F arm bill discussions are beginning in earnest, as groups prepare for congressional hearings and possible legislative action in 2006. A common outcome of organized discussions is an expressed need for a better federal safety net for farmers. This outcome is somewhat surprising in light of the existing safety net for producers of currently supported fi eld crops. As was demonstrated in a previous Iowa Ag Review (“Risk Free Farming,” Winter 2004), producers of program crops who farm their own land and successfully get their crop into the ground face almost no risk that their returns over variable costs of production will fall below the average returns without government support, as shown in Figure 1. While the situation depicted in Figure 1 is not directly applicable elsewhere, the majority of land-owning producers of corn, soybeans, and wheat face practically no risk that they will not cover their cash production costs. So what motivates the widely held perception that farmers need an improved safety net?
Babcock, Bruce A. and Hart, Chad E.
"Safety Net Design for the New Farm Bill,"
Iowa Ag Review: Vol. 11
, Article 1.
Available at: http://lib.dr.iastate.edu/iowaagreview/vol11/iss3/1