Agricultural Policy And Its Advantages

Sep 8, 2020 | Business Insurance

What Is An Agricultural Policy?

Agricultural policy “involves agriculture, economy, and society,” according to Britannica. According to definitions.net, agricultural policy is a set of regulations governing domestic agriculture and agricultural imports. With this idea in mind, we dive into the advantages of agricultural policy to farmers and why farmers need agricultural insurance.

Each country’s government implements policies to achieve certain results in its domestic agricultural market, such as “assured supply level, price stability, product quality, product selection, land usage, or employment.” U.S.  “Farm bills” govern agricultural, food, nutrition, bioenergy, and forestry initiatives. For nutrition policy, SNAP will alter less. 

Biotechnology

One of the advantages of agricultural policy works to keep markets open for U.S. products made from modern biotechnology.  Biotechnology can reduce wastes from pests, viruses, and drought, which is an important factor in combating malnutrition. The United States also works with different organizations to promote awareness of biotechnology.

The Benefits and Challenges of Biotechnology

Increasing Food Security 

By 2050, the world’s population is expected to increase to over 9 billion from the current 7 billion. Food production must be made more than double its value today and be environmentally sustainable to meet that challenge. Biotechnology has many benefits such as reduced insecticide use, reduced erosion, increased tolerance to droughts and floods, and proper nutrition.

Increasing Understanding and Acceptance

GMO crop production is strong in 26 countries while 44 other countries imported this kind of crop. Food production through biotechnology goes through strict inspection by risk assessment procedures by different organizations such as the Environmental Protection Agency. International acceptance will grow as science-based regulations continue to develop the production of biotech crops and as people experience its advantages.


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Food Security

The Office of Agricultural Policy works with the Office of Global Food Security and the United States Agency for International Development to improve on Feed the Future. This is the country’s global hunger and food security initiative to combat problems in food security. As reported by the Food and Agriculture Organization, there are about 821 million people who are malnourished. Making agricultural products sustainable increases the availability of food makes the food affordable and raises incomes of the poor.

Improving Food Security

The World Food Prize gives recognition to individuals who have progressive human development by improving the quality, quantity, or availability of food. Every year, about 4,000 institutions and organizations are invited to nominate candidates for this recognition. This is awarded at a ceremony at the Iowa State Capitol in Des Moines, Iowa every October.

Food Assistance

The U.S. Office of Agricultural Policy played a key role in negotiating the 2013 Food Assistance Convention which replaced the 1999 Food Aid Convention. The new convention includes all forms of food assistance that will improve access to food for people who are most in need. This also includes a new commission structure, qualified activities, food assistance products, and better transparency and accountability.

Food Safety

The main core of the Office of Agricultural Policy is ensuring the health and well-being of the country’s consumers, preserving market access for American agriculture producers, and protecting the environment. They work closely with a number of regulatory agencies to monitor food safety risks from products abroad. They also support negotiations to eliminate unfair barriers to trade related to food safety, animal health, and plant health.

Protecting Consumer Health and Preserving Market Access

The Office of Agricultural Policy is part of the U.S. Codex Alimentarius Commission, an international food standard-setting body that ensures fair trade practices. Their standards are used as a basis for national food regulatory policy around the world. The Economic and Business Affairs Bureau works with the USDA’s Codex Office on global consensus building on standards to guarantee safe food.

World Trade Organization Committee on Sanitary and Phytosanitary Measures

The Office of Agricultural Policy serves on the U.S. delegation to the World Trade Organization Committee on Sanitary and Phytosanitary (SPS) measures. They meet three times per year in Geneva, Switzerland to advocate for better market access for agricultural and food products. They also make sure that other countries abide by their World Trade Organization obligations.


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Animal Products

Animal Policy & Regulatory Issues

The Agricultural Improvement Act of 2018 (2018 Farm Act) provides disaster assistance to livestock producers. The Natural Resources Conservation Service provides technical, educational, and financial assistance to qualified farmers to combat soil, water, and related natural resource problems.

When livestock farmers are having trouble financially, the USDA’s Agricultural Marketing Service (AMS) buys their goods. These products include meat, poultry, fish, and eggs for domestic feeding programs to maintain price through their Food Purchase programs.

The Risk Management Agency of USDA offers agricultural insurance for cattle, swine, and lamb that prevents problems such as declining livestock prices and instances like feed costs are greater than livestock prices. Animal and Plant Health Inspection Service (APHIS) looks after USDA’s Disease Eradication, Animal Health Surveillance System, and Emergency Management Response System. 

Regulatory Issues 

Animal Waste 

One of the regulatory issues is animal waste.  This ensures that the production of livestock does not decrease their land’s capacity to provide logging, mining and farming for the general public. As poultry and hogs are in restricted areas for their whole life cycles. Cattle and sheep are usually in pastures and then placed on feedlots. The Environmental Protection Agency disseminates information and enforces livestock waste regulations. 

Animal Health and Food Safety

The U.S. Food and Drug Administration (FDA) protects the Nation’s food supply and public health. Livestock regulations are also being followed to govern imports from other countries, feeding practices, and food safety for meat products. Animal and Plant Health Inspection Service (APHIS) inspects imported live animals. FSIS also works on food-borne illnesses such as E. 


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Livestock Mandatory Price Reporting

The Mandatory Price Reporting (MPR) program began in 2001 as an answer for more price information at several stages in the marketing system. All livestock packers and processors who slaughter an average of 125,000 cattle, 100,000 swine, or 75,000 lambs per year are required to report to USDA.

Aquaculture

Aquaculture is when you produce aquatic animals and plants that are under regulations for all or parts of their life cycles. The interest in this is on the rise because the restrictions may decrease. The estimated sales for this are at $1.37 billion.

Cattle and Beef

The U.S. is the world’s largest producer of meat and has the biggest fed-cattle industry. The country produces high-quality and grain-fed beef for domestic and export use. However, they purchase lower value and grass-fed beef for processing. There are two production sectors which are cow-calf operations and cattle feeding. Since cattle eat feed grains, grain supplies and prices influence the production of beef.

Dairy

Milk is being made in the whole country having the western and northern areas of the country as the major producers. Dairy farms are members of cooperatives. This industry has a continuous decline in operations. Dairy products produce fluid beverage milk, cheese, butter, ice cream, etc. to name a few.

Hogs and Pork

The U.S. is currently the third biggest consumer of pork and pork-produced products. Exports usually reach over 20% of commercial pork production in recent years. Furthermore, the production is currently dominating in the Midwest and in eastern North Carolina.

Poultry and Eggs

The poultry industry in the U.S. is the largest producer and second-largest exporter of poultry meat. They are also a major egg producer. U.S. consumers eat more poultry than beef or pork. The industry is significantly influenced by dollar fluctuations, trade negotiations, and economic growth in foreign markets. This industry is also a major user of food grains.

Sheep, Lamb, and Mutton

Farmers breed sheep for meat and wool. This industry has continued to decline since the mid-1970s. As the wool industry declines, producers focus on lamb and mutton production and also products like sheep leather.


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Crops

Corn and other Feed Grains

Corn production is high as feed grain in the U.S reaching up to 95% of production and use. The others are sorghum, barley, and oats. Most corn crops supply the main energy in feeding the livestock. Cereal, alcohol, and sweeteners, to name a few, need Corn.

Cotton and Wool

Being 25% of total world fiber use, cotton is one of the most significant textile fibers. The U.S. is the third biggest cotton producer and exporter. This industry produces $21 billion in products and services per year and also produces more than 125,000 jobs from the farm to textile mill industries.

Fruit and Tree Nuts

This industry consists of a wide range of products that reaches $25 billion farm cash receipts per year. The farm cash receipts are reaching about 7% of the total receipts for all agricultural needs and commodities and around 13% for all crops. This is produced on less than 2% of the country’s agricultural cropland. Less than 20% of the overall U.S. fruit and tree nuts supplies are for foreign markets. Nearly half of the supplies come from imports for local consumption.

Rice

Rice, which is the primary source of food for the whole population of the world, is also produced worldwide with 90% grown in Asia. Meanwhile, the U.S is a major exporter accounting for nearly half the yearly sales of produced rice in the U.S. Four regions in the country produce rice crops particularly in the South and in California. The South is producing long-grain rice while California is producing medium and short-grain rice.

Soybeans and Oil Crops

Soybeans are the largest source of animal protein feed and the second-largest source of vegetable oil. The U.S. is the world’s greatest soybean producer and second in exporting. This industry comprises 90% of the country’s production of oilseed that includes peanuts, sunflower seeds, and canola to name a few.

Sugar and Sweeteners

The U.S. is one of the world’s biggest sugar producers. Sugarcane and sugar beets make up to 45% and 55% of local sugar production. Production of sugar in the US increased from an average of 6 million short tons raw value (STRV) in the 1980s to 8.1 million STRV since 2005.

Vegetables

This industry comprises hundreds of self-sufficient markets within the food-marketing system. The farm cash receipts from the selling of vegetables and pulses reached up to $17.4 billion during the first 8 years of the 2000s. That’s about 14% of U.S. crop cash receipts. This was made on less than 2% of all harvested crops in the US. The annual per capita use of this industry was also 2% higher than a decade earlier.

Wheat

Wheat is only ranked third among field crops behind corn and soybeans. Farmers produced a total of .820 billion bushels of winter and other spring durum wheat on 50.2 million acres of land from 2016 to 2017. The acre land for wheat for 2017 to 2018 is only about 46 million acres which is a low record. This decline was due to low relative returns for wheat, changes in government programs for farmers, and competition in global markets. The country’s share of the market has also been declining over the past 20 years. It was high between 2001 and 2005 that reached 25%. However, it was reduced to 15% from 2016 to 2017.


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Farm Economy

Agricultural Baseline

Long-term agricultural projections of the USDA issues a scenario for the farm sector for the next 10 years. Projections include agricultural commodities, agricultural trade, and aggregate indicators of the sector such as farm income. These projections name major forces and uncertainties that might affect agricultural markets, prospects for long-term economic growth, consumption, trade, future price trends, trade flows, and exports of major farm commodities.

Beginning, Limited Resource, Socially Disadvantaged, and Female Farmers

Beginning Farmers

New farmers are farmers who have operated farms for 10 years or less. According to 2016 data, almost 17% of 2 million family farms were beginning farms. These were smaller than more developed farms. In the same year, they produced 10% of the total value of farm production. The owners of these farms are younger with an average age of 49.1. More than a third of these farms had a college degree or higher. Beginning farmers earned less income from the farm and they earned more from off-farm activities.

Limited-Resource Farm Households

Limited-resource farm households are defined as having low farm sales for 2 years and low household income. Low sales mean direct or indirect gross farm sales not more than $180,300. Low household income means current-year income is below the national poverty level for a family of four.

Socially Disadvantaged Farmers

Socially disadvantaged farmers are farmers who have been subjected to racial, ethnic, or gender prejudice because of their identities. These are the American Indians, Alaskan Natives, Asians, African Americans, Native Hawaiians, Hispanics, and women. The 2018 Farm Act provides funding for increased cost-share, loss compensation, and loan assistance.

Women Farmers

The number of women farmers has increased since 25 years ago. Women were the head operators primarily having the responsibility of the day-to-day operations of about 256,000 farms in 2016. 565,000 female farmers were second or third operators who provided focus on farm business management. Female head operators were older than their male opposites. 40% of them were 65 or older in 2016. Unfortunately, 28% of these were not currently in the paid workforce.


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Why Do You Need Agricultural Insurance?

Everything thus far has contained the advantages of agricultural policy to farmers. That said, the agriculture industry is not without risks and just like every other business, your farm needs protection. Your insurance policy should be designed to protect you from the unexpected, so that you can focus on the things that matter most: growing your crops and making sure they’re safe for consumption.

Here are some of the most common reasons why farmers need agricultural insurance:

  • Protection from natural disasters like hail storms or tornadoes
  • Protection against animal-related accidents such as a cow kicking over a water tank, or an animal escaping its enclosure and trampling your crops
  • Protection from theft of equipment or livestock
  • Protection from liability claims when someone is hurt on your property

We’re Here To Help!

Agricultural insurance, such as farm or ranch insurance policies can be a very advantageous product for farmers to have. This can raise the prosperity of households in farming communities and lead to a rise in consumer spending, while simultaneously enriching the country’s economy.

Let Advantage Insurance Solutions help you understand how to better protect your agricultural business today! Call us toll-free at (877) 658-2472!

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