rotation with every other program crop.” As a result it asserts that “this gives ASA a unique perspective as [it] considers changes in current farm programs that will impact all program crops.”
Critiquing the current set of policies the ASA writes, “currently, marketing loan rates and target prices are too low to provide effective price and income support. The ACRE program has too many disincentives to participation. The SURE disaster program has not made timely payments and is expiring, and there is concern about how to protect against shallow losses. Direct Payments are increasingly difficult to defend as farm prices remain at historically high levels.”
To overcome these problems, the ASA proposes a program it calls Risk Management for American Farmers (RMAF), which “provides meaningful protection against shallow revenue losses for producers of all program crops in all regions, and that complements the federal crop insurance program.”
In the RMAF, the ASA makes a distinction between irrigated and non-irrigated crops. For non-irrigated crops ASA proposes a revenue guarantee against losses between 90 and 75 percent of the producer’s revenue benchmark, thus requiring a 10 percent loss before the program provides a percentage compensation to producers. Crop insurance provides protection against revenue losses greater than 25 percent.
“For irrigated commodities,” the RMAF would “provide a revenue guarantee against losses below 95 percent of the producer’s revenue benchmark down to 80 percent of the revenue benchmark (a 5 percent revenue loss is required before the program is applicable).”
The ASA calculates the revenue benchmark for each commodity based on the higher of three calculations—“the producer’s APH (Actual Production History) yield, the producer’s five-year Olympic average APH yield, or 80 percent of the county yield”—times the five-year Olympic average (leave out the high and low values and average the remaining three) of National Agricultural Statistical Service (NASS) season average prices received by farmers.