Managing Production Agriculture Risks

For the last couple of years there’s been a lot of talk about the high prices of commodities, but a whole lot less talk about the record high input costs it took to grow them. These costs put farmers at record levels of risk that the supposed safety net in the current farm bill doesn’t address. Joe Brown has more in this week’s From The Ground Up.

"With our costs and prices of today, those farm level safety nets that are embedded in the farm program, offer a safety net that is so far the cost of production, that they are practically ineffective."

Mark Welch is a Texas Agrilife Extension economist.

"The price safety net that’s established in the farm legislation is done at the writing of the farm bill, and so those prices were set when they wrote this bill, as they negotiated the current farm program in 2005,, 2006, 2007 along that time, and the time they seemed sufficient, but so much has changed in the last couple of years."

Crop insurance is available through the USDA.

"Those packages do adjust for higher prices, and so they do insure against some of your production risks, as well as some price risks, not 100% of production like any kind of insurance product, the better the product the more expensive it’s going to be, the higher the premiums, the higher the deductibles, you know those kinds of issues come into play like any insurance product."

There are several other things farmers do to try and protect themselves against the risks they face.

"The number one thing that we’re doing is being as efficient as possible with all of the inputs that we do supply to grow that crop. We mentioned seed technology, tillage systems and equipment that not only manage soil residue to control erosion, but also maintain and manage soil moisture, allow farmers to put a crop in with fewer passes over the field, utilizing less chemical per acre, by pin pointing where and when that pesticide is applied, or that fertilizer is applied. All of those things that squeeze efficiency."

And nobody, says Dr. Welch, is better at that than the American farmer. I’m Joe Brown, looking at Brazos Valley agriculture, From The Ground Up.

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