WASHINGTON, MAY 6, 2013 – As the House and Senate Agriculture Committees prepare to start writing a new farm bill over the next two weeks, farm and conservation groups reached what they described as a “delicately crafted” compromise designed to protect crop insurance from “means testing” and payment limitations while also offering concessions that would once again link crop insurance participation to conservation guidelines.
The agreement was outlined in a new position paper sent to Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., and Ranking Member Thad Cochran, R-Miss., today. The compromise was signed by 32 groups - representing major farm, commodity, conservation and environmental organizations - as well as some representatives of the crop insurance industry. According to a list of recommendations offered by the groups, “crop insurance would continue to be available to all, but premium assistance would be eliminated when certain circumstances occur.”
“In the spirit of compromise and in the interest of completing a 2013 Farm Bill this year, each of the groups has committed to not support amendments beyond this compromise that might weaken the crop insurance program or amendments that might not link conservation compliance with crop insurance premium assistance,” they wrote in a letter.
With the exception of the National Farmers Union, which also signed the compromise, all of the farm and commodity organizations have long opposed linking crop insurance to conservation compliance and “means testing” to reduce the amount of government subsidy available to large growers who purchase crop insurance. Similar amendments passed the Senate floor during farm bill debate last year.
But as Agri-Pulse first reported in the April 24, 2013 issue, Stabenow’s staff started floating the idea of including some of the language from those amendments in the Chairman’s mark, S.10 – and potentially bringing farm and conservation groups together to head off further amendments on the Senate floor.
“It was an exercise in seeing how we can gain votes, not lose them,” explained one source who attended the April meetings to discuss the strategy.
But farm organizations and crop insurance groups fought the linkage to conservation compliance. Many feared that new regulations would hurt participation in the crop insurance program and perhaps make the program more costly for those who remained eligible. Plus, some of the penalties were viewed as egregious and unworkable because - unlike almost all other government subsidized farm programs - farmers must purchase crop insurance policies and insurance providers have to meet strict financial guidelines in order to provide coverage.
Simply stripping crop insurance subsidies from conservation violators - after coverage was purchased - would be unworkable for both farmers and insurance providers, they argued.
“Upon finding a violation, S. 10 makes a producer immediately ineligible for crop insurance premium assistance. This would require the government to go back to “Approved Insurance Providers (AIPs)” and ask them to remit the premium subsidy and in turn the companies would be required to either notify producers that indemnities will be reduced or seek repayment of those subsidies,” the groups noted in their position paper, which is available here.
Instead, the groups recommended that producers who break up or violate a conservation plan on highly erodible land or drain or improve the drainage of a wetland should not become ineligible for premium assistance in the year of the infraction.
“Crop insurance companies and producers have already incurred expenses and made major borrowing commitments at that time. It would be difficult and administratively burdensome to change the insurance policy mid-stream. Instead, no premium assistance should be available to the producer the following crop insurance year or until the infraction has been corrected or appropriately mitigated. Furthermore, it is critical that premium assistance not be denied until all appeals to USDA’s National Appeals Division have been exhausted,” they wrote.
As currently written, S.10 extends the sodbuster and swampbuster provisions in current law to make them applicable to those who utilize crop insurance as a risk management tool; limits crop insurance subsidies on newly converted land for four years following the event; and reduces premium assistance by 15 percent for producers who have an Adjusted Gross Income of more than $750,000.
The bill requires that those who are subject to the loss of premium subsidies for the first time and have broken out highly erodible land will have five years to develop and comply with an approved conservation plan before they risk losing eligibility for premium assistance. S. 10 requires those who drain wetlands to immediately lose eligibility for any premium assistance.
Instead, the groups recommend that there should be more time for implementation and correction.
“Those who are subject to highly erodible land (HEL) provisions (not Sodsaver) for the first time after May 1, 2013 will have five years to develop and comply with an approved conservation plan before they risk losing eligibility for premium assistance,” the groups wrote. “Those who are subject to compliance for the first time and have drained wetlands after May 1, 2013 will be given a two-year period to begin the mitigation process in order to retain eligibility to receive crop insurance premium subsidies.
“Individuals who were subject to compliance since enactment of the 2008 Farm Bill, but are no longer under compliance (i.e you did not participate in the Direct Payment program in order to improve drainage on wetlands, you received disaster assistance in the 1990s but have not received it since, etc.) will be given a two-year period to develop and comply with a compliance plan for HEL or two years to begin the mitigation process in order to retain eligibility to receive crop insurance premium subsidies,” they recommended.
Today’s agreement puts organizations like the Environmental Defense Fund, the National Wildlife Federation, and the National Association of Conservation Districts on record as opposing means testing and payment limits for crop insurance, asking the Senate Agriculture Committee to remove language in S.10 that provides for a reduction of 15 percent on premium assistance if a producers Adjusted Gross Income exceeds $750,000.
Among other changes, the agreement asks that producers who are newly covered by conservation compliance requirements “shall receive first priority for NRCS conservation technical assistance in developing and applying a conservation plan” and “the Secretary shall be directed to provide additional technical and program financial resources to states with large numbers of producers who were not previously subject to compliance.
Whether or not the committee’s leadership will accept the recommendations remains to be seen. But for now, the groups are signaling that this is their final offer.
“We will not support any changes to the points,” they noted in their position statement.
The National Sustainable Agriculture Coalition (NSAC) issued a statement opposing the agreement, stating that “conservation accountability should apply to the entire farm safety net.”
“Reasonable limits and actively engaged in farming rules should apply to all crop subsidies,” NSAC stated. “These are fundamental principles supported by the farmers we represent. We therefore do not support the deal. We may not even support the conservation portion of the deal which appears to include major loopholes, though we will need to see actual legislative language before making a definitive judgment on that score.”
Senator Cochran’s office responded that they are aware of the statement released regarding conservation compliance, but “have not reviewed any language yet.”
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