FARGO, N.D. - Farmers want to protect crop insurance but should also keep in mind that they need to protect a "portfolio" of revenues.
That was the message from Brad Lubben, a University of Nebraska Extension Service policy specialist at Lincoln, Neb., speaking at the 25th Annual Crop Insurance Conference in Fargo, N.D. The event is hosted by North Dakota State University in Fargo. This year it drew about 230 crop insurance company officials, who use it for continuing education credits to stay certified for their work.
Farmers have been asking Congress to "please do no harm," in preserving the crop insurance component, Lubben said. Crop insurance currently is "inextricably linked" to the farm bill that is set to expire in September. Politics and money will have their impacts. Many see crop insurance as the "biggest part of the safety net" the federal government can have for keeping farmers in business during down-trends.
Farmers are worried about unforeseen shifts in the program, Lubben said.
"If you change how the program fundamentally works, a limit on the premium support provided by the government, or an adjusted gross income eligibility cap on that premium support, or if you change and eliminate the harvest price coverage - all that have been proposed - that fundamentally affects the kind of producer that participates. It kicks larger producers out or it kicks producers out that fundamentally see a role for that coverage," he said.
Who's in, out
Lubbens said the larger producers tend to be a smaller risk.
"If you kick out the smaller-risk producers, you end up with the more expensive costs for the producers that remain," he said.
Lubben described potential returns from crop sales receipts, as well as government supports. The primary commodity titles in the 2014 Farm Bill included the Agricultural Risk Coverage program. Corn and soybean farmers used that program "overwhelmingly" but wheat producers were "more mixed."
"Under the next farm program there may be just as equal a shift toward the PLC - the Price Loss Coverage program," Lubben said. In the last farm bill, there were higher market prices for commodities and higher moving-average guarantee levels for coverage in ARC.
Lubben noted that the Congressional Budget Office is seeing that and has projected a large shift in expenditures toward PLC starting with the 2019 crop.
"If we have a farm bill - that's due this September - or even if we don't get a new farm bill, and extend the current bill, everyone expects that we have a new 'decision' for producers between ARC and PLC, starting with the 2019 crop," Lubben said.
The decision has been a one-time, multi-year choice per farm bill. The only area that the choice seems difficult is for soybeans. Forecasters project soybeans may trade in the $9 to $10 per bushel range, which is above the $8.40 per bushel reference price in the PLC, so ARC may be the better choice.
Lubben said the ARC program equation is triggered using an Olympic average yield and Olympic average price. That traditionally has come from survey data from the U.S. Department of Agriculture's National Agricultural Statistics Service.
Some have advocated using crop insurance data from the USDA's Risk Management offers more complete data sets for major crops. Minor crops, such as pulses, may have little data, so that data will have to be supplemented.
Frayne Olson, an NDSU Extension Service grain marketing specialist, said this year's event was fraught with cancellations. Rep. Collin Peterson, D-Minn., the ranking minority member in the of the U.S. House Agriculture Committee, canceled due to votes on keeping the government running. Eric Bashore, regional director of the USDA's Risk Management Agency office in Billings, Mont., was furloughed because of the government shutdown.