FOR IMMEDIATE RELEASE
Contact: Sara Robertson (Sara.Robertson2@mail.house.gov)
Rep. Crawford Raises Reference Price Challenges in Farm Bill Hearing
Washington — Today, Representative Rick Crawford (AR-01) participated in the House Agriculture Committee hearing entitled, “A 2022 Review of the Farm Bill: The Role of USDA Programs in Addressing Climate Change.” Rep. Crawford raised the challenges caused by statutorily set reference prices as commodities, such as rice, experience declining prices and astronomical fuel, fertilizer and other input costs.
“Rice is not projected to do very well over the next few years mainly because they don’t benefit from the higher prices to offset all these high costs that you’ve mentioned. All I can say is the safety net that we have that was constructed with reference prices were put in place in the 2014 Farm Bill that were using from the 2012 time period is well out of date. We need to start thinking about ways that the reference price could be arched up to take some of the pressure off of producers,” said Dr. Outlaw, co-Director of agriculture and Food Policy Center.
“The current Farm Bill using reference price as a baseline from 2012 is obviously not adequate to meet the demands of input costs today as well as production costs. Would indexing be a good option in this scenario?” asked Rep. Crawford.
“We’ve actually looked at indexing over the last ten years many different times and there are approaches that will work and offset some of the costs,” responded Dr. Outlaw.
“I understand that you can’t index something based on a future projection it’d have to be probably be based on a 3 year history or a rolling average. But the fact that we can even have a conversation about the potential for indexing to address this shortfall is worth mentioning,” said Rep. Crawford.
This exchange highlights the need to revisit current reference price policy. Commodity price protection – Price Loss Coverage or Agricultural Risk Coverage – is based on a price set in law, known as a reference price. If a commodity’s market year average price does not meet the reference price, a price protection payment is triggered. The goal of price protection programs is to protect agricultural producers from market fluctuations. However, if the reference price is not based on current market conditions, that protection may not be realized. As we draft the next Farm Bill, the House Agriculture Committee must keep producers top of mind to ensure we enact policies to enable them to continue feeding and clothing the world.
Rep. Crawford’s full remarks from the hearing can be found here.