As farm bill hearings continue, several groups are outlining their goals and priorities for the next farm bill.
On July 25, the Senate Agriculture Committee held a hearing focused on credit and crop insurance, "Commodities, Credit, and Crop Insurance: Perspectives on Risk Management Tools and Trends for the 2018 Farm Bill."
The Independent Community Bankers of America are asking for a multi-year farm bill that allows multi-year business decision-making.
The American Farm Bureau Federation is calling on Congress to maintain a unified farm bill that keeps nutrition and farm programs in the same bill.
Crop insurance industry leaders stressed the importance of crop insurance in their testimony.
A Montana sugar beet grower testified in favor of maintaining a strong no-cost U.S. sugar policy in the bill.
Soybean farmer Kevin Scott testified on the importance of risk management programs.
Read more about what these groups have to say about the next farm bill.
5 farm bill goals of Independent Community Bankers
The Independent Community Bankers of America, the voice of more than 5,800 community banks, urged Congress to adopt a new long-term farm bill incorporating five broad goals and offered enhancements to USDA programs to prevent a farm credit crisis.
In her testimony before the committee, Brenda Kluesner, a loan officer and crop insurance manager for Royal Bank in Cassville, Wis., advocated for Congress to adopt a new multi-year farm bill upon expiration of the current bill to provide continuity and enable agricultural producers and their lenders to engage in multi-year business decision making.
Kluesner urged Congress to authorize permanent funding mechanisms for USDA farm loan programs and USDA’s Business and Industry program in years where demand for program loans exceed appropriated funds. She also noted more robust and better-financed USDA guaranteed lending programs through the 2018 farm bill will help avoid a farm credit crunch and prevent an exodus of producers from the agricultural sector.
ICBA’s five principles for consideration in the next farm bill include:
- Providing producers ample funds for commodities, crop insurance and credit programs to help them weather a potential farm income or farm credit crisis,
- Considering any program changes, including outside the current farm bill, that benefit producers and their community banks,
- Directing agencies to reduce regulatory burdens and prohibit regulations not based on statutory language or that add unnecessary regulatory burdens,
- Requiring federal agencies’ rules to treat all categories of program participants fairly, and
- Requiring direct loan programs to compliment, not undercut, private sector lending.
To meet the growing demand for these programs, Kluesner encouraged Congress to provide adequate funding, raise loan limits, minimize origination fees and paperwork requirements, and provide uniform financing requirements for USDA loans across state lines in addition to other recommendations.
“Congress has the power to help avoid a farm credit crisis,” Kluesner said. “A strong farm safety net for commodities, and a strong crop insurance program, are both vital to producers and community banks. By enhancing, streamlining and adjusting the USDA guaranteed lending programs in the next farm bill, we will ensure that they fulfill their potential to be a key component of the farm safety net and help prevent the next farm credit crisis.”
American Farm Bureau outlines priorities
Congress must counter a steep, four-year drop in commodity prices that has left farmers and ranchers in worse shape than any time since the farm depression of the 1980s, Kentucky Farm Bureau President Mark Haney told members of the Senate Agriculture Committee.
“2017 and 2018 will be a critical period for farmers and ranchers,” Haney said. “Farmers and ranchers are tightening their belts and paying very close attention to their individual financial situations. Simply put, they are in greater need of strong, secure safety net programs and risk management tools than has been the case for several years.”
To offset the effects of deteriorating farm and ranch conditions, Haney said, Congress should:
- Protect current farm bill spending.
- Maintain a unified farm bill that includes nutrition programs and farm programs together.
- Ensure any changes to current farm legislation be an amendment to the Agricultural Adjustment Act of 1938 or the Agricultural Act of 1949.
- Prioritize top funding concerns -- risk management tools, which include both federal crop insurance and Title I commodity programs.
- Ensure programs are compliant with World Trade Organization agreements.
- Maintain robust funding for conservation programs that encourage environmentally sensitive farming practices as well as the periodic withdrawal of land from active use.
Insurance industry leaders tout crop insurance benefits
Crop insurance is a vital risk management tool, crop insurance industry officials testified.
Ron Rutledge, president and CEO of Farmers Mutual Hail Insurance Company of Iowa, emphasized the breadth of the protection that is provided by crop insurance, noting that protection is available on more than 100 different crops in all 50 states, including rapid growth among specialty crops.
Crop insurance policies must be purchased by farmers and policies only pay an indemnity when producers face a verifiable loss above and beyond their deductible.
"I would like to point out, however, that on average over the last five years, 54% of Farmers Mutual Hail's customers paid premiums out of their own pockets and received zero indemnity payments...That's how insurance is supposed to work," Rutledge told lawmakers.
Rutledge called on committee members to continue their support for the private-sector delivery of crop insurance and for affordable and effective crop insurance for producers of all sizes, crops and regions.
Specifically, he asked that Congress oppose efforts to harm crop insurance in the 2018 Farm Bill, including cuts to the private-sector delivery of crop insurance, reductions to premium discounts, and arbitrary means testing participation.
William Cole, chairman of Crop Insurance Professionals Association, also testified before the committee. He said participation in crop insurance has doubled since the Agricultural Risk Protection Act of 2000 was passed, which has thus far eliminated un-budgeted agriculture disaster bills.
"The Chairman's (Sen. Pat Roberts) work is largely responsible for the success story of federal crop insurance, which today insures 90% of all U.S. planted acres, 290 million acres in all, with $100 billion in liability protection in force today," Cole testified.
Since the 2008 Farm Bill, crop insurance has yielded $17 billion in savings and is on target to save taxpayers another $6.7 billion over the next 10 years, Cole said.
He asked lawmakers to consider three key principles while debating the 2018 Farm Bill:
- The current Farm Bill is below budget;
- Crop insurance is critical and gives taxpayers a big bang for the buck; and
- Farmers need a strong "Title 1," or non-insurance components of the safety net, for times of depressed markets.
Source: National Crop Insurance Services
American Sugar Alliance urges support for U.S. sugar growers
Maintaining a strong sugar policy in the next farm bill is essential, Montana sugar beet grower Ervin Schlemmer testified.
"American sugar farmers are facing a very difficult time," Schlemmer said during testimony on behalf of the American Sugar Alliance. "For the past five years, refined sugar prices have been depressed as a result of Mexico dumping subsidized sugar into the U.S. market."
Mexico was found guilty of violating U.S. trade law, and its actions cost U.S. producers more than $4 billion in lost revenues and many workers their jobs, he said. In June, the U.S. and Mexican and governments reached an agreement to bring Mexico's subsidized sugar industry into compliance with U.S. trade law and stop the injury caused by its trade abuses.
He urged lawmakers to keep current U.S. sugar policy, which is based on loans repaid with interest. "We must have full access to [government-backed] loans on the sugar we store for our customers throughout the year," he explained.
Schlemmer noted that sugar producer's safety net is designed to operate without taxpayer cost and helps shield farmers from market distortions caused by foreign subsidies.
"American sugar farmers are among the most efficient in the world," he said. "We would gladly compete against foreign producers if their governments did not intervene in their markets. We can compete against foreign farmers, but not foreign treasuries."
Unlike foreign producers, "U.S. sugar farmers derive all of our revenue from the marketplace," Schlemmer explained. "There are no government checks, payments, or revenue insurance products to manage market risk."
In addition to maintaining U.S. sugar policy, he also asked committee members to make research funding a priority in the next Farm Bill to help farmers cope with climatic and economic challenges.
"We must reduce costs and improve yields and do so in sustainable ways," he concluded. "We need research to achieve that goal."
Source: American Sugar Alliance
Soybean farmer says risk management is important
South Dakota soybean grower Kevin Scott, who serves on the Board of Directors of the American Soybean Association (ASA), detailed ways that programs within the commodities and crop insurance titles of the farm bill work together and may be improved to help producers. Scott also testified on changes the committee could make with regard to wetlands conservation.
- The two main programs within Title 1 —the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs — have worked as intended, Scott said.
“(ASA) supports reauthorizing ARC and PLC as choices on a farm-by-farm and crop-by-crop basis,” he stated. “We also support offering an option to reallocate crop acreage bases or to update bases to reflect recent planting history, and to update program payment yields, if funding is available to do so.”
Scott suggested that the more accurate yield data generated by USDA’s Risk Management Agency should be used to calculate payments, instead of the current policy of using yields reported to the National Agricultural Statistics Service, and further recommended that payments under Title I should continue to be based on average planting of covered commodities in recent years, rather than on current-year plantings. “Decoupling encourages farmers to follow market signals rather than prospects for receiving government payments,” Scott said.
- ASA also strongly supports strengthening crop insurance.
“Crop insurance is now widely acknowledged as the most valuable part of the farm safety net,” Scott said.
- He said changes are needed in the way USDA's Natural Resources Conservation Service determines wetlands for the purposes of farm bill conservation programs.
“. . . The process at NRCS for determining the existence of wetlands has become slow and burdensome to producers … There is such a backlog of applications waiting on NRCS in our area that producers can wait years before they know what they can or cannot do on their land," Scott said.
Scott suggested several fixes, including third-party determinations, deadlines for NRCS determinations, establishment of a determination as a final action that would allow for an immediate appeal in District Court, and reallocation of NRCS resources to states where the wetland determination backlog is largest.