Implementation of the new farm bill’s crop insurance provisions was front and center during a recent hearing of the House Agriculture Committee's Subcommittee on General Farm Commodities and Risk Management.
One of the chief concerns of lawmakers was the right of farmers to quickly utilize an Actual Production History (APH) adjustment. APH is a tally of a farm’s crop yields over many years. The adjustment in the farm bill aims to help disaster-hit farmers by allowing them to exclude a crop year from their APH history if a yield is less than 50 percent of the 10-year county average.
The APH adjustment “is meant to be self-executing,” said Texas Rep. Mike Conaway, chairman of the subcommittee. “Farmers were not meant to have to ask permission to exclude qualifying yields.”
Georgia Rep. David Scott, ranking member, backed up Conaway’s worries and, pointing to major crop losses in the Southeast due to freeze damage, said there is “great concern” regarding the Risk Management Agency (RMA) imposing a “downward trending adjustment on APH in Georgia and South Carolina while waiving the requirement in all other states. That’s not right.”
The APH was also part of Oklahoma Rep. Frank Lucas’ talking points. “For anyone who’s facing the prospect of drought, or has suffered prolonged drought, this provision is designed to provide immediate relief.”
Following a series of poor crops due to drought in Lucas’ home state, “the APH adjustment would provide widespread relief for wheat producers planting and insuring their crops this fall. Congress was clear: all producers affected by drought should be able to exclude those years. They should be able to do so immediately.”
With so much riding on the APH adjustment, the lawmakers were surely disappointed with testimony of Michael Scuse, USDA Under Secretary. Scuse said the adjustment in APH “will be available for crops planted in the fall of 2015. This was one of the few crop insurance provisions that did not exist in either the House or Senate version of the farm bill prior to conference. While (the RMA) understands how important this provision is to many farmers who have suffered from natural disasters, it is not possible to implement this provision for the 2015 crop year.”
20 years of data
Part of the problem with quick APH adjustments, said Scuse, was that the RMA must gather 20 years of crop data from every U.S. county. Further, while USDA agencies were able to get a jump-start on some farm bill provisions, the APH adjustment was placed in the legislation late during conference. Scuse did tell the subcommittee he would provide them details on the APH adjustment in several weeks.
Conaway was also wary of the USDA’s implementation of conservation compliance. “This was never a smart provision and the interim rule explains why so many of us were concerned with it. For example, page 11 of the rule says that if a farmer plants a crop next spring and is found to be non-compliant on June 1 even if he or she was to come back into compliance by July 1, the farmer would still be denied premium support for 2015. This effectively means no insurance.
“As bad as the compliance provision is, the objective was to impose the penalty in the following year -- and only if the producer did not come back into compliance.”
Such provisions, said Conaway, help explain why farmers and ranchers are “scared to death about regulatory overreach of the administration.”
Title 11 of the farm bill “specifically enhances coverage of the permanently authorized federal (crop) insurance program,” said Scott. “It is very important that we understand this farm bill completely changes -- completely -- the way in which farmers receive assistance. Farmers must now make a decision about which crop insurance program they must sign onto this fall -- either the Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC). And once they make that decision they are committed to it for five years.”
“For this reason it is critical that we take the time and make sure our farmers get the correct information to make the right decisions.”
To help implement ARC and PLC, Scuse said farmers could expect the Farm Service Agency to provide data on current base acres, yields and recent planting history in late summer. That will be followed in the fall with a chance to update a farm’s yields and reallocate base acres. Contracts for either ARC or PLC will be signed by 2015.