Crop Insurance Plan Raises Eyebrows

DC Dialogue

Farm Bill proposal would use $3 billion to pay insurance deductibles.

Published on: May 15, 2012

By Mike Wilson

The farm bill proposal now before congress would take $3 billion to pay upfront costs for crop insurance deductibles normally paid from a farmer's pocketbook. The proposed $3-billion subsidy for deductibles would come out of the expected $5 billion savings from removing direct payments.

The deductible subsidy is in addition to the existing federal program to subsidize crop insurance premiums themselves. It was included in the farm bill that passed the Senate Agriculture Committee last month by a bipartisan 16-5 vote.

Proponents of the plan say it still saves money since it's less costly than the $5 billion per year for direct payments. Critics, such as Craig Cox at the Environmental Working Group, say it's money that could be better spent on consumer-friendly programs like food stamps. 

Subsidies for federal crop insurance premiums have ballooned from 2.4 billion in 2001 to 9 billion in 2011. No doubt the plan to pay for deductibles will certainly be scrutinized by critics who see it as another unneeded cost to taxpayers.

Oklahoma Senator Tom Coburn has said he will introduce an amendment to the senate farm bill proposal that would cap insurance premium subsidies at $40,000 per individual farm. A study by GAO says such a cap would result in a savings of $1 billion per year.

Louisiana Political Leader Responds to EPA Activists

A Louisiana political leader is defending his state's agriculture in light of aggressive behavior by  EPA.

In an open letter titled, "The new regulatory environment for Louisiana agriculture," Mike Strain, D.V.M. and Commissioner of Louisiana Agriculture and Forestry, reveals how EPA enforcement agents are going after large-scale poultry farms and concentrated animal feeding operations using satellite monitoring and other data sources.  EPA agents from region six visited four poultry operations and issued compliance orders due to Clean Water Act violations.

Agriculture is the largest sector of Louisiana's economy and valued at $30 billion.  Agriculture, forestry and aquaculture comprise more than 85% of the surface area of this state, 9.7% of the work force, and over 243,000 jobs.

As a response to the EPA 's orders, Strain issued letters advising poultry farmers to re-visit nutrient management plans and to make sure that they are in compliance with the best management practices and conservation measures set forth in their plans.

EPA met with poultry producers and the Louisiana Department of Environmental Quality, National Resource Conservation Service, Louisiana Department of Agriculture and Forestry and Louisiana Farm Bureau, where the agency outlined its protocols. "We reiterated that we are committed to poultry producers and the goal of helping them comply with standards," Strain says.

In a subsequent meeting the EPA informed the Louisiana ag department that in addition to poultry and egg producers, they intend to examine all CAFOs including but not limited to dairy, beef, and equine facilities.  Additionally, the EPA plans to identify other facilities that may be near the CAFO threshold and make sure they are designated as CAFOs. The EPA estimates that there are between 200 and 400 CAFOs in Louisiana.

In April, a lawsuit was filed by environmental groups alleging that Mississippi River states are not establishing, nor implementing nutrient criteria to reduce the hypoxic zone in the Gulf of Mexico.  At this meeting, Ag officials including Strain asked for an appropriate amount of time to establish background baseline data based on sound science before mandates are enforced on watersheds. 

"One of the most significant concerns to Louisiana agriculture is the impending threat of the development of TMDLs and nutrient criteria for the Mississippi River Basin," says Strain. 

Such load reductions would affect all aspects of agriculture and agribusinesses. "If limits are improperly established, there will be a chilling and negative effect on both growth and profitability of many types of enterprises," says Strain.

Strain says environmental concerns in Louisiana are a high priority. "However, we believe that:

1) Louisiana should be allowed to exercise the authority to develop its own standards and implement them through an approved and predictable process governed by existing state law.

2) Decisions should be based on sound science.

3) Efforts must be sensitive to economic costs to producers.

4) Consideration must be given to the overall impact to the economyic health of farm-based communities where agriculture is the economic base of these communities."

The primary responsibility of Louisiana producers is to produce the highest quality, safest and sustainable food and fiber supply, adds Strain.  "Our growers do not have dedicated environmental compliance officers that monitor EPA rules and regulations.  By the year 2020, we must increase food production 25%to meet worldwide demands.  We must aggressively increase productivity in an economically and environmentally sustainable manner to achieve these goals in a time of increasing federal mandates.

"Today is truly the Golden Age of Agriculture.  It is imperative that we work together for the future of Louisiana and of America."

Mike Wilson is covering for Jacqui Fatka, who will return to DC Dialogue next month.