Sunday, May 18, 2008

Simply shocking news...

Once again, Pro Farmer Washington correspondent Jim Weisemeyer has put his finger on a key factor in the new farm bill that I agree will ensure significant budget-busting cost overruns: the ACRE program.

Without cherry-picking his brilliant analysis, I will say just this. I have never bought crop insurance (other than the required CAT for my grain bin loan), and now I won't have to. The ACRE program is a painless way for me to get crop insurance for a piddling price. (In fact, if you are close to the payment limit, participation may effectively extend the top - not sure on this, but I'll find out). In the true spirit of our farm policy, we once again target benefits to people like me who don't need them.

Like Jim, I predict a massive signup for this feature, which will result in whopping payouts unimagined by legislators. Check out the billions we'd get at $4 corn, for example.

In other words, we have a traditional farm bill.

3 comments:

From Virginia said...

As I understand the bill, your ACRE pay limit is combined with your Countercyclical pay limit of $65K with the provision that if you sign up for ACRE you take a 20% reduction in direct payments and a 30% cut in loan rates. The pay limit for Direct payments is then lowered from $40K to $32K (20%)and that $8K is then added to your ACRE/Countercyclical pay limit, bringing it up to $73K.

What a tangleled web we weave!

John Phipps said...

VA:

Thanks for the info. I suspected there was a wrinkle in my thinking somewhere. Still, Jim appears to be right - we can almost double our target price.

I think we are talking major education headache for the FSA here.

From Virginia said...

Yes, a major headache indeed. And wait till they have to explain the "whole farm" approach to the new standing disaster program! I think that will make our head explode and finish melting down FSA's obsolete computers.