Agricultural and Food Policy
 Agri Outlook
Radio
Number 78
Policy Part 5. Key points to consider as the Senate debates the new farm bill on
agricultural policy, the global economy, and the need for a strong safety net for the U.S.
rice and cotton sector. ( 2:56 minutes)
Audio/Video Script:
Dr. Bobby Coats
Extension Economist
University of Arkansas, Division of Agriculture
Rice and cotton yield protection falls short of needs and revenue insurance
requires study and pilot testing for rice and cotton producers. The
counter-cyclical program should provide producers with choice between the
current program and a revenue type product. I’m Bobby Coats Extension Economist
University of Arkansas Division of Agriculture.
The new global economy has intensified competition among agricultural
producers around the world. This competition implies the low cost provider has a
market advantage in the domestic and global marketplace unless one simply has a
preferred provider. This increasing competition coupled with inflation,
non-indexed program payments, and huge production cost increases since 2002 have
cut into U.S. rice and cotton producers’ profit margins and this makes producers
increasingly vulnerable to yield and price risks.
For rice and cotton producers the traditional yield crop insurance product is
not an effective risk management product especially for above average producers,
while for Midwest corn and soybean producers the traditional yield crop
insurance product has shown itself to be a very viable and effective product.
Priority in the new farm bill should be given to making the traditional yield
crop insurance product as viable for rice and cotton producers as it is for
Midwest corn and soybeans producers. The development of a viable traditional
yield crop insurance program then sets the stage for developing a viable county
or area revenue insurance product.
The proposed national revenue insurance products tend to favor lower
yielding producers over higher productivity producers. The counter-cyclical
program should provide producers with choice between the current program and
a revenue type program. Until the global marketplace proves otherwise, rice and
cotton producers must assume that they will once again experience the
devastatingly low prices that they experienced in 2001 and without a revenue
insurance program that groups like operations the expectation is that the higher
ones productivity, the more likely rice and cotton producers will favor the
current counter-cyclical program.
This has been Bobby Coats Extension Economist University of Arkansas Division
of Agriculture.
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