The Hagstrom Report

Agriculture News As It Happens


Insurance interests hear commodity proposals on farm bill

SCOTTSDALE, Ariz. – A series of farm group representatives spoke on farm bill proposals at the annual crop insurance industry conference held here this week.

Executives from the insurance companies and reinsurers and agents are wondering if Congress will cut the budget for crop insurance and how a rewritten farm program would interact with crop insurance. Some proposals would lead farmers to buy less insurance while others might cause a rerating of policies.

Mark Lange

Mark Lange
National Cotton Council CEO Mark Lange told the crop insurers on Monday that his group had endorsed its proposal at their annual meeting in Fort Worth last weekend.

Lange said that proposal would layer a second level of crop insurance on top of traditional crop insurance, and noted that NCC wants that second crop insurance program delivered by the USDA Risk Management Agency rather than the Farm Service Agency. The cotton proposal would also lower the marketing loan.

One of the cotton industry’s goals, Lange said, is to resolve the case against the U.S. cotton program that the United States lost to Brazil in the World Trade Organization. At the present time the United States is making a $147 million payment to Brazil each year, and Brazil has agreed not to impose the retaliatory tariffs to which it is entitled.

Lange said the cotton industry’s goal is to equip the Office of the U.S. Trade Representative with arguments that the new U.S. cotton program satisfies the requirement that the program not suppress prices.

The Brazilian government has said that it does not believe the cotton proposal, which is known as STAX, satisfies that requirement, but Lange said that Brazil officials, in a letter to the leaders of the House and Senate agriculture committees, “trashed everything they didn’t like.”

Lange said NCC is not arguing that the STAX program would fit within the WTO green box of non-trade distorting subsidies, but that it will satisfy the case because it would not suppress prices.

Growers of some other crops have contended that the STAX program and the higher target prices that rice and sorghum growers favor would shift acreage toward those crops, but in a sign of the tensions between grower groups over the next farm bill, Lange said, “There have been a lot of people shooting from the hip.”

“Farm and ag commodities are accountable for what they say and they better exercise sound judgment when they start criticizing other people’s programs,” Lange said.

On Monday’s grower panel, Blake Gerard, a rice and soybean producer from southeast Missouri and southern Illinois, defended the proposed $13.98 rice target price, saying that because it would be paid on base acres it amounts to only $9.

Gerard noted that rice has two primary risks — an extended period of depressed and low prices, and unexpected increases in production costs.
“Without direct payments, the rice producer has no safety net,” Gerard said.

But on a panel of lobbyists on Tuesday, Mary Kay Thatcher of the American Farm Bureau Federation said some of the proposed target prices are so high that farmers would receive a payment each year, and “that won’t fly.”

The sugar program “is in the best spot,” Thatcher added, because it does not involve government payments.

Bev Paul of the American Soybean Association said her group had conducted a study of why some soybean farmers do not buy crop insurance, and was disappointed to find out that many do not believe the program can be improved so that they would want to buy insurance.

Paul said the study shows that ASA needs to educate its growers more on the benefits of crop insurance.

Mike Stranz of the National Farmers Union said his group would like consideration of its proposal for a farmer-owned reserve that NFU claims would smooth out the ups and downs of commodity prices.

In overall policy, Stranz said that NFU wants farm-level triggers on programs, a permanent disaster program like SURE to be maintained, and a safety net “that helps us in times of need, not all the time.”
Ken Barbic

Ken Barbic
Ken Barbic of the Western Growers Association, a West Coast group of specialty crop producers, said his members are most concerned about maintaining the programs that were included for those crops in the 2008 farm bill and was pleased by the proposal that went to the supercommittee.

“There is definitely a mix of feelings toward crop insurance” among his growers, Barbic said. Those with permanent crops such as citrus favor it, he said, but among vegetable growers “there is a lot of concern about how it would be developed and implemented.”

Specialty crops growers, he said, are not so concerned about the ups and downs of the market as they are about other events they cannot control such as quarantines, disease outbreaks and recalls.

Amidst discussion of how difficult it will be for Congress to finish the bill in 2012, Dana Peterson of the National Association of Wheat Growers said, “I am looking for the completion of the development of the next farm bill. We have had a pretty intense scrimmage.”

But one academic observing the conference said that what’s really holding up the bill is the unwillingness of the farm groups to come together on policy. The farm leaders may blame members of Congress if it does not pass in 2012, but the fault would really lie with the groups, the academic said.