December 31, 2012
The Spare ParachuteBy Glen Cope
Some words of wisdom my dad once gave me about farming were: “You must save in the good years to get you through the bad.” This is good advice when you consider that many Americans are no longer saving to overcome a job layoff or in anticipation of an injury or sickness that could lead to a loss in wages.
The drought of 2012 qualifies as a “bad year.” It will take several “good” years for farmers and ranchers to overcome not only the financial losses that occurred, but also bring the condition of their land back to a healthy and productive state. Family farms, like other small businesses, are subject to many variables that bring uncertainty to having a profitable or break-even year. However, agriculture is at the mercy of Mother Nature, a potentially disastrous variable that does not affect other businesses so significantly.
Farmers know rainfall amounts and weather conditions are some of the most important factors when it comes to having a successful year. Some might say downswings in the market, taxes and regulations, and even high fuel and fertilizer costs have a huge impact on a farm’s profitability. And they do, but when looking back on 2012, the lack of rain was enough to convince the most optimistic farmer that a drought of such historical magnitude could affect the future of the farm. Even saving like Ebenezer Scrooge during the good years could not help many farmers overcome its devastation.
If there is one saving grace for farmers in 2012, it is that federal crop insurance helped limit the potential for many farms to go completely under. With corn yields in some areas of the country near zero and the cost to plant, fertilize and harvest crops at elevated levels, the losses were staggering. Thankfully, because of the federal crop insurance program, which is essentially a partnership between the Agriculture Department, private insurers and farmers, there was modest support for farmers who felt the ill effects of our weather. Crop insurance isn’t free or another government handout. It is a risk-management tool only available to those who have purchased coverage. It is because of federal crop insurance that some farmers are still in business after a disastrous year like 2012.
Crop insurance has become a central part of our nation’s farm safety net and the farm bills approved by the Senate and House Agriculture Committee make some important improvements to it that farmers would like to see in place. These changes, along with the other parts of the farm safety net, remain in limbo since Congress has not completed its work, and leave farmers in a quandary as they plan for 2013 and beyond.
Glen Cope, a fourth-generation beef producer in southwest Missouri, is chair of the American Farm Bureau Federation’s Young Farmers and Ranchers Committee.