Archive for Tuesday, October 9, 2012

Schlageck: Community investment

October 9, 2012

With each new generation, more of this country’s population becomes further and further removed from the farm. It’s easy to understand why many people in this country have no concept where their food comes from. Many have forgotten, or may have never known, that individual producers supply staples for the U.S. diet. Some people believe there will never be a food shortage in our country as long as the doors remain open on their neighborhood supermarket.

Today’s farmer is a planning specialist. Producers understand marketing and using the incentives of free enterprise. This group of food producing folks also know the importance of incorporating government-sponsored programs in their individual operations.

Every year, this production machine made up of family operations comes under closer scrutiny and sometimes unfounded attacks. We’ve all read such articles in the New York Times, Washington Post and CNN. Social media is also rampant with such stories.

These exposés include the usual suspects and contain a story line that goes something like this: Federal money is going to supplement wealthy farmers who don’t need it and who are ripping off the taxpayers. These payments should go instead to small and medium-sized farmers.

This just isn’t so.

During the last few decades, farmers have relied on and supported direct payments. These subsidies are based on the historic acreage and yield referred to as a farmer’s “base.” This base is tied to a piece of land, not a farmer.

Direct payments are issued by the U.S. Department of Agriculture every year to producers with qualified base acres, regardless of what they planted or if they planted. Given the uncertainty of prices and production, it was one part of the federal farm program “safety net” that producers, and perhaps more importantly, their lenders, could count on year in and year out.

During the last two to three years, and in no small measure driven by drought and ever-increasing production and land costs, crop insurance is becoming more important to farmers than direct payments. This is happening because more growers have also benefited from the predictability of crop insurance, especially revenue-based products.

For instance, wheat growers purchased more than 136,000 policies for crop revenue coverage insurance, paying more than $1 billion in premiums last year. That’s up from 117,708 policies the previous year, with premiums of more than $570 million.

Even though crop insurance is subsidized by the federal government, producers pay a significant portion of the cost. American taxpayers view crop insurance as a better alternative than a direct payment program. Consequently, many crop growers are asking whether or not the funds currently invested in direct payments could be used to make the federal crop insurance program even better.

Today’s farmer is using crop insurance as a risk management tool to deal with wide swings in the marketplace and a drought that has devastated many family farming operations. This valuable tool has helped provide some stability and allowed crop growers to project their revenue (or lack thereof) when they approach their lenders.

Crop insurance allows farmers to tailor their risk management to their individual situation and immediate needs. This tool returns an important part of the management decision back to farmers by providing a wide range of products, coverage and options.

This country needs stability in agriculture, especially during these troubled economic times. Few citizens of the United States have ever lived during a period of food insecurity. We’ve been blessed with an abundance of food at an affordable price.

Continuing to safeguard the interest of agriculture is in the best interest of all of us – farmers, stockmen, agribusiness and our customers. Safeguarding agriculture is critical because the contribution it makes to the health and prosperity of this country is beyond measure. Without agriculture, there is no way to ensure prosperity in our economy. Farmers will not be able to produce the food we take so much for granted.

— John Schlageck is a leading commentator on agriculture and rural Kansas. He was raised on a diversified farm in northwestern Kansas, .his writing reflects a lifetime of experience, knowledge and passion.


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