House panel pushes USDA on APH crop insurance provision

By Sarah Gonzalez

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, July 16, 2014 - Lawmakers and ranchers are praising USDA for its timely delivery of livestock disaster assistance authorized in the 2014 Farm Bill, but some legislators say row crop producers need quicker implementation of crop insurance provisions designed to help them after years of drought.

During a House Agriculture subcommittee hearing last week, Rep. Mike Conaway, R-Texas, said he is “deeply troubled” by USDA's delay in implementing the crop insurance title's Actual Production History (APH) adjustment, “which would provide critical relief for those struggling against severe drought.” The provision could lessen the blow on farmers impacted by severe crop losses by removing some of the worst years of production history from calculations used to determine their crop insurance guarantees.

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Michael Scuse, USDA's under secretary for farm and foreign agricultural services, said an APH adjustment will be available for crops planted in the fall of 2015, but not for crops harvested before then.

Under the Farm Bill, a producer may choose to exclude any year from their APH if his or her yield in that year is less than 50 percent of the simple average for the crop in the county for the previous consecutive 10 crop years. The law also allows insureds in any county contiguous to a county in which an insured is eligible to exclude a recorded yield and also elect a similar adjustment. Annually, the Federal Crop Insurance Corporation (FCIC) anticipates a cost of $35.7 million as a result of this change.

“All we ask on APH is that some effort be made to partially implement the provision in time for 2015, where relief is needed most,” Conaway said. Members in drought-affected areas of the country want producers to be able to exclude the 2014 drought year from their averages, which could help them insure more bushels per acre. 

However, Scuse said “it's no small effort” to adjust the APH, which includes going over 20 years of data “for every single county for every single crop in that county.”

USDA's Risk Management Agency (RMA) included a reference to the APH adjustment in its interim rule, published July 1. But experts say making sure the changes are financially sound from an actuarial standpoint will take time, because changing the yield guarantee, also requires changes in the rating and delivery software.

Even though the provision technically allows farmers to exclude qualifying yields the day the law passed, Scuse said the information must still be verified by RMA in order to implement the changes. He explained that USDA has too little time to prepare for the new APH provision to implement before the fall of 2015. 

Several members on the panel were concerned by the delay in APH adjustment, including Agriculture Committee Chairman Frank Lucas, R-Okla., who said the APH adjustment in the farm bill is intended to provide relief “for anyone suffering from the prolonged drought.”

APH provisions were included in both the House and Senate farm bill versions that went into conference committee. Those provisions simply used a 70 percent “plug” taken from the county traditional yield that a producer could use as a substitute for production during a year of major losses. But as the drought worsened, some ag committee members had been discussing a more targeted approach to help row crop farmers. That adjustment, eventually included in the final 2014 farm bill, provides even more help for drought-stricken producers.

Conaway asked if RMA would consider implementing the APH adjustment on a partial basis, so at least producers in areas heavily devastated by drought could benefit before the 2016 crop year. 

“I respectfully urge the department to respond to this natural disaster in states like Texas, Oklahoma, New Mexico, Colorado and other states around the country with the same speed and determination as one would expect in the case of a wildfire or a hurricane,” he said.

Scuse said RMA would provide the committee with a written explanation of USDA's process for implementing the APH adjustment.

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