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USDA programs under scrutiny

Crop insurance and rural revitalization were points of focus during a June 30 Senate Agriculture Committee hearing that stretched over three hours and three witness panels.

Agriculture Secretary Tom Vilsack told the committee that in mid-June he met with his staff to begin the 2012 farm bill process. As he has been doing for months, Vilsack again played up the need to halt rural America’s population and infrastructure slide.

“From my perception and vantage point, what I’m most interested in is trying to increase populations in rural communities, in our rural areas — and also improved incomes.

“Why am I interested in increasing rural populations? The sad reality is that in 56 percent of rural American counties we’ve lost population. With that, as everyone knows, you lose political influence. You have fewer people who understand … the hard-working folks who live, work and raise families in rural communities.”

The problem is particularly acute “in the area of production agriculture and in small, commercial operations — operations (with) $200,000 to $300,000 in sales every year. Over the last 10 years, we’ve lost 141,000” such operators.

“We should get very serious,” Vilsack testified “about how we can replenish and rebuild that population center. How can we focus policies, procedures, programs and efforts to increase small and medium-sized farming operations?”

100,000 new farmers?

Today, the average age of a farmer in America is 57. Only five years ago, it was 55. To combat the loss of smaller farms and an aging farmer base, Vilsack suggested the committee consider lifting an idea first pushed during the Clinton administration.

“Not long ago, we had a goal and national commitment to increase the national police by 100,000 officers. We talk about the need for additional teachers in our classrooms. Why not set as a goal for the 2012 farm bill the ability to add at least 100,000 additional farmers in the area of the small farming commercial operations? Why not establish local advisory councils in communities across the country to identify, recruit, encourage and assist young people to consider a life of farming?

“Why not create a venue where new farmers can get help with business planning, marketing and other ingredients of successful entrepreneurship? Why not expand efforts to encourage transitions from those seeking to retire to those seeking to start in the farming business? Why not place the nation’s attention on our need for young farmers?”

Simplifying programs

Vilsack was then peppered with committee questions about USDA programs and crop insurance.

“My staff has been working with the Risk Management Agency to find a way to provide insurance against the higher harvest costs farmers incur when high winds result in downed rice in fields,” said Arkansas Sen. Blanche Lincoln, chairman of the committee. “RMA has been very helpful in suggesting possible approaches but the sooner we can get such a product in place, the better off … rice farmers across the country would be. What are the prospects for developing such an insurance policy?”

Vilsack asked to respond in writing (editor’s note: as of July 6, a Senate Agriculture Committee spokesperson said a response from Vilsack had not yet arrived) but said USDA is “constantly looking for ways in which we can expand opportunity. One thing we’re hopeful of doing with the resources we’re recapturing from the SRA (Standard Reinsurance Agreement) negotiations is to expand our range, forage and pastureland programs. That’s long overdue. And we continue to look at specialty crops and a variety of other ways we can provide assistance and help.”

Lincoln said a complaint she hears often from many farmers is how complicated USDA safety net programs — “especially ACRE and SURE” — are. “We also have other programs that are similar such as crop insurance and counter-cyclical payments. Do you think these programs complement each other or do they work at cross purposes?”

Vilsack acknowledged ACRE needs work. “There’s no question about that. We were asking farmers to basically give up ‘the known’ for the unknown. We were asking them to enroll for the life of the farm bill instead of being able to reevaluate the impact and effect of that decision.”

ACRE was not “particularly geared” towards all commodities, said Vilsack. “It was more favorably inclined towards some commodities. Certainly, rice, cotton and peanut producers weren’t necessarily enamored with ACRE. So there’s still work to be done when only 8 percent of farms and 13 percent of base acres are included in the program. Candidly, I think we have a lot of work to do in terms of simplifying all these programs.”

Little love for ACRE

Every farmer who testified after Vilsack underlined how unpopular the new USDA programs truly are.

“While the counter-cyclical payment and marketing loan programs have been helpful in the past, they have recently been overwhelmed by the costs of production,” said Dow Brantley III, a cotton, corn, rice, and soybean producer from England, Ark. “If crop prices drop sharply, most producers, including me, will be in dire financial straits by the time these programs make payments.”

The 2008 farm bill “made very substantial changes to the payment eligibility provisions of the safety net, establishing an additional adjusted gross income (AGI) means test and a very significant tightening of the ‘actively engaged in farming’ requirement for eligibility,” continued Brantley. “In my opinion, the USDA overstepped the intent of Congress in payment eligibility provisions and issued regulations that are overly complicated and restrictive.”

Brantley said a measure of Arkansas producers’ unhappiness with ACRE is that “in my home county, we have 1,650 producers and no one has elected to participate in ACRE. In fact, only two producers in the entire state have chosen ACRE.”

Crop insurance doesn’t work very well in Arkansas, Lincoln insisted. And since crop insurance doesn’t work well, “SURE doesn’t work well. One of the reasons I’ve been fighting for disaster assistance is I’ve got foreclosures on a lot of (constituent) farms.

Vilsack: “On the issue of credit, we’ve been working closely with our own credit operations to see if we can forebear or restructure loans to farmers who are struggling. At the same time, we’ve done as much as we can to convince and encourage our commercial bankers … to do the same.”


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