Farm Bill: Crop Insurance
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Larger farmers would have to pay higher crop-insurance premiums under an amendment added to the Senate version of the farm bill on Thursday.
“Repeating a provision they introduced last year, Sen. Dick Durbin, D-Ill., and Sen. Tom Coburn, R-Okla., got senators to back a plan that would lower the premium subsidy for farmers making more than $750,000 adjusted gross income. The vote was 59-33 despite opposition from leaders on the Senate Agriculture Committee.”
Mr. Clayton explained that, “Under the Durbin-Coburn provision, those farmers making more than $750,000 would see their premium subsidy lowered from 62% to 47%.
“Durbin and Coburn said their amendment would affect about 20,000 farmers and save $1 billion over 10 years. They also each noted that roughly 4% of farmers account for nearly 33% of all the premium support for the federal government. Those figures come from a Government Accounting Office report last year.”
A video replay of the discussion between Sens. Durbin, Coburn and Chairwoman Debbie Stabenow (D., Mich.), which preceded the vote on the amendment, can be viewed here. In the clip, each lawmaker made their respective arguments for supporting (Durbin, Coburn) the proposal, or alternatively, opposing (Stabenow) the amendment.
The DTN article added that, “Stabenow also noted higher premium costs could prompt large farmers to stop buying crop insurance altogether. ‘Crop insurance is insurance. The farmer gets a bill, not a check,’ Stabenow said.
“Coburn countered that large farmers would still make an economic decision to buy crop insurance. ‘They won’t go out because it’s still too much of a sweetheart deal.’”
Mr. Clayton pointed out that, “The House Agriculture Committee version of the farm bill does not include any means testing for crop insurance, nor does the House bill tie conservation compliance to eligibility for the crop-insurance premium subsidy.”
AP writer Mary Clare Jalonick reported yesterday that, “Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., argued that the amendment would result in fewer people buying insurance and undercut a separate provision in the bill that would require farmers buying crop insurance to comply with certain environmental standards on their land.”
Hill writer Ramsey Cox noted yesterday that, “‘What we ought to do is make sure there is a safety net,’ Coburn said ahead of the vote. ‘But like on every other program, we’re going to ask those who have more to actually participate more.’”
Also yesterday, Reuters writer Charles Abbott reported that, “Crop insurance, which pays out if farmers’ crops are damaged, is the costliest part of the farm safety net, costing $9 billion a year. It would expand by 5 percent in the Senate bill even as other farm, conservation and nutrition programs are cut by $24 billion over 10 years.
“Agriculture Chairwoman Debbie Stabenow of Michigan said she expected more attempts to rein in crop insurance spending before the Senate votes on the full five-year, $500 billion bill in early June. One pending amendment would limit farmers to $50,000 a year in insurance subsidies.”
David Rogers reported yesterday at Politico that, “In the wings are proposals requiring much greater disclosure from the Agriculture Department on who benefits from the program. And there is a bipartisan proposal to bar any farmer from getting more than $50,000 in premium subsidies per year.”
On the Durbin-Coburn amendment, the Politico article noted that, “As adopted, the provision would apply only to producers with an annual adjusted gross income of $750,000 or higher. And the rate of premium subsidy would be reduced by 15 percentage points or from about 62 percent to 47 percent.
“Stabenow argued that this could lead some to drop out of program — potentially increasing the premium costs for smaller, less wealthy farmers who remain. And the amendment is written in such a way that the cut will be voided if the evidence shows this adverse impact.
“But Coburn scoffed at this notion, arguing that the taxpayer would still be paying almost half the premium costs for what can be multimillion-dollar farm operations.”
A brief paper by former USDA Chief Economist Keith Collins (“Coburn-Durbin Sharply Raises Premium Costs for Affected Farms”), which was released yesterday, noted that, “The rate of premium support depends on three factors: 1—the plan of insurance, 2—the type of unit insured, and 3) the level of coverage. The following table shows the current rates of premium support for the Revenue Protection and APH plans of insurance (the vast majority of policies sold) for optional and basic units (typical units insured in many parts of the east). The table also shows the farmer share of the total premium now and with the Coburn-Durbin amendment. Farmers buying RP for soybeans at the most common coverage of 70% would see a 37% increase in premiums.”
Meanwhile, Ramsey Cox reported at The Hill’s Floor Action Blog that, “The Senate rejected a farm bill amendment that would have ended all taxpayer subsidies for tobacco farmers.
“Sens. Dianne Feinstein (D-Calif.) and John McCain (R-Ariz.) introduced the amendment, which failed on a 44 to 52 vote — the amendment was held to a 60-vote threshold.”
The Hill update added that, “Their amendment would have prohibited the payment by the federal crop insurance program of any portion of the premium for a policy or plan of insurance for tobacco. Feinstein said tobacco farmers could still buy crop insurance, but it wouldn’t be federally subsidized. She added that the effects of tobacco already cost taxpayers billions of dollars in Medicare and Medicaid expenses.”
Prior to the vote on this amendment yesterday, Sen. Feinstein made arguments in support of the measure (video replay here), while Sen. Richard Burr (R., N.C.) countered with a brief floor presentation explaining why the amendment should be defeated (video replay here).
And, in his DTN article from yesterday, Chris Clayton also pointed out that, “In another vote related to crop insurance, senators also voted 94-0 to expand efforts to root out fraud in the program through better data mining efforts. Sen. Kay Hagan, R-N.C., offered the amendment, citing a major federal crop-insurance fraud case in her state. Hagan said the amendment’s cost was minimal, but would generate substantial savings by reducing crop-insurance fraud.”
Meanwhile, an update yesterday by National Crop Insurance Services indicated that, “While farmers must make their decisions about purchasing crop insurance well before they plant, more than 244,000 policies have been processed through participating companies and RMA as of May 20, 2013. Those policies protect more than 89 million acres representing more than $20 billion in liabilities, accounting for $810 million in farmer paid premium. These numbers will continue to grow as more policies are processed and farmers plant their acres.”
Farm Bill: GMO Labeling
Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “The Senate rejected a farm bill amendment that would have clarified that states have the right to label genetically engineered (GE) food.
“Sen. Bernie Sanders (I-Vt.) introduced the amendment, which failed on a 27-71 vote — the amendment was held to a 60-vote threshold.”
Yesterday’s update added that, “Sen. Pat Roberts (R-Kan.) said Sanders’s amendment was not needed because the Food and Drug Administration has said there is no need to worry about genetically engineered crops. He urged his colleagues to vote against it.
“‘We already have policies and procedures in place in the Food and Drug Administration to address labeling of foods,’ Roberts said. ‘It ensures all labels of all foods are truthful.’”
David Rogers reported yesterday at Politico that, “To the surprise of the biotech industry, [Majority Leader Harry Reid (D., Nev.)] switched from a year ago and joined in support an effort by Vermont liberal independent Sen. Bernie Sanders to allow states to impose their own labeling on food products with GMO ingredients.
“The measure failed 27-71, but Reid’s vote stood out together with that of Sen. Chuck Schumer (D-N.Y.), who also changed from last year. Indeed, with the exception of Majority Whip Dick Durbin (D-Ill.), the top Democratic leadership in the Senate now appears sympathetic to greater GMO labeling.”
Farm Bill- Amendments, Senate Convenes Again on Monday, June 3rd
A news release yesterday from Nebraska GOP Senator Mike Johanns outlined the amendments he has offered, including a provision that, “Eliminates the high minimum prices that only apply to rice and peanut producers. Every other commodity has rolling average price protection that moves with the markets to avoid long-term market distortions. Rice and peanuts have a special carve-out that makes frequent subsidy payments much more likely. This amendment simply ensures fairness by using the same payment formula for all crops.”
Sen. Chuck Grassley (R., Iowa) also recently outlined the Farm Bill amendments he has submitted, including one that “would hold peanut farmers to the same cumulative $50,000 payment limit that applies to farmers growing other crops. In current law, and in the underlying bill, peanut farmers essentially can double their farm payments if they grow peanuts and another type of crop.”
A news release yesterday from Sen. Ag. Comm. Ranking Member Thad Cochran (R., Miss.) stated that, “[Sen. Cochran] today said he looks for forward to the Senate passing a new farm bill after the Memorial Day break.
“Cochran and Chairwoman Debbie Stabenow (D-Mich.) on Thursday afternoon thanked their colleagues for the progress made during the week-long beginning debate on the Agriculture Reform, Food and Jobs Act of 2013 (S.954, the farm bill). The Senate will resume consideration of the measure June 3.
“‘We’ve made true progress in developing what I think can be a very important contribution toward a legislative framework to help enable American farmers to compete in the international marketplace and to sustain the jobs that flow from their work throughout the country,’ Cochran said.”
Farm Bill- Additional Considerations
Brian Francisco reported this week at The Journal Gazette (Fort Wayne, Ind.) that, “[Sen. Joe Donnelly, D-Ind.], a member of the Senate Agriculture Committee, said Wednesday that despite the battles about the Supplemental Nutrition Assistance Program, he supports keeping SNAP as part of the farm bill.
“‘It engages our friends who may be from more urban or more suburban areas,’ Donnelly said in a telephone conference call with reporters. ‘And so the presence of both elements in there helps to enable us to have enough votes to pass a farm bill, to do all the things we need to do in agriculture.’
“Some lawmakers, including Rep. Marlin Stutzman, R-Ind., advocate separating SNAP from the farm bill. But Donnelly said that without a balance of urban and rural interests, ‘I don’t know that either of them would pass standing alone.’”
University of Illinois Agricultural Economist Nick Paulson indicated in an update posted yesterday at the farmdoc daily blog (“Comparison of Approaches to Price Supports for the 2013 Farm Bill”) that, “Last week the Senate and House Ag Committees successfully passed their versions of the 2013 Farm Bill (see Senate version here; House version here). As discussed in a post from last week, price support programs now exist in both versions, making it highly likely that price supports will continue to be offered to the major program crops over the next Farm Bill period.
“However, the design of the price support programs – the Adverse Market Payment (AMP) program in the Senate, and the Price Loss Coverage (PLC) program in the House – differ in terms of the way in which the target or reference prices for each commodity are defined. Today’s post examines the differences in each program’s reference price levels and how, in the case of the AMP program, those reference price levels might evolve over the next Farm Bill.”
Farm Bill- House Developments
Also yesterday, the Congressional Budget Office released its analysis of the House Farm Bill.
After the CBO release, Rep. Bob Goodlatte (R., Va.) tweeted that, “CBO confirms massive costs for private sector under new #dairy supply management in House #FarmBill. CBO Letter: http://1.usa.gov/16crp7M”
COOL (Country of Origin Labeling)
AP writer M.L. Johnson reported yesterday that, “Shoppers in the U.S. will soon have more information about where their meat comes from after new federal labeling rules went into effect Thursday.
“The rules require labels on steaks, ribs and other cuts of meat to say where the animal was born, raised and slaughtered. Earlier U.S. Department of Agriculture rules only required that countries of origin to be noted, so a package might say ‘Produce of U.S. and Canada.’ Now, the label will specify ‘Born in Canada, raised and slaughtered in the United States.’
“The new rules apply only to cuts of meat such as steaks and roasts, not to ground meat.”
The AP article indicated that, “The USDA has required country of origin labels on seafood since 2005 and on meat and other products since 2009. The new rules for meat are meant to bring the U.S. in line with World Trade Organization standards after the organization determined the old labels discriminated against livestock imported from Canada and Mexico.
“President Barack Obama’s administration had asked the meat industry in 2009 to voluntarily provide the additional information on labels. The new requirements come after the WTO’s appeals body in June upheld the organization’s earlier decision.
“The meat industry and grocery stores have protested the changes, saying they are a hassle and could lead to higher prices. The National Grocers Association issued a statement expressing its ‘strong frustration’ over what it sees as ‘unnecessary’ regulation.”
Bloomberg writers Alan Bjerga and Jen Skerritt reported yesterday that, “Canada vowed to escalate a dispute with the U.S. over plans to impose stricter country-of-origin labeling rules for meat that are opposed by industry groups on both sides of the border.
“The U.S. Department of Agriculture said yesterday it will tighten provisions that specify where animals are born, raised and slaughtered, even after the World Trade Organization backed complaints from Canada and Mexico that challenged the policy. Canada will examine all of its options, including appeals or retaliatory measures through the WTO, Agriculture Minister Gerry Ritz said.
“‘We have no intention of backing off or backing down,’ Ritz said yesterday on a conference call with reporters. The government in Ottawa will do ‘everything within our power’ to make sure the U.S. is aware Canadian and American industry groups oppose the labeling provision, he said.”
Nirmala Menon reported yesterday at the Canada Real Time Blog (Wall Street Journal) that, “Ottawa has company, as Mexican officials are working with Canada on the matter.
“According to a person familiar with the details, the plan is for Ottawa to inform the WTO–probably in August–that the U.S. has not complied with the trade body’s ruling, and seek authorization to retaliate. The WTO is expected to take about a year to issue a finding on compliance, and if Canada wins, it will probably take another year to secure approval to retaliate.
“‘We’re talking about a major, major trade dispute that’s looming,’ said Lawrence Herman, an international trade lawyer with Cassels Brock LLP, a law firm in Toronto.”