“NFU members believe strongly in the need for farm programs for two reasons: to provide assistance in times of disastrous yields or weather conditions and to protect against agricultural commodity price collapse,” said Mr Johnson. “The version of the farm bill approved by the House Committee on Agriculture fulfills both of those needs, through a robust crop insurance program and the inclusion of meaningful reference prices through the Price Loss Coverage (PLC) option. PLC in particular is under repeated and unwarranted attack from members of Congress, the administration, and some outside interests who seem to have forgotten the conditions of the late 1990s after the failure of ‘Freedom to Farm’ policies that eliminated farm safety net protection against extremely low market prices.”

NFU argues that modifying PLC to establish a reference price based on a five-year Olympic average price, as some have suggested, would weaken the safety net as multiple years of lower prices would decrease the support prices to very low levels.

“PLC in its current form sets fixed reference prices well below the cost of production so as to provide some help in very tough times but not guarantee profits,” said Mr Johnson. “For example, PLC as proposed sets a corn reference price of $3.70/bushel, while the 2012 average total cost of production for corn was $5.41/bushel. For soybeans, the reference price would be set at $8.40/bushel, but the 2012 average total cost of production was $10.03/bushel. For wheat, the reference price would be $5.50/bushel, while wheat’s 2012 average total cost of production was $6.77/bushel. In addition, the level of support set by PLC would not distort planting decisions since the program only triggers during market collapse.”

NFU opposes any efforts to undermine the integrity of either of those important farm safety net policies.