March 30, 2012
Former U.S. Secretaries of Agriculture Dan Glickman (1995-2001) and Ann Veneman (2001-2005) delivered a letter to the chairs and ranking members of the House and Senate Agriculture Committees on Wednesday, March 28, urging them to reattach basic conservation compliance requirements to federally subsidized crop insurance in the next farm bill.
The letter states:
As you renew farm and food policies, we urge you to renew the conservation compact between farmers and taxpayers.
The conservation compact — a provision of the 1985 farm bill called conservation compliance — sparked a decade of unprecedented progress in limiting soil erosion, cleaning up waterways, and protecting wetlands. This compact between farmers and taxpayers has been one of America’s greatest conservation success stories.
Farmers managing more than 140 million acres of highly erodible land have implemented practices that reduced the amount of soil washed into streams from “highly erodible” lands by 40 percent. At the same time, farmers have received generous federal support that has stabilized farm income. This compact has served both farmers and taxpayers very well and should be renewed.
As you take steps to modernize our farm safety net, we urge you to renew our conservation compact. The conservation compact should bring all income support programs under its umbrella, including eligibility for crop and revenue insurance premium subsidies.
The letter was delivered to Senators Debbie Stabenow (D-MI) and Pat Roberts (R-KS), Chair and Ranking Member of the Senate Agriculture Committee, respectively, and Representatives Frank Lucas (R-OK) and Collin Peterson (D-MN), Chair and Ranking Member of the House Agriculture Committee.
The letter speaks to an increasingly worrisome unintended consequence of federally subsidized crop insurance and the likely elimination of direct payments in the next Farm Bill. Basic conservation requirements to protect against soil erosion and wetland drainage have been a condition of receiving farm subsidies since 1985. This so-called “conservation compliance” policy has dramatically reduced soil erosion on farmland and protected wetlands, keeping land productive and natural resources intact. Since 1996, however, these requirements have not applied to subsidized crop insurance.
Most of the farmers that are today enrolled in the crop insurance program are also enrolled in the direct payment program, the disaster assistance program, or the conservation programs and are therefore already subject to conservation compliance. However, some farms are enrolled only in crop insurance and are therefore not currently subject to rules aimed at preventing unsustainable soil erosion and wetland loss.
There are also examples of producers now foregoing commodity payments and relying on crop insurance payments in order to avoid conservation compliance requirements, as high commodity prices make it more enticing to drain wetlands and plant marginal highly erodible land and forgo direct government payments. This otherwise uneconomic behavior becomes worth the risk in part because of the existence of heavily taxpayer-subsidized revenue insurance.
The federal crop insurance program is now the most dominant means of taxpayer support to agricultural producers, whether measured in total amount of taxpayer-provided subsidies, program participation rates, or geographical scope. While direct payments may be eliminated in the next farm bill and while basic soil erosion prevention and wetland protection requirements will likely be attached to whatever program or programs replace direct payments,the fact is that subsidized crop insurance has become the centerpiece of the farm safety net. At an anticipated $90 billion in taxpayer-provided subsidies over the next ten years, the program is a long way removed from the situation in 1996 when Congress was trying to find ways to entice farmers to participate in the insurance program.
The subsidized risk reduction provided by crop insurance has the potential perverse effect of encouraging producer’s to expand production without consideration for cumulative effects (e.g. increased soil erosion, or loss of wetlands and their functions) or even land productivity. A risk management program should not itself heighten risk, especially not with taxpayer’s money.
NSAC commends Secretary Glickman and Secretary Veneman for standing up for our basic natural resources.