Difficult Choices When Crop Insurance, Disaster Aid, and Trump’s Bailout Intersect
The farm safety net offers many strands of support to farmers swamped by a historically slow planting season, but the strands pull in different directions, says associate professor Bradley Lubben of the University of Nebraska. “The complexity for producer decision-making is compounded,” he said, when potential Trump tariff payments and disaster aid are woven into traditional crop subsidies and crop insurance.
Other analysts have the same view. At the farmdoc daily blog, five university economists said the still-unknown rules for Trump payments or disaster aid make it harder for farmers to decide whether to plant soybeans so late in the season. On its own, a prevented planting indemnity from crop insurance was likely to mean more revenue for a farmer than the lower yields from a late planting, they said. A large Trump payment could change the equation in favor of planting. A disaster payment for prevented planting could swing it the other way.
“These decisions will be difficult,” the economists wrote. “In both the prevent plant or plant alternatives, our estimates suggest that losses will occur this year.”
At a House Agriculture subcommittee hearing last week, Lubben advocated a continuation of risk-management education for producers. Two members of the crop insurance industry warned against federal penny-pinching that would reduce sales to farmers and increase losses from natural disasters. A flooded-out farmer from southeastern Iowa, Leo Ettleman, said flood control should be the federal priority in managing the Missouri River and that Congress should ratify the United States-Mexico-Canada Agreement. Brad Willis, a former USDA overseer of crop insurance, suggested that “development of new and improved products with better risk-management education.”
Federally subsidized crop insurance ordinarily is the leading farm support in dollar volume. It would be far exceeded this year by the Market Facilitation Program, created by the Trump administration to mitigate the impact of trade war. Up to $14.5 billion has been offered to support crops and livestock.
“I don’t think they (the payments) are going to solve the problem,” said House Agriculture Chairman Collin Peterson. “I hope we get these trade wars over with.” A fellow Minnesota Democrat, Representative Angie Craig, said, “Farm country is in a crisis, and it’s time that Congress started acting like it.”
The rain-delayed planting season is expected to end with a larger-than-usual amount of land that is not sown. The USDA will provide clarity on that question with its Annual Acreage Report, due for release on Friday. It is based on a survey that asks tens of thousands of growers what they have planted this year. Some analysts expect major reductions in corn and soybean acreage from farmers’ intentions in early spring.
To watch a video of the subcommittee hearing, click here.