USDA implementation of crop insurance programs questioned

By Sarah Gonzalez

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, July 11, 2014-House Agriculture Committee members said at a hearing on Thursday they are worried about USDA's implementation of certain crop insurance provisions in the five-month old 2014 Farm Bill.

At the same hearing, members on the General Farm Commodities and Risk Management subcommittee applauded USDA's Farm Service Agency for its timely deliverance of livestock disaster assistance. Through the Livestock Forage Program and Livestock Indemnity Program the agency has provided more than $1.2 billion to livestock producers, many of whom had been waiting for over two years for assistance. 

Lets Talk Food

The only witness at the hearing, Michael Scuse, USDA's under secretary for farm and foreign agriculture services, provided an update on several commodity and conservation provisions included in the 2014 Farm Bill. 

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.” He asked for more information on the APH and on conservation compliance. USDA's Risk Management Agency included these provisions in its interim rule published last week on several sections from the Farm Bill.

APH policies insure producers against yield losses due to natural causes such as drought. APH is the record of a producer's crop yields over a multiyear period.

Scuse said an APH adjustment included in the Farm Bill to help farmers affected by drought and other disasters in recent years will be available for crops planted in the fall of 2015, but not for crops harvested before then.

“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. 

Under the Farm Bill, a producer may choose to exclude any year from their APH if their yield in that year is less than 50 percent of the 10-year county average. Additionally, the final provision is retroactive, requiring a change not just to future yields, but also to the previous 10 years that can be used to calculate a producers' APH.

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.”

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 the agency in order to implement the changes.

Several members on the panel seemed 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.”

Scuse said he plans to provide the committee with a detailed, written explanation of USDA's process for implementing the APH adjustment.

Conaway also said conservation compliance, a provision he opposed form the start, is a major concern of his in farm bill implementation. “I fear [conservation compliance] could undermine crop insurance and our overall conservation goals if the approach is overly punitive,” he said.

In USDA's interim rule, “if a farmer plants a crop next spring and is found to be non-compliant on June 1, even if he were to come back into compliance on July 1, within a month, the farmer would still be denied premium support for 2016,” Conaway said in his opening statement.

He added that the compliance provision was intended to impose the penalty the following year and only if the producer did not come back into compliance.

In response to questions from Rep. Kristi Noem, R-S.D., Scuse clarified that if a producer is found not in compliance in 2015, he or she cannot re-enroll in crop insurance until 2017.

“This is a heavy penalty for producers, considering the amount of subsidy in crop insurance policies,” Noem said.

However, Scuse noted that the agency is asking for compliance on June 15 of next year, but producers will have a period of time to adjust and come into compliance before the 2016 crop year without losing their subsidy. USDA has not determined the length of that time period.

Scuse said in his opening statement that USDA intends to provide more details on the new conservation compliance requirements by the fall.

Regarding the farm bill's Margin Protection Program (MPP) for dairy producers, the ranking member of the House Agriculture Committee, Rep. Collin Peterson, D-Minn., said he is worried about the roll out of the new program. He said dairy farmers in his district “have no idea” there is now a margin insurance program.

“I'm worried that we're going to get a very poor enrollment,” he said, and suggested that FSA send a letter to dairy farmers making them aware of the upcoming changes and the rate levels included in the law.

Scuse said FSA plans to implement MPP for dairy later this summer, and that he would consider sending an update to producers before it is finalized. 

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