Thursday, October 10, 2013

Farm Bureau breaks deal on tying crop-insurance subsides to conservation; key Republican approves

While the government shutdown continues, the Farm Bill still waits to be resolved. And while Congress isn't focusing on the farm bill, there is plenty to report about it. Issues that could have major implications for the bill are the Supplemental Coverage Option for crop insurance and the American Farm Bureau Federation's reneging on a deal to require crop-insurance recipients to follow best conservation practices. House Agriculture Committee Chairman Frank Lucas (R-Okla.), praised Farm Bureau's move, signaling it will be a priority for Republicans once House Speaker John Boehner appoints members to a House-Senate conference committee that will iron out differences in the chambers' bills.

Last week the Farm Bureau said it opposed language in the Senate farm bill that ties conservation compliance to crop-insurance premium subsidies, reports Agri-Pulse, a Washington newsletter. The "conservation compliance coalition" was created in May as a way for farm lobbies to fend off limits or bans on subsidies to people earning more than a certain amount. In return for dropping their fight for such limits, "environmental groups hoped to achieve conservation compliance on the more than 280 million acres covered by crop insurance in 2012—an option not available if the primary incentive-direct payments-are eliminated in any new farm bill." The limit "would reduce premium support on crop insurance by 15 percent for farmers with adjusted gross incomes over $750,000." Agri-Pulse is subscription-only but is available for a free trial by clicking here.

UPDATE, Oct. 12: The House approved a resolution asking its conference committee members to support reducing crop-insurance subsidies to recipients with adjusted gross income of more than $750,000 a year.

On Wednesday, Lucas praised the Farm Bureau's decision, Chris Clayton reports for DTN The Progressive Farmer. "The statement lays down a marker for Lucas that the battle over conservation compliance is important enough to highlight a position taken by a major farm group even though AFBF didn't issue a statement on its board's actions. Lucas calls the efforts to tie minimum conservation standards to crop insurance a 'misguided and redundant regulatory burden imposed on farmers and their property rights.'" (Read more)

The Supplemental Coverage Option was designed to let farmers buy lower-cost crop insurance based on county-wide losses, not those of a single farm, as protection against county-wide disasters such as drought, but "has evolved into more like insurance against shallow losses to the top end as well," David Rogers writes for Politico. "In the latest configuration, SCO’s premiums would be subsidized by the government at a 65 percent rate with only a 10 percent deductible and no payment limits," which would cost about $3.85 billion over the next 10 years under the House bill, according to the Food and Agricultural Policy Research Institute at the University of Missouri.

"The single biggest factor in the FAPRI’s analysis is the 10 percent deductible allowed for farmers who enroll in both SCO and the new countercyclical, target-price program in the House bill," Rogers writes. "FAPRI’s numbers show that for corn, soybeans and wheat, farmers will gain more per acre from enrolling in SCO than they will get under the House’s price loss coverage or countercyclical program. The Senate bill also allows for a 10 percent deductible for SCO. But FAPRI’s economic model shows that many more farmers will accept for a higher 22 percent deductible for SCO in order to qualify for a fully-subsidized ARC program—the Senate’s answer to shallow losses." (Read more)

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