We should be looking at Disaster payments in Canada for this year, over and above Crop Insurance for grain farmers.
NAWG in the US gives a good discription of the reasons why:
I found these articles on: http://www.agnewsonline.com/testtxt/story.asp?num=3261
"WHY DO FARMERS WITH CROP INSURANCE NEED DISASTER ASSISTANCE?
9/19/2002
The National Association of Wheat Growers (NAWG) today responded to a question that is being asked more and more in the press, relative to disaster assistance. Many apparently believe that disaster assistance only needs to be provided to those agricultural sectors which do not have access to crop insurance tools.
NAWG pointed out that the highest level of crop insurance available is 85% of production, but because of premium cost many producers must insure at even lower levels.
"Crop insurance is an effective tool, but even at the highest coverage levels it requires at minimum a 15 percent deductible every single year," said Gary Broyles, President of the association. "The most common coverage is at 70%, resulting in a 30% annual deductible. In wheat country we have faced five consecutive years of drought, and no one can sustain 30% deductibles every year for five years in a row. Nobody has margins to absorb that impact. We certainly agree that disaster assistance for livestock producers is necessary, but crop producers also have acute needs for disaster assistance."
Kansas State University agricultural economist Dr. Art Barnaby illustrated the point on his web site earlier this week. In a paper entitled If Crop Insurance is Working Why Do Farmers Need Disaster Assistance?, Barnaby made the following observation: "The worst outcome for insured growers is to suffer a 35% to 40% yield loss and higher prices. They will lose their counter cyclical payment because of higher prices, they have fewer bushels (production) to sell at the higher prices, even with this significant yield loss they will receive no payments under traditional ad hoc disaster aid, and their net insurance payments will be small or none." Barnaby referred to the lack of relief for insured acres as the "hole in the safety net".
The scenario described by Barnaby is exactly what is happening in wheat and other crops. Multiple years of drought, coupled with production problems elsewhere in the world, have led to a tightening of wheat supplies and resulted in rising prices. US producers have fewer bushels to sell, but will receive no aid from price-based mechanisms because the prices have risen above trigger levels.
"We're happy to see the Administration announce disaster relief for livestock producers," said Broyles. "We appreciate their creative proposal to address the needs in the livestock sector. We hope now Congress and the USDA will turn their attention to the serious needs of crop producers in this country, and meet that need as well."
NAWG also called on members of the House of Representatives to co-sponsor H.R. 5383, a disaster bill introduced by Congresswoman Barbara Cubin, which has attracted bipartisan support and is now circulating in the House.
National Association of Wheat Growers
415 Second St. NE, Suite 300
Washington, DC 20002 Phone (202)547-7800 / Fax (202)546-2638
Contacts: Daren Coppock, Mark Geade
Gary Broyles, NAWG President (406) 663-2115
NAWG in the US gives a good discription of the reasons why:
I found these articles on: http://www.agnewsonline.com/testtxt/story.asp?num=3261
"WHY DO FARMERS WITH CROP INSURANCE NEED DISASTER ASSISTANCE?
9/19/2002
The National Association of Wheat Growers (NAWG) today responded to a question that is being asked more and more in the press, relative to disaster assistance. Many apparently believe that disaster assistance only needs to be provided to those agricultural sectors which do not have access to crop insurance tools.
NAWG pointed out that the highest level of crop insurance available is 85% of production, but because of premium cost many producers must insure at even lower levels.
"Crop insurance is an effective tool, but even at the highest coverage levels it requires at minimum a 15 percent deductible every single year," said Gary Broyles, President of the association. "The most common coverage is at 70%, resulting in a 30% annual deductible. In wheat country we have faced five consecutive years of drought, and no one can sustain 30% deductibles every year for five years in a row. Nobody has margins to absorb that impact. We certainly agree that disaster assistance for livestock producers is necessary, but crop producers also have acute needs for disaster assistance."
Kansas State University agricultural economist Dr. Art Barnaby illustrated the point on his web site earlier this week. In a paper entitled If Crop Insurance is Working Why Do Farmers Need Disaster Assistance?, Barnaby made the following observation: "The worst outcome for insured growers is to suffer a 35% to 40% yield loss and higher prices. They will lose their counter cyclical payment because of higher prices, they have fewer bushels (production) to sell at the higher prices, even with this significant yield loss they will receive no payments under traditional ad hoc disaster aid, and their net insurance payments will be small or none." Barnaby referred to the lack of relief for insured acres as the "hole in the safety net".
The scenario described by Barnaby is exactly what is happening in wheat and other crops. Multiple years of drought, coupled with production problems elsewhere in the world, have led to a tightening of wheat supplies and resulted in rising prices. US producers have fewer bushels to sell, but will receive no aid from price-based mechanisms because the prices have risen above trigger levels.
"We're happy to see the Administration announce disaster relief for livestock producers," said Broyles. "We appreciate their creative proposal to address the needs in the livestock sector. We hope now Congress and the USDA will turn their attention to the serious needs of crop producers in this country, and meet that need as well."
NAWG also called on members of the House of Representatives to co-sponsor H.R. 5383, a disaster bill introduced by Congresswoman Barbara Cubin, which has attracted bipartisan support and is now circulating in the House.
National Association of Wheat Growers
415 Second St. NE, Suite 300
Washington, DC 20002 Phone (202)547-7800 / Fax (202)546-2638
Contacts: Daren Coppock, Mark Geade
Gary Broyles, NAWG President (406) 663-2115
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