The Farm Bill and Crop Insurance, One Economist’s View

Crop insurance is now the heart of the U.S. farm support, but the program will likely be the largest target attacked during the next farm bill negotiations, Dr. Keith Coble warned attendees at the 2015 Risk and Profit Conference on August 21.

Dr. Coble, the W.L. Giles distinguished professor of agricultural economics at Mississippi State University, had a front-row seat during the last farm bill negotiations, as he helped provided economic analysis on the new programs included in the bill. He shared his firsthand observations as well as cautioned the agricultural audience that the real fight for farm policy may be just beginning.

To start, Dr. Coble outlined the political situation during which the last farm bill moved through the U.S. Congress, including substantial budget deficits and significantly increasing partisanship. As a result, the traditional farm bill allies – including farm groups, legislators, food organizations and environmental groups willing to deal with farm groups – splintered into small factions that each advocated for their own initiatives rather than working together.

That included the farm commodity organizations. Each commodity “team,” as Dr. Coble described, pushed for their own preferred policies driven by their own motives, which resulted in the variety of programs offered (ARC-County, PLC, ARC-Individual). To further complicate the political environment, non-commodity “teams” also had varying agendas that resulted in policy changes. For example, more amiable environmental groups worked out a deal to tie conservation compliance to crop insurance.

Dr. Coble explained that crop insurance and risk management were politically palatable during the last farm bill discussions, especially as Congress has transitioned away from ad hoc disaster payments in recent decades. However, more farmers are participating in the program and purchasing higher levels of coverage. In addition, 72 percent of the 2014 crop insurance plans included revenue protection, according to Dr. Coble. As a result, Dr. Coble said to expect that crop insurance will not be seen as favorably in the next farm bill negotiations.

“Will the coalition of environmental dealers and farm groups strengthen or weaken. I do not know,” Dr. Coble said. “Crop insurance is going to be the bullseye.”

No matter the farm programs offered or the political fights to come, Dr. Coble said producers have more immediate concerns they can address before farm bill negotiations begin anew.

“Is your relationship with your landlords going to be more important than ARC or PLC?” Dr. Coble asked. “Worry about what really matters to your bottom line.”

Find Dr. Coble’s full presentation at http://agmanager.info/events/risk_profit/2015/Papers/GS5_Coble_FarmPolicy_2.pdf.

This year marked the 20th Risk & Profit Conference, organized by the K-State Department of Agricultural Economics. The conference is intended to update key agricultural decision makers on contemporary agricultural issues. For more resources from the conference, visit http://agmanager.info/events/risk_profit/2015/Papers.asp.

By Julia Debes