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The Ag Agenda

June 2013

Farming: Raincoats (and Risk Management) Required


Bob Stallman
President
American Farm Bureau
By Bob Stallman
President, American Farm Bureau

As the old saying goes, when it rains it pours. No one knows that better right now than farmers, especially those in the Midwest. Because of the record downpour this spring, it comes as no surprise crops will be planted very late this year, if at all. In fact, one needs to go back to 1984 to find a year when planting began later than where it is right now.

Farmers have always been at the mercy of Mother Nature. That’s why risk management tools play such a vital role in farming.

An Umbrella of Sorts

Agriculture is fundamentally a risky business. Farmers have to be willing to spend hundreds of dollars per acre to plant a crop in the hope that it will come up, the weeds won’t be too bad, the pests won’t kill it and, in the end, there will actually be a market that will pay a high enough price to cover all of these production costs.

As a society, we want farmers to take that risk in order to put food on America’s dinner tables. Because weather presents a risk to agriculture at a level not experienced by most other sectors, farmers are able to turn to crop insurance. This program provides a partnership between farmers and consumers to help share some of the risk. Farmers pay a significant portion of the premium costs for the insurance policy, while the taxpayer also shares in that cost by helping to pay the premium. It is a wise investment of public funds.

Last year was one of the worst droughts the nation has faced in decades. Crop insurance played a pivotal role in helping farmers through that disaster and is a classic example of why we need this important risk management program.

Weather Predictions

Mark Twain once said, “Climate is what we expect, weather is what we get.” No one knows this to be true more so than farmers, whose livelihood depends on the right combination of rainclouds and sunshine.

This year, whether farmers are ultimately able to plant a full crop is only as good as one’s weather forecast. By mid-June all of the crop delay issues will either rise as a matter of great concern or will completely fade away. I’m optimistic, along with fellow farmers from around the countryside, that it will be the latter.

In the meantime, as farm bill legislation works its way through Capitol Hill, Farm Bureau will continue to fight for flexible and effective risk management tools to help America’s farmers regardless of sunshine or rain.