Fresh produce leaders are skeptical about a Farm Bureau proposal that would provide government-subsidized revenue-based crop insurance to growers of apples, potatoes, grapes, tomatoes and sweet corn.
As the farm bill debate heats up, the American Farm Bureau Federation has advocated the idea of a revenue-based "deep loss" or catastrophic crop insurance for five fruit and vegetable commodities and traditional program crops. The plan would be subsidized by the government and be supplemented by grower-paid crop insurance.
In testimony before the Senate Agriculture Committee in March, American Farm Bureau Federation president Bob Stallman outlined out the deep loss concept would work.
"Under our plan, each producer of a program crop, as well as producers of apples, potatoes, tomatoes, grapes and sweet corn, would be provided a coverage level equal to 75 percent of the last five years' average revenue, Stallman said in his testimony.
He said the "deep loss" coverage would be provided for the same fee charged for catastrophic crop insurance-$300 per commodity per county. Stallman said growers could then supplement that coverage with one of the current crop insurance programs based on their own assessment of their farm's risk management needs.
Stallman said the deep loss program could reduce the loss of traditional crop insurance by 9 percent to 22 percent. The Farm Bureau deep loss concept can be applied to virtually any commodity, said Dale Moore, deputy executive director at American Farm Bureau Federation. The Farm Bureau's proposal was limited to five commodities to test out the model before expanding it to every fruit or vegetable.
"Those are five specialty crops grown across the country in different regions and different size operations," he said.
Moore said crop insurance is increasingly viewed as the cornerstone of farm policy and the deep loss concept fits into that vision. Moore said the infrequent projected payouts from the program would eliminate the "moral hazard" of growers trying to use the program to "farm the government."
The fate of the Farm Bureau's plan is far from assured, with some farm program commodity groups arguing for other insurance products that would provide greater levels of annual support. More importantly, fresh produce leaders seem skeptical about a revenue-based crop insurance model.
John Keeling, executive vice president and chief executive officer of the Washington, D.C.-based council, said the potato industry has concerns about revenue or price-triggered insurance programs.
"Many, many people in the specialty crop industry have concerns if you have a policy that rewards people in times of low prices that it will keep production in the market place that would be in the market place without that level of support," Keeling said.
On the other hand, growers generally feel better about crop insurance programs that are triggered by a loss in yield rather than triggered revenue, he said.
SOURCE: Tom Karst, The Packer