FAYETTEVILLE -- The future of federal farm policy depends on more than the views of those working in agriculture, said Brandon Willis, administrator of the U.S. Department of Agriculture's Risk Management Agency.
"It matters what people who are not farmers think, because farmers are so few," said Willis, who spoke Friday at the University of Arkansas.
Willis, who earned a master's degree in agricultural law from UA, leads an agency managing premiums and subsidies for crop insurance, a safety net option for farmers that has taken on increased importance in recent farm bills.
"Just over the last three farm bills, you've seen a dramatic shift from commodity programs to crop insurance programs," said Willis, whose talk was sponsored by the National Agricultural Law Center, a part of the UA System's Division of Agriculture.
Funding for commodity programs -- aid for farmers through loans, purchases and payments -- has dipped below insurance programs, he said.
Farmers pay private companies for coverage to protect against, for example, low crop yields because of drought. The federal government provides subsidies to encourage farmers to get coverage. Willis' agency also develops or approves premium rates as well as insurance products.
With the farm bill passed last year, "Congress has greater expectations for us," Willis said. Farmers, too, expect more, he said.
Rich Hillman, vice president of the Arkansas Farm Bureau, praised Willis for being approachable. He said rice farmers still are getting used to the emphasis on crop insurance, however.
"This farm bill that was inked in 2014 was predicated on crop insurance, and it took away really our true safety net," said Hillman, a rice farmer in Lonoke and Prairie counties. He explained he was referring to direct payments to farmers from the government, which he said helped cushion against unpredictable expenses related to fertilizer and irrigation.
Rice farmers in general have steady yields but deal with fluctuations in expenses and price, he said.
This year, "the price of rice has just plummeted since harvest," Hillman said. "Really, the cash price for rice right now is below break even."
Crop insurance based on expected revenue rather than yield can often be purchased. But no such policies are available to rice farmers.
Willis, in response to a question from the crowd, explained a lack of rice trades left a gap in price information, with such information needed "so we know how much to charge" for revenue-based crop insurance, he said.
"We're looking forward to make sure it doesn't happen again," Willis told the crowd. "We definitely understand the issue. I don't like being the administrator of the agency to have a policy farmers can't necessarily depend on every year."
He gave a brief history of crop insurance, noting it dates to 1938 but only much more recently has become widely used. Premium amounts vary in different parts of the country and are based on risk. A basic philosophy helps guide the setting of premiums, he said.
"What Congress tells us is we want over a period of time -- realizing you have good years, realizing you have bad years -- we want the amount that comes in a premium to be the same as the amount that goes out in indemnities," Willis said. "Indemnities are payments when you have a loss."
Crop insurance "does a better job than previous polices of balancing the needs of taxpayers with the needs of farmers," Willis said. The proper amount of premium subsidy -- averaging 62 percent, compared with 30 percent in 2000, he said -- and possible talk about imposing some sort of income eligibility limit for farmers remain issues under discussion, he said.
Hillman noted direct payments "had gotten vilified" politically. Willis told the crowd he thinks the nature of insurance appeals to some outside of agriculture.
"I think people appreciate the fact that a farmer has to pay the premium every year. I think it's more defendable that way. It's not a giveaway," Hillman said.
NW News on 03/21/2015
Print Headline: Farm insurance programs out pace commodity subsidies