December 27, 2022

AFBF: Risk management tools must be US farm bill's priority

Managing risk remains a priority for US farmers and ranchers, and, in this context, a new analysis from the American Farm Bureau Federation (AFBF) examines several farm bill risk management tools included in Title I, explaining their impact and importance to farmers.

The analysis is part of a Market Intel series dedicated to farm bill programmes, designed to inform discussions about renewing the farm bill.

"Title I of the farm bill, known as the commodity title, has provided certainty and predictability to eligible producers by reauthorising and improving commodity, marketing loan, sugar, dairy and disaster programmes," economist Shelby Myers explained in the analysis, which is the third Market Intel focused on Title I. This article breaks down the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programmes, which provide risk management coverage based on price and revenue targets for farmers and ranchers growing commodities.

"Farmers and ranchers face risk every day," said AFBF president Zippy Duvall. "It's just part of the job. And we're price takers, not price makers, so we can't adjust prices to absorb losses. That's why (US) Congress authorised tools to help manage that risk, so the folks who keep our country fed, clothed and fueled can focus on growing their crops, taking care of their livestock and being good stewards of the land and water we are entrusted with."

The analysis provides historical perspective, including changes made in the 2018 farm bill to reauthorise and strengthen the PLC and ARC price and revenue programmes for crop years of 2019-2023. These programmes were created in the 2014 farm bill to provide shallow-loss risk management coverage to producers of covered commodities.

Myers concluded in the analysis that one factor remains consistent as farmers and ranchers faced unprecedented circumstances in recent years: the need for a variety of risk management options, such as ARC and PLC, that fit farmers' and ranchers' unique situations.

Risk management tools like these are vital to farmers and ranchers being able to mitigate the unpredictable nature of farming.

- AFBF