farm bill fails - july 2013

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Rep. Ted Yoho entangled in dispute over farm

bill

ByBill Thompso n

Staff writer

Published: Saturday, July 27, 201 3 at 7:18 p.m.

The farm bill making its way through Congress includes a significant change away

from direct payments and toward crop insurance in the federal safety net that

protects farmers.

But this potential policy change has put U.S. Rep. Ted Yoho, the newly elected

Republican congressman for this region, in a delicate political position.

He supports insurance over subsidies, saying that approach is more consistent with

his conservative stance on assistance and economic issues. But conservative groups

like the Heritage Foundation and Taxpayers for Common Sense are bitterly opposed,

saying the feds are taking on far too much expense with crop insurance.

Meanwhile, Yohos district which includes much of Marion and Alachua counties

is a significant winner under the current system. In fact, his district was tops in

Florida last year in the amount of government subsidies paid to farmers.

According to the Environmental Working Group a Washington-based organization

that tracks federal farm subsidies, the USDA in 2012 paid $6.7 million to farmers in

Yohos district for all agriculture-related subsidies, including disaster relief.

That represented about 6 percent of the $114 million the USDA paid to Florida

farmers last year, the EWG reports.

Crop insurance has blossomed in recent years to already become the nations

costliest farm-support program.

Under the new farm bill, which looks out 10 years, the program will widen in scope

and further escalate in cost.

Proponents of expanding crop insurance maintain that the program, whose roots

stretch back to the Great Depression, has brought stability to an erratic, and often

expensive, system of federal farm support.

Proponents also point out that crop insurance improves on the direct-payment

system. Thats because farmers buy the insurance and because the coverage onlykicks in only during the worst of circumstances.

Critics, however, counter that crop insurance has become more expensive and offers

less accountability than the direct payments that would be phased out in the

measure.

The farm bill remains stuck in Congress, although not so much because of crop

insurance.

The food stamp program is also part of the bill, and House leaders last week said they

will try to cut billions from food stamps before negotiating with the Senate on the

overall bill.

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An issue of accountability

For years thousands of farmers across the country have received direct payments

a $5 billion annual entitlement based on the historic production of the growers land.

The payments provided to producers of key staples such as wheat, corn, rice,

soybeans, peanuts and cotton are unaffected by fluctuations in crop yields, crop

prices or the farmers income.

Lawmakers, Republican and Democratic alike, favor ending direct payments. A U.S.

Government Accountability Office report issued in early July helps explain why.

The GAO called for overhauling the program, highlighting practices it considered

questionable.

For instance, the government paid U.S. farmers $46 billion in direct payments

between 2003 and 2011.

The GAO found that almost a quarter of that amount, $10.6 billion, went to farmers

who in a given year did not actually grow the crops that qualified for the subsidy,

which is permissible.

Moreover, the GAO discovered that between 2007 and 2011 about 2,300 farms

received direct payments despite allowing their land to remain fallow each of those

years. In 2011 alone, those farmers collectively reaped $3 million.

The auditors recalled in the report a prev ious GAO study from 2007 that revealed

the U.S. Department of Agriculture had paid $1.1 billion in direct payments to

170,000 people who were dead.

Richard Barber, a west Marion County peanut farmer, maintains that farmers need a

safety net.

Agriculture is a little bit different than most manufacturing, he said. You get one

shot and if you miss it, youve got to wait a whole year.

It helps the safety net. It helps the general farm economy, he added.

Still, Barber is not bothered to see direct payments go.

Its not needed now, he said.

He took out crop insurance last year but said he will not do so again. Its not a good

investment because my y ields are always good, he said.

USDA data shows that farm incomes have hit record levels in recent years.

The agency reported in February that net farm income has doubled since 2009,

leaping from $63 billion that year to a projected $128 billion this year.

Barber, however, isnt so sure insurance will duplicate for farm economies what

direct payments did.

If it does anything, it might keep a farmer from quitting. It might keep you in

business if youre just going to stay in business, he said.

Problems with both parties

When the initial version of the farm bill was defeated in the House in June, Yoho, the

only Florida lawmaker on the House Agriculture Committee, slammed Democrats

and his fellow Republicans.


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The bill, Yoho said in a statement, failed because of a plague of ignorance in

Congress.

Democrats earned Yohos scorn because of their unflagging commitment to the status

quo on food stamps. The freshman lawmaker chastised his fellow GOP members for

not recognizing that the shift from direct payments to crop insurance represented a

conservative movement toward market-based policy.

Crop insurance is heavily subsidized by the government and now costs nearly three

times as much yearly as direct payments.

Yohos office did not respond to The Suns multiple attempts to ask the congressman

to further explain how the reform helps taxpayers.

On July 11, when the House passed its version of the revised farm bill, Yoho noted in

a statement that the measure reformed, reduced and eliminated more than 100

wasteful and duplicative programs.

As the name implies, crop insurance is an insurance policy.

It protects farmers against, as the USDA says on its website, the unavoidable perils

beyond the farmers control.

Policies can be written to cover the farmer for a drop in crop yield, a decline in

revenue, or both. Farmers pay premiums and a deductible is applied as with other

insurance policies.

That is, unless the loss is due to a catastrophe. Then the government covers the

deductible as well.

Janell Hendren, national affairs coordinator for the Gainesville-based Florida Farm

Bureau, called crop insurance a great risk-management tool.

Farmers have skin in the game, it makes them follow good farming practices and its

good risk management, because the whole point is to have a secure food supply,

Hendren said in an interview.

One way crop insurance benefits taxpayers, Hendren noted, is that farmers must

demonstrate to regulators they did all they could to produce a solid crop in order to

have a claim honored.

It gives a good farmer a chance to start over, and for a bad farmer not following

good practices, its not propping them up any more, she said.

Still, the program is heavily laden with federal dollars, and it is growing.

The USDA reports that 180 million acres of farmland were covered by crop insurance

in 1998.

Last December, the Congressional Research Service released a study indicating 282

million acres of cropland were insured in 2012.

Much of the increase is attributable to an expansion of the program.

Today, more than 100 different crops can be protected. The USDA even makes

policies available to livestock and dairy producers.

Participation has also risen because of increases in the subsidy amount for insurance

premiums and mandates for coverage from the government and financial institutions

that make farm loans.

While premiums are assessed on the amount of coverage a farmer wants, the CRS


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pointed out that Washington pays on average 62 percent of the farmers individual

premiums.

Paying those premiums costs the government $7.1 billion in 2012, double what it was

just five years earlier.

In the absence of premium subsidies, farmer participation in the crop insurance

program and/or purchased coverage levels would be lower, the CRS report said.

The EWG database indicates that the government spent $3.9 million between 1995

and 2012 on crop insurance in Marion County. That went to pay claims and the

insurers overhead.

That was offset by about $1 million from premiums paid by farmers over that period.

In Alachua County, the governments cost was $8.3 million over that same time

frame.

Alachua farmers paid $1.8 million for their policies.

Besides helping with premiums, U.S. taxpayers fund the administrative overhead for

the 17 insurance companies that underwrite the policies.

That came to $1.4 billion last year.

That cost has dropped in recent years, but it remains significantly above what it was

in the early part of the last decade.

Combining the payments for premiums, claims and overhead, the taxpayers cost has

risen from $2.2 billion in 2000 to $14.1 billion last year.

In the new farm bill, Congress sought to further pad the amounts over the next 1 0

years.

The Senate version would add $5 billion over current spending over that time, while

the more generous House would up it by $9 billion.

Moreover, the bill creates new exceptions for cotton and peanuts, and the legislation

directs studies for possibly insuring poultry, swine and catfish.

Conservative complaints

Even the natural allies of conservative lawmakers like Yoho are expressing

skepticism.

The Heritage Foundation, a conservative think tank in Washington, referred to crop

insurance costs as out of hand in a June blog post.

The group linked to another GAO report from April that argued had the USDA cut

the average for premium subsidies from 62 percent to 52 percent, taxpayers wouldhave saved $1.2 billion.

When the House bill is to the left of (President Barack) Obama on the most

expensive farm program, what does that say about the House farm bill? Heritage

asked in its blog post.

Taxpayers for Common Sense, another right-leaning group in Washington, noted in a

report on crop insurance last October that deserving farmers need a thoughtful

level of taxpayer support, if the private insurance market cannot sustain them in a

disaster.

Beyond that, though, taxpayers should be spared the expense, the group said.


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Farm businesses should use their own dollars to purchase private crop insurance or

utilize other methods to protect against most yield and revenue risks, the report

said.

(E)xpanding crop insurance to cover shallow losses that guarantee farm business

income and transfer unnecessary risk to taxpayers should be rejected outright.

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farm bill fails - july 2013

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