State-backed Marketing Cooperative for Independent Producers. The coop's cash flow reverses during higher hog prices. Members cannot exit the co-op until their debt is repaid. Loan losses would be covered by member fees, grants from the state economic development department, private contributions and promissory notes pledging future checkoff revenues of members. If packers provide larger hog operations with more favorable ledger contract terms in the future as suggested by recent research from ISU and the University of Missouri, the marketing co-op concept would assist independent hog producers with a competitive set of contract terms.
Farmers pay in during good years and get back revenues in poor years.
In the final analysis, farmers have faced greater price and income variability since the U.S. farm policy transition began in 1996. There are tradeoffs in the costs and consequences of the alternative proposals. Option 1 direct payments cost more than loan guarantees and interest rate buy downs. Private sector solutions like the Option 3 will face more difficulty, as long as government solutions like Option 1 are supported on an ad hoc basis whenever a crisis develops. Finally, none of the proposals includes decision-making support, financial restructuring, stress and career counseling assistance.