House Ag Committee scrutinizes farm bill implementation

USDA under secretary Scuse testifies on progress of commodity and crop insurance rollout.

Although the U.S. Department of Agriculture has done an exemplary job of quickly administering disaster payments under the farm bill, it has a tall order ahead of continuing implementation.

During a hearing Thursday House Agriculture Committee members praised the agency for the work on disaster aid, but also expressed top concerns including the need for better education on dairy and commodity programs and how quickly information can be dispersed on the upcoming commodity program changes.  

USDA under secretary Michael Scuse said that to date $1.2 billion has gone out in disaster payments and during the last week of June 17,000 applications were processed. Scuse said he’s asked his county office staff to do three years’ worth of work in a short period of time, but is managing resources best as they can.

He explained they are hiring temporary staff, reallocating staff and putting together jump teams from regions that don’t have as much livestock losses to help in areas that do.

Dairy program rollout

Scuse testified that FSA plans to implement dairy producers’ new Margin Protection Program (MPP) by late this summer and have it implemented by September 1 as the farm bill laid out. . Late this summer FSA also plans to publish the details on the Dairy Product Donation Program (DPDP). While current margins are well above $4 per hundredweight and DPDP is not expected to trigger, USDA will have the program details finalized.

In his written testimony, Scuse explained by law, dairy producers may not participate in both MPP and RMA’s Livestock Gross Margin for Dairy (LGM-Dairy) programs. As a result, FSA and Risk Management Agency (RMA) jointly sent guidance at the end of June on the transition period, which will afford dairy producers maximum flexibility by allowing them to transition to the MPP-Dairy program in either 2014 or 2015.

This flexibility will allow producers under LGM-Dairy, who already have LGM-Dairy target marketings that go into 2015, to participate in MPP-Dairy in 2015 after their insurance contract is over, as opposed to keeping these producers out until 2016.

House Agriculture Committee ranking member Collin Peterson (D., Minn.) expressed concerns that the new margin program which he championed during the farm bill process is going to see poor enrollment from producers because there’s not enough information being disseminated by FSA to let them know it exists. Peterson said he feared current high prices will catch producers thinking they don’t need any insurance, but warned high prices likely historically turn to lower prices.

The farm bill set the rates, so Peterson said at the least dairy producers could be sent a letter explaining the rates and that decisions need to be made in September. Farm Service Agency staff also need to be brought up to speed on things, he added. Scuse said he would take under consideration sending a letter out.

Scuse reiterated that the USDA takes the outreach and extension responsibility very seriously. The committee on dairy programs will be in Washington the week of July 14 and Scuse said the program will be finalized as quickly as possible.

Commodity title concerns

The new farm bill offers two new commodity program choices – Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC).

Scuse said late this summer FSA plans to provide producers information on their current base acres, yields and 2009-2012 planting history and offer them an opportunity to verify this information with their local FSA office.

Then later this fall, there will be an opportunity to update yields and reallocate bases, which Scuse said is the critical first step in implementing the ARC and PLC programs. By mid-winter all producers on a farm will be required to make a one-time, unanimous and irrevocable election between price protection, country revenue protection and/or individual revenue protection for 2014-2018 crop years.

By early 2015 producers can expect to sign contracts for ARC or PLC for the 2014 and 2015 crop years.

Producers who elect ARC on a farm will not be eligible for Supplemental Coverage Option (SCO), and Scuse said the RMA is working to provide additional information on new crops and counties that may have SCO prior to the ARC and PLC election period. He said that a majority of producers will have SCO available to them in the 2015 crop year.

APH

A major topic during the hearing was from southern representatives regarding the decision by USDA to not allow for the actual production history (APH) updates to be made until the 2016 crop years. An APH adjustment offers producers to elect to exclude any recorded or appraised yield for any crop year in which the per planted acre yield in the county was at least 50% below the simple average of the per planted acre yield during the previous 10 consecutive crop years.

For states such as Texas and Oklahoma with prolonged droughts it could have a dramatic impact on the levels of premiums they’re paying for crop insurance.

There was an APH-related provision in both the 2012 and 2013 House farm bill versions. During House-Senate negotiations, the provision was modified to both save money and to provide more targeted assistance to producers who had suffered from disasters in recent years.

Scuse said he would be providing a detailed explanation of issues the agency faces in trying to implement the provision. Particularly, many provisions RMA was able to begin working on ahead of final farm bill passage, but this provision wasn’t known until the last minute. Also, it requires getting 20 years of data for every single county and for every single crop grown in each county, he told members.

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