Minnesota Congressman Collin Peterson says the current safety net was not built to adequately protect farmers from a poor crop.
Peterson, the ranking member of the House Agriculture Committee, said record-breaking corn and soybean production the last two years has helped offset softening commodity prices.
“But if we get an average or below-average crop, I think next year at this time we’re going to be looking at some stress.”
Whether a producer chooses crop insurance or the Agricultural Risk Coverage (ARC) commodity title program, Peterson says the safety net seemingly works better when prices go up.
“So as prices have come down, the amount that you can affordably insure under crop insurance has come down as well. Which is probably backwards of what’s necessary, but that’s how it operates.”
The Price Loss Coverage (PLC) program puts a floor under prices, but he says losses are still possible depending on yield.
Peterson has concerns that ad hoc disaster aid may be necessary to keep some crop farmers in business until an improved safety net is available through the next farm bill.