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Witnesses urge House panel to protect crop insurance

The farm economy will be driven by commodity prices, input costs and the future of the farm safety net.  That’s the view of witnesses who testified Thursday about growing farm financial pressure before the House Subcommittee on General Farm Commodities and Risk Management.

There is currently not a crisis, according to Zippy Duvall, president of the American Farm Bureau Federation, but citing USDA projections for falling farm income, Duvall says one is on the horizon.

“These declines are starting to have an impact on the farmer debt-to-asset ratio,” Duvall told the House panel, “and farmers’ operating debt has grown from $124 billion in 2012, to more the $165 billion today.”

Duvall and other witnesses told the subcommittee that farm bill risk management tools, such as crop insurance, are of growing importance in maintaining strength in the U.S. farm economy.

“Thanks to these programs, the agriculture sector overall will hold on,” Duvall testified.  “If I do not deliver any other message today, I want to deliver one, and that’s that Farm Bureau members and the Farm Bureau appreciates your continued efforts to protect these important farm programs, especially now when they’re so badly needed,”

National Farmers Union President Roger Johnson told the subcommittee that the number of troubled credit portfolios is increasing in his home state of North Dakota.

“My local lender says without crop insurance I would not have ten troubled accounts, I would have between 300 and 2,200 troubled accounts,” said Johnson, during his testimony Thursday.  “That lender services 2,600 members in the center of North Dakota, 99 percent of whom carry crop insurance.”

Although similarities between now and the 1980s farm crisis came up during the hearing, the primary difference also came up; that interest rates are much lower than they were in the 80s.

“Debt just spiraled out of control,” said Johnson, referring to the period of the 80’s during which interest rates exceeded 20 percent.  “We don’t have that interest rate environment right now, but if that changes, this situation is ripe for going very fast in a negative direction, in my opinion.”

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