[Matticus_Rex]

"In the 2000s (decade), onion prices were significantly more volatile than corn or oil prices. This volatility led the son of a farmer who initially lobbied for the ban to advocate a return to onion futures trading."

This is the important part -- ag futures are insurance for farmers. You don't have to get it, but it limits your downside when you do, which is extremely important in low-margin, capital-intensive industries like agriculture. Banning the insurance may prevent one-off manipulations and limit the upside captured by speculators, but it also makes the industry much more dangerous, particularly for smaller players.

[protomyth]

Yep, for a decent explanation of hedging ISU has a page https://www.extension.iastate.edu/agdm/crops/html/a2-60.html

Note the futures market requirement for hedging.

[S_A_P]

Work in energy and commodity trading. This is probably one of the best explanations to what is at best a very confusing concept. Thanks for posting

[fujimotos]

> ag futures are insurance for farmers

I know nothing about futures, but how does it work?

Insurance works because a loss happens to some individual, not to all members of the class of people at all once. So insurers can cover the specific loss with pooled money.

But if ag price falls, every farmer (that is, all members of the insurance buyers) suffers loss, right? Won't it just bankrupt the insurance providers?

[rue]

Isn’t there then just the option of traditional split-risk insurance?

[gammateam]

You can squeeze repeals like these into Budget Appropriation Acts to avoid government shutdowns

If you want. Better and faster than the popular vote for different representatives, you dont even have to be registered anywhere.

The US Federal Government doesnt have single item veto, and Congress wont care to revisit this even if they noticed later.

[Aloha]

What on earth does this have to do with the OP's comment?

[nine_k]

The comment suggests futures-based hedging of governmental (over)spending.

[gammateam]

really? no. It was about how to repeal the Onion Futures Act

[gammateam]

> What on earth does this have to do with the OP's comment?

the onion futures act prevents farmers from having agricultural insurance on onion the same way they do on their other crops

the onion futures act can be repealed with very low effort by inserting it into a bill that congress has to pass, such as budget appropriation bills

didn't realize nobody caught that