Whole-Farm Approaches to a Safety Net

25 Pages Posted: 30 Aug 2006

See all articles by Robert Dismukes

Robert Dismukes

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Ron Durst

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: June 2006

Abstract

In recent farm policy debates, proposals for a whole-farm revenue safety net program have been put forward that could provide a farm-income safety net for a wide variety of farming activities. These proposals include income-stabilization accounts and whole-farm revenue insurance. Risk protection from income-stabilization accounts would depend on the reserves in individual accounts and the structure of program benefits. Experience with farm savings accounts in Canada and Australia suggests that lack of adequate account balances and buildup of balances beyond the level required for risk management can reduce program effectiveness. Whole-farm revenue insurance could overcome these problems since coverage would not depend on the farmer's ability to build an account balance and benefits would only be realized when the farmer suffers a drop in income. However, the complexity of factors affecting income variability raises questions about the feasibility of a whole-farm insurance plan.

Keywords: safety net, income variability, risk management, income-stabilization accounts, savings, tax, revenue insurance

Suggested Citation

Dismukes, Robert and Durst, Ron, Whole-Farm Approaches to a Safety Net (June 2006). USDA-ERS Economic Information Bulletin No. 15, Available at SSRN: https://ssrn.com/abstract=923881 or http://dx.doi.org/10.2139/ssrn.923881

Robert Dismukes (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

Ron Durst

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

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