INDIAN WELLS, Calif., Feb. 14, 2013 – The new Acting Administrator of USDA’s Risk Management Agency (RMA) learned the importance of crop insurance - for both farmers and consumers – at an early age.
As a child growing up in rural Utah, Brandon Willis’ family raised sheep. But his father gave him ground to grow berries with the hope of earning some extra money and starting a career in farming. The weather didn’t cooperate and neither did his berries. Crop insurance wasn’t available. Willis decided that farming was a little more difficult than it looked and law school was a better option.
“When I planned to go into farming it was pretty apparent that, without a safety net I couldn’t do it. So that’s one reason I feel strongly about crop insurance,” Willis told Agri-Pulse on the sidelines of the crop insurance industry’s annual convention this week.
After attending law school at the University of Wyoming and building a career that included a stint in Sen. Max Baucus’ office, work at the Farm Service Agency and service as a confidential assistant to Agriculture Secretary Tom Vilsack - Willis is now serving as the RMA’s acting administrator.
His agency provides the type of safety net he once hoped for on a whopping 281 million acres across the countryside - covering everything from apples to macadamia nuts, cherries to wheat, and yes, even berries.
“If having a food supply is in our nation’s interest, we need the best and brightest to be engaged in agriculture, providing that food for us,” he explained. “Without crop insurance we will not get the best and brightest back on our farms.”
And consumers benefit, too. Willis said that, thanks to risk management policies and tremendous productivity on the farm, “American families pay less for food at the grocery store than people in any other nation.”
USDA Under Secretary Michael Scuse also commended crop insurance providers for their ability to provide risk management tools while dealing with drought across a large part of the nation. Scuse traveled to many states last year to gain a first-hand view of disaster conditions.
“To this day, I have yet to have a single producer call me with a complaint about crop insurance,” he said. “That is a testament to just how well your agents, your adjusters, the companies, and Risk Management Agency (RMA) worked together in one of the worst droughts in the history of this nation.”
However, Willis, suggested that the industry is not without its critics.
He told meeting participants to be ever vigilant about program integrity - clamping down on waste, fraud and abuse in the program - warning that crop insurance can’t afford any negative publicity.
“Even if it’s an unfair story, it’s a story we can’t have. So we will be looking, top to bottom, for ways to make sure that’s not a reason that crop insurance gets cut,” he explained.
Willis noted that the number of improper payments – which could include something as simple as clerical errors and are not technically considered fraud or abuse – has continued to decline from $4.72 million to $4.08 million.
At the same time, he encouraged the industry to look for new ways to expand crop insurance to an even wider geographic and political base, including more organic, specialty crops and pasturelands.
“While we have a strong core in the center of the nation, as agriculture continues to be in the spotlight, we better have a strong core in a lot of places,” he explained. There are votes in a lot of places outside of the current program and we better have them in the program.”
For example, Willis suggested that there are plenty of opportunities to protect more rangeland. The RMA’s Livestock Forage Program, which he helped write when he worked as a Senate staffer, covers about 48 million acres. But that’s just a small piece of the 520 million acres of rangeland and forage in the U.S.
As the program has grown dramatically in participation and the number of crops covered, so has the budget exposure – making crop insurance a more likely target for cuts in a budget-conscious Congress.
Eighty-six percent of all planted U.S. farmland is protected by crop insurance this year, up 2 percent from 2011 and a nearly three-fold increase from the late 1990s when only about 30 percent of farmers purchased policies, according to data from USDA’s Risk Management Agency.
In the last 11 years, crop insurance outlays have increased from about $33 billion in 2002 to a projected $84.5 billion in 2013.
“We can’t afford a program that doesn’t work for everyone,” Willis added.
The concern about potential budget cuts was echoed by a panel of farm organization lobbyists who participated in the crop insurance industry program, Along with concerns over the upcoming budget sequestration on March 1 and expiration of the continuing resolution on March 27, the lobbyists talked about payment limits and linking crop insurance to conservation compliance
“The big lesson from 2012 is that farm policy worked,” said the National Farmers Union’s Mike Stranz. “We had a crop disaster of epic proportions with drought and early freeze. The ag economy is doing well right now That’s a testament to risk management programs we have in place.”
But the appetite for cuts is there, Stranz added.
“We’ve already seen it this year and I’m sure it’s not going to stop anytime soon.”
During the farm bill debate, Stranz said there were two “conspicuous amendments” regarding crop insurance on the Senate floor: linking crop insurance to conservation compliance and an adjusted gross income (AGI) test to scale back the premium subsidy by 15 percent for those with an AGI over $750,000.
The conservation compliance amendment passed by 52 to 47 and the AGI test passed by 66 to 33.
“It will be interesting to see how that support in the Senate will translate into the House,” Stranz added.
American Farm Bureau Federation’s Mary Kay Thatcher noted that “there is a trend toward programs “where farmers have skin in the game” and that’s one of the benefits of crop insurance because farmers pay part of the premium.
“To me that trend also has implications for conservation compliance,” she added. While noting that her organization, along with most of the others represented on the panel, is adamantly opposed to linking conservation compliance to crop insurance, she expressed personal concerns about “how long we can hold that linkage in abeyance.”
“One of the things that was always amazing to me is that conservation groups have long been splintered in what they want in the farm bill,” Thatcher explained. “I’ve long thought that, if they ever got it together, they would be formidable.”
Now she is hearing that 30 of 32 major wildlife, habitat and conservation groups support linking crop insurance participation to conservation compliance.
Dennis Nuxoll, representing Western Growers, acknowledged that budget issues might slow the timeline for farm bill consideration.
But budget issues can also create an opportunity to move a farm bill, Nuxoll said.
‘In 1996, we saw budget reconciliation used to pass a farm bill,” he added.
Other panelists warned that failure to keep crop insurance strong could have both domestic and global implications.
Former USDA chief economist Keith Collins said that increased demand for food in the developing world will increase pressure on U.S. farmers to boost productivity, which will make yield-enhancing technology and risk-mitigation tools like crop insurance even more important in the future.
William Hohenstein, director of USDA's Climate Change Program Office, said
keeping up with growing demand could be even more challenging given an unpredictable weather outlook. USDA recently released reports on climate change effects and adaptation.
"Agriculture has been and will continue to be significantly affected by changes in climate conditions," Hohenstein said. "There's a lot of potential for the crop insurance program to help make farmers more resilient to climate change by addressing risk.”
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