Tuesday, October 07, 2014

APH Again--What Is Normal

Previously posted on the problems implementing the APH provision of the farm bill.  The issue continues to get a lot of attention, as witness today's Farm Policy.  Two paragraphs from there:

Ms. Taylor pointed out that, “Huie [a Texas farmer introduced earlier in the piece] and other mega-drought victims from Texas to Colorado had banked on a new 2014 farm bill provision forgiving Actual Production History (APH) yields that collapsed due to extreme weather. The APH fix forgave an individual’s actual yields in counties where planted-acre yield tumbled at least 50% below a 10-year average. Growers in contiguous counties would also qualify.
Because APHs are based on a 10-year history, the new rule would have erased Huie’s near-zero yields due to drought in 2006, 2009, 2012 and 2013. That would have lifted his 2015 cotton APH average 26% — with similar boosts for his dryland corn, grain sorghum and wheat. Establishing a realistic APH is doubly important now, since it is the basis for payments under the new Supplemental Coverage Option (SCO), an insurance rider that allows growers to buy up insurance coverage to 86% levels. Huie expects to need that option to supplement his base coverage.
I see this as illustrating one of the problems: the poor guy had zero yields in 4 out of the last 10 years, but he wants a "realistic" APH to get his coverage up.  What's the problem:  defining "normal".   For a farmer it's a good yield, not the sort of yields the Midwest corn and soybean people are getting this year, but a good, solid yield, one which rewards the hard work and the investment in land and equipment and fertilizer.  It's much like a Washington R*dskin fan, we'd like a good team, a team with a winning record, not necessarily a Super Bowl team, though that would be nice, but one whose season ends with some quiet satisfaction.  Certainly we don't want a team which only wins 3 games, we deserve better.

The reality Washington fans have to face is the team has not been good, much less very good, on a sustained basis for the last 2 decades. We don't have either the talent or the system.  It's possible that farmer Huie needs to face the fact that his land in Texas no longer has the weather needed to be a good farm.

If that's true, then Congress and RMA will be wasting money when they adjust the APH.

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