Senators Propose Farm Bill Commodity Title Changes

DC Dialogue

New farm bill proposal extends livestock disaster programs and has farm-level shallow loss component.

Published on: April 6, 2012

Work on both Capitol Hill and in the field continues as Congress works to get a farm bill prepared. A new proposal is out from a group of senators which offers budgetary savings within the commodity title.

The Senate Agriculture Committee plans to begin drafting its version of the farm bill this month after completing four Congressional hearings earlier this year. Reports indicate the Senate would like to have a bill passed out of committee by the end of April, giving them just two weeks once returning from their Easter recess April 16.

Senators Kent Conrad, D-N.D., Max Baucus, D-Mont., and John Hoeven, R-N.D., unveiled March 29 the "Revenue Loss Assistance and Crop Insurance Enhancement Act of 2012," which the trio said reduces farm program complexity and duplication, strengthens the federal crop insurance program, permanently extends livestock disaster assistance, and serves as a major component of a new farm bill.

The legislation creates the Revenue Loss Assistance Program (RLAP), an initiative that combines Supplemental Agricultural Disaster Assistance (SURE) and Average Crop Revenue Election (ACRE) into what the senators see as “one simpler and more effective program.”

Conrad said the “fits hand-in-glove with crop insurance” and as a shallow-loss program is based on farm losses rather than a crop-reporting district or statewide program as other proposals currently on the table.

RLAP works in conjunction with crop insurance to provide farmers with assistance for losses between 12 and 25% of their average historic revenue. An eligible loss can be due to any combination of decreased yields, declining prices or quality discounts. RLAP is based on individual farm performance, rather than an area trigger, and assistance is provided on a commodity specific basis. Conrad’s home state of North Dakota has only 9 crop reporting districts which could put farmers there at a disadvantage.

The senators note RLAP is designed to address two of the primary shortcomings of the federal crop insurance: program deductibles that greatly exceed the operating margins for a crop and the lack of adequate coverage during multi-year price declines. RLAP provides assistance for farmers who suffered losses on acres planted for harvest at a 65% payment rate. For acreage that was unable to be planted due to adverse weather, the payment rate is 45%. Total acreage covered under RLAP for a producer will not be able to exceed that producer's total base acres.

The legislation also establishes a Supplemental Coverage Option (SCO), along with other improvements to crop insurance. SCO will allow producers to obtain area-wide federal crop insurance coverage in addition to the individual coverage they currently purchase.

The SURE program has received much criticism for its inability to provide payments in a timely manner after a disaster. The new proposal extends the SURE Programs for crops for the 2012 crop year with a modification to expedite crop revenue loss payments by about one year.

In a hearing on risk management earlier this spring, Baucus stressed the importance of the livestock disaster programs in his district. The proposed bill permanently extends the three livestock disaster programs authorized in the 2008 Farm Bill. (see related blog posting)

The legislation continues, with minor modifications, the current commodity marketing loan program and counter-cyclical program while ending the direct payment and Average Crop Revenue Election programs beginning with the 2013 crop.

Conrad said the bill saves $16.4 billion over 10 years in the commodity title, similar to Senate Agriculture Committee chairwoman Debbie Stabenow and ranking member Pat Roberts’ proposal of a $15 billion cut in the commodity title. Stabenow welcomed the proposal, but also admitted there are several glitches that need to be ironed out with addressing concerns of southern producers.

Those in the south have been pushing for increases in target prices rather than a shallow-loss program, something the Conrad-Baucus-Hoeven plan doesn’t include.

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  1. Anonymous says:

    Sad to find out US senators acting as policy designers of Insurance company. The safety net of food security while mitigating climate change is "Organic Plant Farming", not insurance. Cut Insurance subsidies and move the fund to encourage farmers/ranchers transition to OPF can further trim down the 2012 Farm Bill and make everyone happy. http://www.concernedcitizensnetwork.org/category/take-action/