IL CORN’S CHRISTMAS LIST: THE BEST RISK MANAGEMENT TOOLS

Illinois corn farmers are writing a letter to Santa; what’s on our list?  Today we continue with item three… risk management tools we can work with!  Thanks to Thomas Martin, SIU student, for this series focusing on IL Corn’s top priorities!

Farmers are a gutsy bunch.

It’s cliché, but farming is a gamble and farmers are putting their families and their livelihood on the line with every seed.  I’d relate it to my first casino experience which, although profitable (luckily), I could have just as easily lost my $20 bill.  Also luckily, I grew up on our family’s “casino” in Central Illinois.  This meant that we’ve had bad years and good years, but through good planning and a little luck, we’ve remained in the game.  For some farmers, it doesn’t always turn out so well and certainly fewer and fewer farmers are in the game today.

Historically, the government has helped to minimize some of the casino-esque qualities of owning a farm.  But, we also as a nation and a state face astronomically record-high debt which is unacceptable. We must change that and as any strategy should entail – we need to realize more revenues and cut spending.

So far we’ve established two things – reduce national debt and farmers need risk management. This is certainly an easy concept but the execution of such a concept is a little more difficult. I think we can establish that direct payments have been far from perfect in their very nature and have become a public relations nightmare for farmers. When Illinois Corn did a survey of farmers it became abundantly clear that we still need a safety net. We need to “ADAPt” to the changing times and that desire has created a proposal called ADAP – Agriculture Disaster Assistance Program.

Building on the original revenue-based safety net, ACRE, ADAP makes common sense modifications that better serve farmers and the government.  ADAP is simplier than ACRE for one.  It is also closer to the farm; payment triggers are determined on a more local basis instead of a state-wide basis.  This makes sense.  Just because weather has threatened a crop in northern Illinois doesn’t mean a farmer in southern Illinois needs a payment.

The chances of Illinois Corn actually receiving ADAP or its cousin, ARRM (Aggregate Risk and Revenue Management) proposed by Senators Durbin, Thune, Lugar, and Brown, are nearly squelched.  But what Illinois Corn still seeks is a program to cover farmers through a multi-year price decline when crop insurance doesn’t provide protection.

Crop insurance remains essential to ensuring that the gambles farmers engage in are a little less like gambling, while preventing the tragedy of families losing their farms as well as any exploitation of the previous systems.  In the surveys and listening sessions that Illinois Corn had on a variety of Farm Bill concerns, it became abundantly clear that crop insurance is essential to farmers in managing their risk.  But Crop Insurance is a risk management tool for any given year and the weather, disease, and insect pressures that exist within that year.  Farmers still need a program to cover them when prices of seed, fuel and fertilizer prices remain high while the prices they get for their crops continually drop.  That dynamic can put hundreds of farmers out of business without some sort of risk management tool.

So Santa, please send all of the Congressmen and women a warm and heartfelt reminder that farmers are willing to help balance the budget (giving up direct payments) if they can have programs that keep farming from being a game of chance (like ADAP and crop insurance).

Thomas Martin, Raymond, IL
Senior in Agricultural Systems
Southern Illinois University

Read about the other items on our Christmas list:
1. Upgraded Locks and Dams
2. Less Government Regulation

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