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Natural Disasters Spur Crop Insurance and Farm Conservation Discussion

February 14th, 2013

On Thursday, February 14, the Senate Agriculture Committee held a hearing on “Drought, Fire, and Freeze: The Economics of Disasters for America’s Agricultural Producers.”  The first panel of witnesses consisted of Dr. Joe Glauber, USDA’s Chief Economist, and Dr. Roger Pulwarty, Director of the National Oceanic and Atmospheric Administration’s National Integrated Drought Information System.  The second panel included Leon LaSalle, a rancher from Montana, Anngie Steinbarger, a corn and soybean farmer from Indiana, Jeff Send, a cherry farmer from Michigan, and Ben Steffen, a diversified crop-livestock producer from Nebraska.

Crop Insurance

Much of the testimony and the questions that followed focused on the need for an improved crop insurance program, one that works for all types of producers.  In fact, Chairwoman Debbie Stabenow (D-MI) repeatedly noted that specialty crop producers in many states do not have access to crop insurance.

The hearing was a good reminder that if risk management and crop insurance is to be the primary farm safety net, it needs to work for all of agriculture, including young and beginning farmers, fruit and vegetable growers, organic farmers, and those involved in dairy and livestock production.

From our perspective, an improved crop insurance program in the 2013 farm bill would:

• Include whole farm revenue insurance for diversified farms – Crop-specific policies for crops that are widely planted with extensive market data have long been the predominant focus of federal crop insurance.  As a consequence, the crop insurance program is oriented towards subsidized commodity crops.  Both the Senate-passed farm bill and the House Agriculture Committee-passed farm bill from last year directed USDA to develop an alternative crop insurance product known as whole farm diversified risk management insurance.  NSAC championed this provision throughout the farm bill debate.  It would help level the playing field by creating a product that works for all of agriculture, included highly diversified grain, grain-livestock, and produce operations, including sustainable and organic farms.

• Eliminate the five percent insurance surcharge for organic producers and direct USDA to develop an organic price series for calculating indemnity payments – Organic producers currently face the double penalty of being forced to pay a five percent surcharge for insurance coverage and then, should disaster strike, being forced to accept conventional prices rather than the usually higher organic price in the calculation of indemnity payments.  Last year’s Senate-passed farm bill directed the Department to develop an organic price series within the next three years, but did not address the surcharge.  The House Committee-passed bill urged that both issues be addressed, but without specific deadlines.

• Include common sense reforms to restore integrity and fiscal responsibility to the federally subsidized crop insurance program – The Senate-passed farm bill from last year included a needs-test amendment to reduce the amount of crop insurance premiums paid for by federal taxpayers for wealthy farm owners with over $750,000 adjusted gross incomes.  Not even this modest step was taken in the House Committee-passed bill.  While not the bigger targeting reform that is badly needed to put limits on the size of taxpayer subsidies any one farm can expect to receive, the Senate provision was nonetheless an important first step in the right direction of aligning this portion of the safety net with publicly supported goals of supporting family farms and new farming opportunities.  The 2013 farm bill should build on this reform effort by also applying actively engaged rules and reasonable subsidy caps to crop insurance.

• Ensure that taxpayer subsidies do not promote the destruction of critical natural resources – Last year’s Senate-passed farm bill included two important safeguards to ensure that the federal crop insurance program does not subsidize the destruction of natural resources.  The bill re-attached highly erodible land and wetland conservation measures to the receipt of crop insurance premium subsidies.  It also included a provision to reduce premium subsidies on native prairie that is “broken” for crop production.  A modified, watered-down version of this latter provision, known as “Sodsaver,” was included in the House Committee-passed bill.  See our related press release from earlier today for the latest news on the effort to secure a strong Sodsaver provision in the House.

Conservation

Another common theme throughout today’s hearing was the importance of farm bill conservation programs.  Chairwoman Stabenow asked each of the farmer witnesses to comment on how conservation programs help them build resiliency and adapt to disaster.

The witnesses discussed a variety of conservation programs including the Conservation Stewardship Program (CSP), Environmental Quality Incentives Program (EQIP), and Farm and Ranch Land Protection Program (FRPP).  Ben Steffen, the diversified crop-livestock producer from Nebraska, noted that his CSP contract has been instrumental in helping him change his tillage practices and establish cover crops on his land.  His extensive cover cropping has helped retain moisture and soil throughout the ongoing drought.  The producers from Michigan, Indiana, and Montana each noted specific conservation practices, such as no-till, cover cropping, buffer strips, and irrigation improvements that built resiliency into their operations and helped them respond to droughts, floods, freezes.

These conservation programs play a critical role in helping producers across the country reduce their vulnerability to extreme weather events.  This has been demonstrated time and time again through research and on-the-ground experience.  Despite this fact, however, there is intense pressure to cut these programs in the farm bill and through the annual appropriations process.  Given the testimony we heard today, we are likely to face repeated and increasingly severe disasters over the next several decades.  It is time to start preparing for this reality by improving the federal crop insurance program and by building upon, rather than weakening, our conservation toolbox.

2013 Farm Bill, Conservation / Land Stewardship, Risk Management | Comments

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