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As input prices go up and commodity prices go down, farmers rely on the reference prices in the farm safety net to help stay in business when margins get squeezed. That’s why Farm Bureau and other U.S. ag stakeholders are pushing lawmakers for updated reference prices in the next farm bill.
“Reference prices play an essential role in the ARC and PLC programs, which, along with crop insurance and other programs, make up the farm safety net,” says Betty Resnick, an economist with American Farm Bureau. “The safety net’s goal is to keep farms in business during periods of low farm income, as our farmers play such an important role in both our country and the world’s food security.”
Resnick explains why reference prices need to be updated in the next farm bill.
“Statutory reference prices have not been updated since the 2014 Farm Bill, which was over a decade ago. The world has changed a lot since then. We’ve had a global pandemic. We’ve had record fertilizer prices. We’ve had massive supply chain issues due to global conflicts and other factors, and some of the worst inflation we’ve seen in many people’s lifetimes. The cost of production agriculture has also steeply increased with these changes. For some of the crops in the program, costs have increased upwards of 40% or more since introduction, and that’s after prices have kind of settled back down over the past few years.”
There are several ways to raise reference prices, but Resnick says Farm Bureau hasn’t advocated for one specific fix.
“We at the American Farm Bureau are advocating for an increase in reference prices for all crops but leave the specifics of that to our legislators on Capitol Hill.”
But Resnick says they’re eagerly waiting to hear about those specifics, and the sooner the better.
Source: NAFB News Service