2013 ag outlook includes farm bill, food price issues


COLUMBUS — Ag economists and farm policy experts drew some final conclusions about 2012, and cast some insight into the new year during the Ag Policy and Outlook Conference, held Dec. 3 at the Nationwide and Ohio Farm Bureau 4-H Center in Columbus.

The meeting has historically been regarded as the Dean’s preview, sponsored by Ohio State University’s dean of the College of Food, Agricultural and Environmental Sciences. And it was the newly appointed dean, Bruce McPheron, who got the program started.

McPheron is an Ohio native and earned his undergraduate degree from Ohio State. He previously served as dean of the College of Ag Sciences at Penn State.

“We are the most important industry in the world because there is not a person in this world who does not wake up in the morning aspiring to shake our hand,” McPheron said. “In fact they (consumers) want to shake our hand three times a day if they can.”

Food availability and affordability were dominant topics throughout the day, as experts weighed in on everything from population growth to food riots, and what farmers can expect in 2013.

Farm bill

Ohio State Farm Policy expert Carl Zulauf weighed in on a policy that could both help farmers and consumers, and one he hopes will be resolved by the end of this year: the new farm bill.

“I honestly believe we will get it done this year, but there is a distinct possibility we won’t get it done,” he said.

Similar versions of the bill have been approved by the full Senate, as well as the House Agriculture committee, but the bill has yet to be considered by the full House, which in September declared a vote would not happen until after November elections.

Zulauf also is a farmer, and stands to gain or lose depending on the actions taken. As a professor, he has tracked the progress closely and believes a bill could be approved fairly soon, if Congress cooperates.

“I’m struck by how similar (House and Senate) these bills are,” he said. “These are really conferenceable farm bills in a variety of different ways, if Congress has the will to do it.”

As Zulauf pointed out, both bills eliminate direct payments, retain marketing loans, make risk management the safety net’s central focus, make individual crop insurance the central safety net program, and add a county insurance supplemental coverage option.

What’s different?

The major differences, he said, are the size of cuts to nutrition programs. The Senate version provides for a $4 billion cut over 10 years, compared to $16 billion in the House version.

The bills also differ on whether the Farm Service Agency should administer a farm level risk management program, and whether the multiple-year risk management program should focus on price (House version) or revenue (Senate version), and have benchmarks that are fixed (House) or change with market conditions (Senate).

Zulauf said he feels the most important changes in the farm safety net are the supplemental coverage option, and the Dairy Production Margin Protection Program.

The supplemental coverage option, or SCO, allows a farm to buy county insurance as an “add-up” to its individual farm coverage. Coverage can be bought up to 90 percent.

Zulauf said crop insurance is both a risk management program, and also a payment program somewhat similar to a direct payment. If a farmer pays for crop insurance over enough years, there is an expectation that he will receive more in payments than he pays in premiums.

“It can be looked at as a strategic investment,” Zulauf said.

Food prices

Ian Sheldon, Andersons Professor of International Trade at OSU, discussed the ways country governments respond to high food prices. He noted that many developing countries respond by enacting their own trade policies and the release of public stock, which collectively with other countries, actually increases the price of food.

Instead, he said countries should avoid direct market invention, and should instead use targeted safety nets like food stamps and cash transfers.

He showed a graph of major political unrest the past eight years, which appears to correlate strongly with the high price of food. When enough countries develop their own trade policies, it actually sends food prices higher, he explained, and adds to the issue of world food price instability.

The daylong event featured a wide variety of ag topics for the new year. Some of the information will appear in upcoming editions of Farm and Dairy.

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