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Senior Advisor

Means Testing - Not So Simple

I read an article by Art Barnaby talking about means testing on crop insurance.  It is not as simple as it sounds.  The administrative nightmare of figuring who is over $750,000 AGI and who is not would take a tax lawyer and maybe some new definitions by the government.

 

 

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Senior Advisor

Re: Means Testing - Not So Simple

I can guarantee you with100% accuracy that the over $750,000 list won't contain my name.
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Re: Means Testing - Not So Simple

I thinki it would be a lot simpler to just limit the subsidy to a fixed amount of dollars per person. And yes, everybody would immediately be trying to figure their way around it.

 

I do think that multiple family members or legitimate unrelated parties who are working together looking for efficiencies are legitimate so it would require some guidelines to deal with that and somebody exercising some judgement at the margins.

 

Either that or no subsidy.

 

I'll actually go you one further and say what we really ought to do is do a 1995 Farm Bill edux but mean it this time. Say we're going to continue to subsidize crop insurance at the same level this year, 80% the next and on down to 0 over 5 years. With that bill you pass a law stating that beyond that there will be no ad hoc disster aid whatsoever and no price supports or LDPs above the current loan levels.

 

You'd have a lot of folks squealing like shoats stuck in a fence but they really wouldn't have any choice other than in or out.

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Honored Advisor

Re: Means Testing - Not So Simple

How about a "bushel means testing"?   Where a farmer gets "cheap insurance" on his or her 1st 50,000 bushel of production(just to throw a number out) then the "cheapness" declines after that.   Of course that wouldn`t encourage getting big big big big big.

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Senior Advisor

Re: Means Testing - Not So Simple

BA, that wouldn't be fair to someone. Us desert farmers might be able to insure 5000 acres where as you garden farmers might be limited to 1250. My numbers are fictional, just as yours were.
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Honored Advisor

Re: Means Testing - Not So Simple

Shaggy, this year I`ll trade places with you "desert farmers", I saw your pictures Smiley Happy   But when talking about what`s "fair" with farm policy, sometimes "payment limitations" make it a battle between northern corn jockeys against southern rice and cotton guys that seem to think they need to drain the US Treasury each year just to stay in business.  The northern BTO corn jockey quitely goes to the bank with his big check that he flies under the limitations radar with. 

 

If you try and untangle the mess, in a year when there was corn LDPs someone with 2,000 corn acres was singing the blues claiming, he would hit the limit.  But it comes down to "production per acre" in a given area.  Some parts of the country 1 acre will carry a cow and calf, other areas you need a half section per cow.  So if the new American Gothic farmer needs 1,000 acres of Wright county Iowa production to live off c/b rotation that`s say 125,000 bushels of production.  Some areas of Nebraska maybe it would take 3 times the acres to produce those bushels. If we want the "cheap" insurance to target the American Gothic/Dodge commercial farmer, then that "125,000 bushels of production" should be some sort of limit.  This business of `adjusted gross income` is just a red herring that bolixes up meaningful farm program reform.

 

With the rice and cotton guys needing all this subsidy to stay in business that could`ve been taken care of in 10 minutes, if they really wanted to solve it.  There would`ve been different payment limits between corn/beans and the rice/cotton.  But I imagine some 20,000 acre BTO corn jockeys went to the National Corn Growers with a bag of money to make sure it remained one high limit.

 

Gotta laugh, it`s like OJ Simpson making his hand not fit in his gloveSmiley Very Happy  if it was the other way and OJ would be innocent if the glove fit, he would`ve miraculously gotten his hand in that glove, amazing what people can do for their best interest.

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Senior Advisor

Re: Means Testing - Not So Simple

Thanks for noticing my pics BA, if they continue to look this good all season I won't trade you. We've got about 11 weeks of hot & dry looming at us and that's where our crops pay the piper.
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