What is in this article?:
- Economist authors study on various farm program proposals recently introduced.
- Tables included.
Is the term ‘shallow loss’ being used the same across all the proposals?
“Not to be academic, but it depends on what kind of definition you bring to ‘shallow loss.’ To my knowledge, there is no common, standard definition.
“However, at the broad level, I think they’re talking about the same thing. That is: the share of losses not covered by crop insurance. To illustrate, a common insurance coverage is 75 percent, which makes the deductible 25 percent. That 25 percent would be the ‘shallow loss.’
“A friend of mine prefers ‘uninsured loss’ instead of ‘shallow loss.’
“When you get to the proposals’ specifics, you see divergence.
“I provide a range of loss covered and it shows some significant disagreements on the specifics (see Table 1A). For example, the National Corn Grower Association’s proposal would cover losses from 5 to 15 percent. The ARRM (Aggregate Risk and Revenue Management)proposal would be at 10 to 25 percent. There’s a big difference between 5 and 25 percent – not just on the coverage a farmer would have but on the cost to the federal budget.
“One thing going on here is that these proposals come from different commodity groups. Producers of different commodities buy different levels of insurance coverage.”
More on crop insurance in the proposals…
“While some proposals provide specific suggestions (see Table 1B), most address crop insurance broadly by saying ‘we want to minimize overlap and the programs need to be coordinated. For example, we want the new shallow loss program to work in concert with crop insurance so there’s a wise use of public dollars that will be cost-effective and provide the most assistance to farmers.’
“The implication is that crop insurance is now an integral part of the farm safety net. Philosophically, that’s a major shift in farm bill discussions. There was a bit of this discussion concerning the ACRE proposal in 2008. Now, though, it’s front-and-center.”