LAST year's farm bill debate pitted environmental and conservation groups against commodity organizations over whether to attach conservation compliance to crop insurance.
Ahead of this year's farm bill markups in the House and Senate, 44 agricultural and conservation policy groups came up with a compromise of specific recommendations that will re-link crop insurance premium subsidies to compliance while opposing limits to crop insurance.
In exchange, the groups agreed not to support amendments beyond this compromise that might weaken the crop insurance program or that might not link conservation compliance with crop insurance premium assistance.
Conservation compliance was decoupled from crop insurance in 1996 and linked to the newly created direct payment program implemented that year, but if direct payments end, many fear that producers will forego the remaining financial payments so they are no longer subject to the erosion control and wetland protection requirements.
To maintain eligibility for most agricultural programs, farmers must: actively apply a Natural Resources Conservation Service (NRCS)-approved soil conservation plan on "highly erodible" land used for crop production (conservation compliance), refrain from cultivating highly erodible land that was not already cropland in 1985 without applying an approved conservation plan (the sodbuster provision) and refrain from draining wetlands for crop production (the swampbuster provision).
Senate majority leader Harry Reid's (D., Nev.) farm bill proposal (S. 10) essentially extends the Senate's farm bill version from last year. It extends the current sodbuster and swampbuster provisions to make them applicable to those who utilize crop insurance as a risk management tool, it limits crop insurance subsidies on newly converted land for four years and it reduces premium assistance by 15% for producers who have an adjusted gross income of more than $750,000.
Mary Kay Thatcher, vice president of government relations at the American Farm Bureau Federation, said the compromise came about because agricultural groups recognized that it would be "difficult, if not impossible, to defeat" another round of efforts to attach conservation compliance to crop insurance, so the goal was to come up with ways to improve it.
Thatcher said the implementation time was unreasonable, and the compromise offers a more workable time frame.
S. 10 would make a producer immediately ineligible for crop insurance premium assistance. This would require the government to go back and remit the premium subsidy, and in turn, companies would be required to either notify producers that indemnities will be reduced or seek repayment.
Under the new recommendations, crop insurance would continue to be available to help farmers manage risks and meet the requirements of their lenders, but under certain circumstances, if a farmer is found to be out of compliance with conservation mandates, his or her eligibility for premium assistance would be eliminated until compliance conditions are satisfied.
However, the compromise notes that "it is critical that premium assistance not be denied until all appeals to (the U.S. Department of Agriculture's) National Appeals Division have been exhausted."
Predominantly midwestern states would be hit with the wetland violations in Reid's bill. The recommendations suggest that those who drain wetlands after the date of enactment and wish to regain eligibility for crop insurance assistance can follow existing NRCS procedures to mitigate their impacts or, for impacts of less than five acres per farm, pay a fine equal to 150% of the cost of mitigation, as determined by NRCS, which will be put into a wetland restoration program. Failure to comply with either of these mechanisms will result in a loss of eligibility for crop insurance premium assistance until the violation has been mitigated.
Thatcher added that fruit and vegetable growers may be affected most by these provisions since they currently do not receive traditional commodity or conservation program payments that already require conservation compliance.