Ag Feels The Pressure As World Population Hits 7 Billion

October 31, 2011 will mark the first time in history that seven billion humans will populate the planet, according to a recent United Nations report. The Executive Director of the UN’s Population Fund called the prediction “both a challenge and an opportunity,” noting that “globally, people are living longer, healthier lives and choosing to have smaller families.”

Commodity markets were already feeling pressure far in advance of the announcement as China placed record orders for feed grains to meet the demands of growing domestic protein consumption. The U.S. Grains Council projects that China will need to import 5-10 million tons of corn for the 2011/12 season, a huge increase from USDA’s estimate of 2 million tons for that period.

About the same time, the UN also updated its grain supply forecasts, noting that world markets remained remarkably tight. So while it seems that the world will slide by with enough food to accommodate its seven billionth inhabitant, the world population is expected to increase by another third by the end of the century.

No respected authority is arguing whether or not we’ll need more food. That’s a certainty. But farmers in the U.S. might have been surprised that the very policy that is in place to help ensure that America’s food production system is efficient and effective – crop insurance – is again under the microscope and was recently targeted by the White House for an additional $8 billion in cuts in the next decade.

That suggestion received a chilly, bi-partisan reception on the Hill by crop insurance champions of all stripes. U.S. Representative Frank Lucas (R-OK), Chairman of the House Agriculture Committee, and U.S. Senator Pat Roberts (R-KS), Ranking Member of the Senate Agriculture Committee, responded quickly, noting that although agriculture has and will continue to do its part to help balance the budget, “The President’s policy priorities reveal a lack of knowledge of production agriculture and fail to recognize how wholesale changes to farm policy would impact the people who feed us.”

“For example,” they said, “cutting $8 billion from the crop insurance program puts the entire program at risk. We have heard again and again from producers that crop insurance is the best risk management tool available. In jeopardizing this program, the President turns a deaf ear to America’s farmers.”

South Dakota’s Senator John Thune (R) agreed and stressed the importance that agricultural budget-cutting decisions should be left to those who understand how each program works, urging that the cuts “can’t be tilted and weighed too heavily against our farmers.”

But Democrats had a lot to say about crop insurance as well. Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) reiterated the view of Roberts and Lucas in a recent statement. “Agriculture will do its fair share in helping to reduce the deficit, but as I’ve always said, decisions on where those cuts come from should be made by the Agriculture Committee, where we constantly receive input from farmers and others in the agriculture community,” she said. “Farmers across the country have made it very clear that maintaining crop insurance and responsible risk management tools are critical, especially as droughts, floods, and devastating storms have battered farms across the country.”

Arkansas Senator Mark Pryor (D) was even more blunt during his weekly conference call with reporters. “Rural America is going to take it on the chin, and that is what you see with the Obama plan,” Pryor said.

Rep. Collin Peterson (MN), the top Democrat on the House Agriculture Committee, was likewise critical, especially when it came to one component of farm policy, which he considers essential to rural America’s success. “I’m very opposed to cutting more from crop insurance,” Rep. Collin Peterson (D-MN) said, explaining that a program this important cannot withstand cuts of that magnitude again, the way it did in 2008.

Despite its broad coattails of political support, crop insurance is again under scrutiny. The question becomes how much more can the budget committee take before the policy itself becomes impotent when calamity strikes the farm?

And the answer to the question will hold serious ramifications, not just for the U.S. farmers and ranchers, but also for the growing number of hungry mouths to feed.

(Source: National Crop Insurance Services)

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