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MSU prof says increasing reference prices for farmers is not a good bet

An ag policy specialist says raising reference prices in the next farm bill would come with more negative impacts than the up to $50 billion price tag is worth.

Michigan State University’s Alan Ker tells Brownfield increasing crop insurance prices for some commodities would likely mean cuts to conservation funding which is already over demanded.

“The farm bill talks about risk management, but really it’s revenue management,” he says. “There is very little protection to none in the farm bill for cost hikes when the output price isn’t going up but the input prices are.”

He says the 10 to 20 percent proposed increase doesn’t fully address margin pressures farmers are facing and the market will is more likely to adjust itself in the short term.

“If the cost of production goes up, sooner or later, the prices are going to have to go up,” he says. “These things are not long-term events or people leave the industry and supply goes way down.”

Ker says demand for a margin protection program hasn’t been widespread yet for crop farmers as it is in the dairy industry.

And, he says it’s unlike the next farm bill will be passed this year or next with the current environment in Congress.

Brownfield interviewed Ker during the recent Michigan Ag Credit Conference.

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