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Farming Without A Net

Dr. Chris Hurt

The 9 month extension of the 2008 Farm Bill will provide no protection for farmers for the 2013 growing season, leaving farmers with no government safety net. According to Purdue Ag Economist Dr. Chris Hurt, “What we have extended to the 2013 crop is a target support price on corn of $2.63. So if prices drop below $2.63 then the government safety net kicks in.” Hurt said the only real protection farmers have for 2013 is crop insurance.

About 75% of Indiana farmers had some level of crop insurance coverage in 2012, and that number is expected to increase in 2013.  Many young and beginning producers, however, say the insurance premiums are too high for them to afford which leaves them vulnerable. Since crop insurance premiums are subsidized in part by the federal government, many in Washington see this as a federal safety net program while others see it as a subsidy for agriculture.  While the level of federal funding for crop insurance for 2014 and beyond is not known, the concept of providing farmers with an insurance policy generally has good support and will likely be part of the next Farm Bill.

Hurt recommends that, in addition to purchasing crop insurance, farmers should use some marketing tools to lock in profit and reduce risk, “For example, forward price some new crop corn, soybeans, or wheat, but then come back and buy an option that gives you upside potential.”  In an interview with HAT, he stated this is only one of many marketing strategies that growers can use to maximize profit opportunities and minimize risk. He added that he, like many Indiana growers, is optimistic about the 2013 crop. He said good moisture recharge this winter will set us up for a good start to the 2013 growing season.[audio:https://www.hoosieragtoday.com//wp-content/uploads//2013/01/riskwrap.mp3|titles=Farming Without A Net]