FAPRI Releases Short Working Paper on Risk Management Bills

October 29, 1999

The Food and Agricultural Policy Research Institute released a brief study, "Net Farm Income Impacts of Alternative Risk Managements Bills," at the request of Senate Agriculture Committee Chairman Richard Lugar.

The bill proposed by Chairman Lugar (S. 1666), whose committee is deciding how to spend the $6 billion earmarked by Congress for risk management, comes off favorably in the report compared to the bill (S. 1580) put forth by Senators Pat Roberts (R-KS) and Bob Kerrey (D-NE). (Five members of the committee support the Lugar bill while ten back the Roberts - Kerrey proposal.) Critics, however, claim the report is not particularly helpful in resolving the central issue of whether cash payments are preferable to crop insurance in providing risk management for American agriculture.

Critics note that the FAPRI analysis merely calculates that farm income would increase under the Lugar plan since the government would be giving money to farmers directly instead of providing increased subsidies for crop insurance premiums under the Roberts - Kerrey approach. The FAPRI report overstates the benefits of the Lugar plan, according to critics, because it fails to calculate the losses uninsured farmers could incur and have to absorb.

Many of these criticisms of the Lugar approach were made in a letter two weeks ago from the American Association of Crop Insurers to the chairman and, according to critics, remain unaddressed in FAPRI's analysis. Click here for the American Association of Crop Insurance letter to Chairman Lugar.

Click here for the FAPRI report and FAPRI chart 1 and FAPRI chart 2 in pdf format.